On March 31, 2020, the Investment Industry Regulatory Organization of Canada (IIROC) approved exemptive relief relating to hardships dealer members are experiencing in complying with IIROC Dealer Member Rules (DMRs). The relief relates to client document approvals, timelines for reporting, audit procedures, pre-approval requirements and supervision requirements, among others.
The announcement by IIROC follows the adoption of measures by Canadian financial regulators and stock exchanges as a result of COVID-19 (a summary of certain key US and Canadian developments, with further details on measures announced by the Canadian Securities Administrators (CSA), and those announced by the TSX and TSXV.
Areas of Exemptive Relief
IIROC announced that it may provide relief including, but not limited to the following:
- A suspension of late filing fees.
- For various DMRs requiring a client signature, IIROC may allow relief to use a written record of a client’s instructions/authorization as an alternative to obtaining a client signature where a client does not have the capability to provide an electronic signature and for safety reasons does not want to be physically present to provide a wet signature.
- Subject to coordination with the relevant CSA jurisdiction, relief from the timing of filing approved person information update filings and notice of termination filings.
- Relief from the requirement that individual panel auditors must be present at the physical security counts at the Dealer Members premises, provided that sufficient alternate audit procedures are performed to support an unqualified audit opinion.
- In certain circumstances if a firm’s ability to perform these pre-approvals in the normal manner are impaired, relief allowing alternative approaches to performing pre-trade approvals for individuals requiring trade pre-clearance, and pre-approvals of advertising and sales literature.
- Relief allowing additional time to complete daily and monthly trade reviews and branch office reviews.
Process for Exemptive Relief
Dealer members wishing to receive exemptive relief must submit a written exemption application by email to email@example.com, setting out:
- the relief their firm wishes to receive;
- why, with respect to the effects of the COVID-19 pandemic this relief has been made necessary; and
- where applicable, the alternative approach the firm would like to use to meet the spirit and intent of the relevant DMR requirement(s).
The IIROC Board of Directors (Board) has approved the delegation of limited discretion to certain IIROC senior staff (Decision Makers). Relief granted by the Decision Makers will be for an initial period of up to six months, subject to renewal, and will be subject to the same term length and same conditions as for all other Dealer members requesting the same exemption for the same matter. Any exemption finalized by IIROC staff may be revoked by the Board, in its sole discretion and for any reason.
Dealer members should note that coordination with relevant members of the CSA will be required for certain types of relief, where equivalent CSA requirements exist.