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CIRO – Rule Consolidation Project – Phase 4
Letter Summary:
CIRO is publishing for comment Phase 4 of its Rule Consolidation Project rule proposals. The Rule Consolidation Project will bring together the two member regulation rule sets currently applicable to investment dealers (IDPC Rules) and to mutual fund dealers (MFD Rules) into one set of member regulation rules applicable to both categories of CIRO Dealer Members.
The objective of Phase 4 of the Rule Consolidation Project (Phase 4 Proposed DC Rules) is to adopt requirements that are mostly unique to the IDPC and MFD Rules and have been assessed as having differences deemed to be significant with potential material impacts on stakeholders.
Overview of the Council’s Comments:
The Canadian Advocacy Council (CAC) responded to the Canadian Investment Regulatory Organization’s (CIRO / OCRI) request for comment on its initiative to distribute disgorged funds to harmed investors. The CAC commended CIRO for its transparency, stakeholder engagement, and policy leadership in this area.
Key points from the letter included:
- The Council acknowledged CIRO’s clarification that the program will be operated using its existing resources and structure, with the General Counsel’s Office acting as Administrator. The CAC recognized that CIRO has conducted an impact assessment and concluded that the benefits to investors outweigh administrative costs.
- The Council also supported CIRO’s plan to conduct regular reviews to assess the program’s effectiveness and encouraged the publication of these findings to enhance transparency and inform similar regulatory initiatives.
- The CAC noted that the Administrator has discretion to forgo distributions if costs exceed benefits, based on factors such as the amount of funds collected, number and value of claims, claimant locations, and feasibility of payment processing. The Council encouraged CIRO to publish the reasons behind such decisions to maintain transparency.
- Additionally, the CAC sought clarification on whether residual funds from non-pursued distributions will remain within the CIRO Restricted Fund for future claims or be transferred to a general account. The CAC welcomed the initiative as an important mechanism to enhance investor protection, market integrity, and confidence, appreciated CIRO’s responsiveness to feedback, and remains open to further engagement on this and other regulatory matters.