On March 9, 2017, the Investment Industry Regulatory Organization of Canada (IIROC) published IIROC Notice 17-0054 – Re-Publication of Proposed IIROC Dealer Member Plain Language Rule Book (the Notice), which republished for comment, the proposed Dealer Member Plain Language Rule Book (the proposed DMPL Rule Book).
The beginnings of the proposed DMPL Rule Book originate in 2008 following a project by the predecessor of IIROC to form a single set of rules to govern all of the individuals and entities now regulated by IIROC. Each section of the proposed DMPL Rule Book was initially published for comment in a number of discrete tranches and subsequently republished for comment in a compiled form in March 2016 (the previous publication).
The proposed DMPL Rule Book being published pursuant to the Notice reflects the changes made to the previous publication as a result of the comments received from the public and the Canadian Securities Administrators, as well as from IIROC’s own review. The principle substantive changes to the previous publication identified by IIROC include the following:
- Changes to certain proficiency requirements, and shortening of the continuing education cycle from three years to two years, while adjusting the total required hours to 30 over the two-year cycle.
- Changes to some of the introducing broker/carrying broker requirements.
- Changes to certain responsibilities assigned to certain dealer member executives.
- New IIROC approval for dual registration of approved persons.
- New requirements to assess the appropriateness of accounts and products before opening accounts or recommending products.
- Application of account opening procedures for retail clients to institutional clients.
- Inclusion of “know-your-client” and account portfolio information to the managed account agreement.
- New prohibition against transactions between a client’s management account and the account of a responsible person (akin to Section 13.5(2)(b) of National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations).
- New retail client suitability rules.
- Modifications to the Investor Application Form, Investor Notification Form and updated guidance.
Additionally, the proposed DMPL Rule Book includes the Consolidated Enforcement, Examination and Approval Rules which became effective on September 1, 2016. These rules are not being published for comment except to the extent that changes were made to the formatting and definitions to conform to the proposed DMPL Rule Book.
With the exception of the Consolidated Enforcement, Examination and Approval Rules, to the extent discussed above, IIROC is soliciting comments on the entirety of the proposed DMPL Rule Book by May 12, 2017.