The Investment Industry Regulatory Organization of Canada (IIROC) says firms should use its most recent Compliance Priorities Report: Helping Firms with Compliance, to help focus their compliance efforts in the coming year. The report, published March 23, 2021, is the most recent summary or regulatory developments, trends and steps taken by the regulator to help firms with compliance.
“This year’s report outlines IIROC’s ongoing response to the impacts of the pandemic, our upcoming policy initiatives, as well as initiatives to continue to support transformation and innovation in the industry,” explains the regulator in an announcement. “This report also summarizes current issues and challenges that IIROC-regulated investment firms should focus on to improve investor protection and foster market integrity.”
Cybersecurity, remote access and supervision
The report outlines areas where exemptive relief from regulation is available and discusses notices published in the past year including guidance on cybersecurity, remote access and supervision. It also looks at best practices for remote examinations, work done to regulate crypto assets and derivatives, and the new plain language rules being adopted by the organization at the end of the year.
“On December 31, 2021, the existing dealer member rules will be repealed and the (plain language) IIROC rules will become effective. Firms should review the IIROC rules and the related table of concordance to ensure compliance with all applicable new and updated requirements,” says IIROC.
Rules for terminating representatives
In addition, the organization’s publication looks at the delegation of supervisory controls to third parties, short selling and failed trades policies and procedures, order-execution-only trailer bans, rules for terminating representatives, proficiency exemptions, advisory competency profiles and the implementation of client-focused reforms (CFRs).
IIROC says the CFR rule amendments are also scheduled to take effect on December 31, at the same time it adopts the plain language rulebook. “The simultaneous implementation of these two major initiatives will entail a significant amount of preparation on the part of member firms as well as IIROC. Member firms are reminded to focus adequate resources on these important initiatives and to raise any implementation questions with IIROC on a timely basis.”
Business continuity plans
As part of its oversight during the COVID-19 pandemic, IIROC also required firms to file weekly interim risk adjusted capital reports, which allowed the regulator to monitor firms’ current capital positions and to obtain additional information about any operational issues or the implementation of business continuity plans (BCPs). “Every firm must establish and maintain a BCP in the event of a significant business disruption,” they add. “The rule also requires an annual CEO BCP certification to be filed with IIROC, certifying that the firm has conducted an annual review and test of its BCP. Due to the COVID-19 pandemic, IIROC accepted that firms implementing a current BCP constituted satisfying the requirement for an annual test.”
Finally, as in past compliance priorities reports, IIROC says it continues to see filing deficiencies from regulated firms. “Our intention is to continue various outreach efforts to the authorized firm representatives and chief compliance officers of these firms, including training sessions with our registration team, to ensure they understand their obligations.”