IIROC Disclosure of Information by Ombudsman Service

November 12, 2019

Download PDF:

IIROC Disclosure of Information by Ombudsman Service

Letter Summary:

The draft amendments follow a review by IIROC of all its derivatives related rules to ensure they are clear, up to date, and consistent with regulations for securities-related activities.  Stage 1 expands current regulation for futures and options to cover OTC derivatives by replacing and expanding various defined terms.  IIROC is also proposing an expansion to the definition of an “institutional client” to include individuals with at least $10m of assets under administration and to non-individuals engaged in specified hedging activities.  They further propose to expand many of the business conduct rules to derivatives activities, such as BCP requirements, sales conduct requirements, best execution and suitability.  Cumulative loss limits would also be required for any type of derivative account offering, and additional account opening procedures and/or IIROC approval would be required prior to offering certain highly leveraged and complex products to retail clients.  IIROC has also prepared a new draft risk disclosure statement for derivatives, and has suggested additional proficiency requirements for representatives (which would need to be worked on in conjunction with the CSA projects on proficiency and derivative registrations).

Overview of the Council’s Comments:

We continue to believe that it is important that relevant information be shared by OBSI with regulators and supervisory bodies, particularly information that could have significant regulatory implications. In our letter, we also encourage IIROC to help reduce regulatory burden on registrants and work collaboratively with other standard setting bodies and regulators.

Consistent with our objectives to advance market integrity, transparency and investor protection, we highlighted that ongoing collaboration and information sharing, may identify more serious underlying problems at a registrant or with a particular product or practice and assist regulators with early prevention of further problematic activities.