The Canadian Investment Regulatory Organization (CIRO) regularly examines its dealer member firms to assess each firm’s compliance with CIRO rules and securities legislation. The regulator, along with the Investment Industry Association of Canada (IIAC) hosted a webinar – the first session in its Self-Regulatory Organization (SRO) examination series – to provide stakeholders with information about what CIRO looks for with the Financial & Operations Compliance (FINOPS) team conducts exams.
“The FINOPS team monitors the solvency of all dealer members and ensures that business activities are conducted within prescribed capital limits and also monitors dealer member adherence to operational rules, including the safeguarding of customer assets,” they write.
Dennis Dirksen, manager of financial and operations compliance with CIRO explains that the regulator has three compliance departments – one for business conduct, one for trade conduct and then FINOPS. “We’re there to monitor the capital of the firm and make sure the firm has adequate capital,” he says, before delving into a description of what a typical exam cycle looks like with any given firm.
Where some firms are deemed to be high risk, these are assessed every year. Moderately risky firms may be assessed every two years and firms that are not deemed to be high risk will see compliance staff every three years. (The risk-based approach was implemented, he says, to make the best use of available resources.)
In addition to corporate finance, one aspect of the exam which has changed in recent years is the assessment of firm’s governance, as well. “We will have more senior meetings. We’ll meet with the UDP (ultimate designated person),” he says. “We’re really trying to assess how the firm is managed. Of course, that feeds into the risk model. To the extent that the firm has a strong governance structure, that will lower their risk (profile).”
Once an examination is completed, he adds that firms have the opportunity to correct any inaccuracies before a final report is issued giving firms 30 days to respond.
Those completing the webinar can earn one compliance continuing education credit.
