Download PDF:
Letter Summary:
We understand that the impetus behind the amendments is to permit Members flexibility in developing branch supervision structures. The MFDA bulletin describing the amendments suggests that they are consistent with the approach to branch supervision contemplated under the IIROC rules(including IIROC Rule 2500)and by the CSA under National Instrument 31-103 -Registration Requirements, Exemptions and Ongoing Registrant Obligations. We also understand that the proposals would require Members to obtain the approval of staff of the MFDA before the Member would be permitted to implement remote supervision of branches.
Overview of the Council’s Comments:
We understand that it is industry standard for branch managers to receive a percentage of profits from their branch(es). In order to avoid potential conflicts of interest or the perception of a conflict of interest, branch managers should not be permitted to receive any other type of remuneration from individuals who are under their supervision. We also believe that to avoid conflicts of interest, it is important that branch managers be required to be at arm’s length from the registered representatives they supervise. In addition, branch managers should not be directly employed by a registered representative under their supervision.