IIROC Consultation Paper (Phase III) — Competency Profiles for Supervisors, Traders, Associate Portfolio Managers and Portfolio Managers

December 13, 2022

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IIROC Consultation Paper (Phase III) — Competency Profiles for Supervisors, Traders, Associate Portfolio Managers and Portfolio Managers

Letter Summary:

The consultation is in the third phase of a multi-year project to set out competency profiles for all of IIROC’s registration categories. A “competency” is a set of knowledge, behaviour, and skills that an individual must have to perform effectively in their role. The proposed profiles for supervisors consist of 3 high-level competencies associated with their oversight responsibilities, focusing on the general regulatory framework, supervisory firm responsibilities and supervisory specific responsibilities. Traders (whose activities are limited to trading through a marketplace member and who do not advise the public) have 3-high-level competencies that related to their technical and regulatory skills, being marketplace structure and regulation, trading in capital markets and trading rules and orders. APMs and PMs have 6 categories of high-level competencies associated with their relationship, regulatory and technical skills, focusing on regulatory environment and ethics, investment policy, research and analysis, portfolio construction, portfolio monitoring and servicing institutions. APMs and PMs must also meet the competencies proposed for Registered Representatives in Phase 1 as they are permitted to carry out RR activities. All categories have numerous sub-competencies and specific knowledge requirements.

IIROC intends to publish the final profiles in advance of the expiry of the CSI contract; a request for expressions of interest will be sent out later this year for education service providers.

Overview of the Council’s Comments:

We firmly support initiatives to examine and improve registrant proficiency, especially for categories of registration that involve dealing directly with clients. We also think it will be helpful, when finalizing the competencies for all registration categories, to review the expectations against the requirements of the end-clients served by those registrants, and to set in place processes that regularize the review of the competency profiles to be responsive to changing markets, client demands, and the resulting emerging competency needs.

While the proposed competency profiles are generally comprehensive, we have noted potential gaps for further consideration in the approach:

With respect to the proposed competency profiles for Supervisors, we are of the view that the competency expectations capture the appropriate level of knowledge that should be expected from individuals holding these important roles. Our core recommendations include knowledge in the following areas:

Moving to the Trader Competency Profiles, we believe there could be improvements and more specificity relating to a few key concepts, such as: 

Specifically with respect to the categories of APMs and PMs, we believe this is the most robust and well thought out of the proposed competency profiles. We agree with the proposed six categories of high-level competencies associated with their relationship skills, regulatory skills and technical skills.

Under the regulatory environment and ethics competency, we appreciate that the sub-competency related to the fiduciary duty of a PM and APM has been broken out and highlighted in its own category. We believe that the competency profile could be incrementally improved through requiring competencies relating to an understanding of specialized legislation and regulation applicable to certain client types such as pensions (as mentioned in comments relating to the Supervisor competency profile above). It could also be improved through additional competency requirements relating to the understanding and application of various asset allocation frameworks applicable to both institutional and retail clients, understanding and evaluation of risk-adjusted performance, and the assessment and understanding of investment and investment manager performance through widely utilized performance evaluation methodologies and metrics. All of these topics are extensively addressed in the CFA Program’s learning objectives and curriculum.