IIROC is responsible for monitoring the compliance of its regulated dealer firms and their registered employees with rules related to business conduct, financial operations and trading practices. Effective compliance is essential to effective securities regulation.
IIROC-regulated firms must comply with rules that minimize the possibility of financial failure and protect client assets if a firm becomes insolvent. IIROC requires that firms have procedures in place to supervise client accounts, including advice and transactions, to reflect client needs and instructions. IIROC monitors firms’ trading activities so that trading compliance and client needs are addressed. Timely and effective compliance helps firms to prevent deficiencies that, if left uncorrected, could require enforcement action.
The three compliance departments conduct about 300 on-site firm reviews each year. Each of these reviews tests the firm’s activities against the IIROC rules. IIROC then issues a report to the firm about their compliance, highlighting the areas that they need to improve or change immediately.
IIROC’s three compliance departments collaborate on their programs and activities in the interests of efficiency and effectiveness. Each year they work together to issue a Compliance Report. This report helps firms determine areas of focus for their own compliance programs, supervisory oversight and internal controls.
Each compliance department maintains its own Risk Assessment Model, which acts as a risk management tool to help identify, define and assess risks for regulated firms compared to the industry as a whole and compared to a firm’s peers as a group. These models help staff determine priority focus in IIROC’s compliance examination cycle.
The assessment models are used to help staff prepare a comprehensive Risk Trend Report for each individual Dealer Member which reflects areas of risk inherent in each firm’s business model.