The Investment Industry Regulatory Organization of Canada (IIROC) has announced its priorities for the 2022 fiscal year, which include a focus on advancing initiatives related to investor protection, supporting industry transformation, managing the implications of the pandemic and helping the Canadian Securities Administrators (CSA) in their review of self-regulatory organizations in the country.
IIROC’s priorities include the effort to enhance protection for vulnerable investors. It will move forward with the creation of an expert investor issues panel, will explore disgorgement options – ways in which to return wrongdoers’ ill-gotten gains to harmed investors – and will examine historical online trading availability, functionality and service provided by online-execution-only firms.
Trading in meme stocks
“The effects of the pandemic and more recently the trading in meme stocks, has led to unprecedented retail trading activity over the last year,” they write. The surge, they add, “created stress across the system. IIROC has historically considered phone delays or electronic platform lapses to be a service issue and not a regulatory matter. However, we are reconsidering this position in light of the trend of escalating complaints and the significant disruptions caused by recent events. In particular, we are now examining the point at which service levels and interrupted access to investments would become an explicit investor protection issue.”
The regulator also plans to do an in-depth study of the settlement process for Canadian equities. “We anticipate publishing the results in late 2021 and will use the findings to both benchmark and assess the current short selling regime,” they add.
Crypto-asset trading platforms
Other priorities include helping the CSA regulate crypto-asset trading platforms, where appropriate, and helping firms build operational resilience through the effective management of cybersecurity and technology risks. Initiatives that will continue include the adoption of client focused reform rule amendments, work on safe harbour rules when considering vulnerable investors, derivatives rule reform, and the implementation of client identifier requirements. The regulator will also continue to develop competency profiles for directors, executives, compliance officers and designated persons, and will continue to collaborate with securities commissions on initiatives related to title protection.
Future efforts will also include a focus on obtaining statutory protection from malicious lawsuits while carrying out its regulatory duties.
IIROC adds that decisions made by the CSA in its review of the self-regulatory framework may impact the nature and timing of IIROC’s priorities. “We continue to recommend the consolidation of IIROC and the MFDA (the Mutual Fund Dealers Association of Canada),” they write, “to build on what is currently working with self-regulation.”