Business Locations – Registration and Compliance approach to work-from-home arrangements

GN-2800-21-002
Type: Rules Notice> Guidance Note
Rule connection:
IIROC Rules
Distribute internally to:
Institutional
Legal and Compliance
Senior Management
Trading Desk
Retail

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Executive Summary

Effective Date: December 31, 2021

The intent of this Guidance is to clarify our approach and expectations relating to work-from-home (WFH) arrangements, particularly given the move to more permanent WFH arrangements by different types of Approved Persons in response to the COVID-19 pandemic.

  1. Rule requirements

National Instrument 33-109, Registration Information, defines “business location” as a location where the firm carries out an activity that requires registration, and includes a residence if regular and ongoing activity that requires registration is carried out from the residence or if records relating to an activity that requires registration are kept at the residence.

Subsection 1201(2) of the IIROC Rules1 defines “business location” as a location where an activity that requires registration or IIROC approval is carried out by or on behalf of a Dealer Member (Dealer), and includes a resident if regular and ongoing activity that requires registration or approval is carried out from the residence or if records relating to an activity that requires registration or approval are kept at the residence.

Sub-clause 2803(2)(i)(g) requires a Dealer to notify IIROC of the opening or closing of a business location and sub-clause 2803(2)(i)(h) requires a Dealer to notify IIROC of the change of address, type of location or supervision of any business location. 

  1. IIROC Staff approach

We continue to support taking a flexible approach to WFH arrangements for IIROC Approved Persons.

In order to avoid imposing undue regulatory burden, we expect that Dealers maintain an up-to-date record of all Approved Persons who have regular and on-going WFH arrangement, whether or not the Dealer has notified IIROC of the location as a Business Location. The record must include the following information:

The date on which the regular and on-going WFH arrangement started,

  • A description of the activities that occur at the individual’s residence,
  • The enhanced supervision assessed and/or introduced in order to address any oversight gaps that may be arising from the WFH arrangement,
  • Potential conflicts of interest arising from the WFH arrangement, and how they have been addressed, and
  • The end of date of the WFH arrangement, if applicable.

In order to comply with their supervision requirements, Dealers need to assess whether the WFH arrangement triggers a need to introduce or modify the current supervision procedures and practices.2 The determination of whether the Dealer needs to enhance or otherwise modify its supervisory procedures will depend on the specific business model, the Approved Person’s role and activities, and the existing supervisory structure at the Dealer.

As part of the Business Conduct Compliance (BCC) examination program, BCC may review the Dealer’s remote supervision structure. If requested, a Dealer should be prepared to provide the information outlined above to examination staff. BCC will continue to use the list of Business Locations on the National Registration Database (NRD) to plan our examinations. BCC may also review the list maintained by Dealers to determine which, if any, WFH arrangements we should examine in order to test whether the Dealer has notified IIROC of all appropriate Business Locations.

In determining whether a residence needs to be reported as a Business Location, Dealers should look to whether:

  1. There is a regular and ongoing WFH arrangement; and
  2. Any one of the following factors are present:
    1. more than one Approved Person conducts registerable activities on behalf of the Dealer at the residence, unless multiple Approved Persons reside in the same residence,
    2. the residence is held out to the public as a business location (signage, business cards, etc.) by the individual or Dealer,
    3. the individual meets with clients at the residence,
    4. the individual maintains records at the residence relating to an activity that requires registration that are not duplicated at the Dealer’s offices.

 

  1. Applicable Rules

IIROC Rules this Guidance Note relates to:

  • subsection 2202(1),
  • sub-clause 2803(2)(i)(g), and
  • section 1201.
  1. Previous Guidance Note

This Guidance Note replaces IIROC Notice 20-0270 – Guidance Note – Dealer Member Rules – Business Locations – Registration and Compliance approach to work-from-home arrangements.

  1. Related documents

This Guidance Note was published under Notice 21-0190 - IIROC Rules, Form 1 and Guidance.