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Six months before merger, IIROC issues bucket list priorities

The SRO detailed its policy priorities for the year

Even with a new self-regulatory organization looming over the existing SROs, the day-to-day work of regulatory policy continues, as the Investment Industry Regulatory Organization of Canada (IIROC) detailed in its newly released policy priorities.

IIROC and the Mutual Fund Dealers Association of Canada (MFDA) are expected to be amalgamated at the end of the year, with a new SRO formally launched on Jan. 1, 2023. Earlier this month, the Canadian Securities Administrators (CSA) published a draft set of interim rules for the new SRO.

“While we actively work towards the realization of a new, enhanced SRO, IIROC continues to prioritize providing value to Canadian investors and enhancing securities regulation across Canada,” said Irene Winel, senior vice-president, member regulation and strategy at IIROC, in a release laying out its priorities for the year ending March 31, 2023.

On the investor protection front, the SRO indicated that it’s continuing to develop a mechanism for returning ill-gotten gains to harmed investors.

“We anticipate completing our review this spring and publishing a proposal for input from stakeholders and for the [CSA’s] review later this year,” it said in the priorities bulletin.

IIROC’s also considering changes to its existing arbitration program based on recommendations from a working group comprised of investor advocates and industry personnel. Possible reforms include publishing arbitration decisions, increasing the award limit, and reducing wait times, it said, noting that proposed changes will likely be published for comment this year.

The SRO said it’s also continuing to assess whether tougher standards are needed to address the risk that service issues — such as trading outages amid heavy volumes at discount brokers — rise to the level of investor protection concerns. This issue arose in the wake of the surge in retail trading that occurred in early 2021 as so-called “meme stocks” sparked a sudden increase in retail activity.

Alongside these investor protection priorities, IIROC indicated it’s also still focused on supporting industry innovation and easing needless compliance burdens.

“IIROC is committed to modernizing our rules and approach to regulation, to help reduce risks associated with innovation and to make it easier for the industry to deliver the products and services that Canadians are looking for,” it said.

Among other things, IIROC said it launched a “compliance modernization group (CMG)” to help streamline its compliance processes and create efficiencies for both IIROC and the industry.

“CMG will continue to focus on enhancing and modernizing the compliance programs and operations, harmonizing key common functions between the three compliance groups and exploring opportunities for automation where possible,” it said.

It’s also still working on registering and regulating novel businesses, such as crypto-trading platforms. To that end, it has created a new dedicated team to expedite and enhance new member application reviews “to support industry transformation and innovation.”

Source: Investment Executive