Early adoption of certain IIROC Rules into the Dealer Member Rules

20-0262
Type: Rules Notice> Approval/Implementation
Rule connection:
Legacy DMR Rules
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Contact:

Rezarte Vukatana
Policy Counsel, Member Regulation Policy
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Executive Summary

The Canadian Securities Administrators (CSA) have approved amendments to the Dealer Member Rules (DMRs) to align with their parallel provisions in the IIROC Dealer Member Plain Language Rule Book (IIROC Rules), which we have attached in Appendix 1 and Appendix 2 of this Notice (the Amendments).

The Amendments will be effective on January 1, 2021 (the Implementation Date).

Table of contents
  1. Background

On July 23, 2020 we published Notice 20-0162 requesting comments on early adoption of certain IIROC Rule provisions into the existing DMRs. 

With the implementation of the IIROC Rules being delayed until December 2021, IIROC staff reviewed the IIROC Rules to determine which, if any, provisions would be beneficial to early adopt to improve the DMRs without negatively impacting investor protection or increasing the regulatory burden on Dealers. 

We are amending the client identity requirements1  and proficiency and education requirements2  in the DMRs for consistency with the equivalent provisions in the IIROC Rules. All relevant background and description of changes is set out in Notice 20-0162.

  1. Comments Received

We received two comments letters in response to Notice 20-0162. Appendix 3 provides a summary of the public comments received and our responses.

  1. Summary of the Amendments

We determined we did not need to make any further changes to the Amendments, and we provide below a summary of the changes to the DMRs.

  1. Client identity

Once the amendments are effective, when opening an account for a corporation, DMR clause 1300.1(b)(i) will permit Dealers to identify beneficial owners of corporations at 25% threshold  consistent with federal anti-money laundering and anti-terrorist financing requirements3 and with National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).

Blackline and clean copies of the Amendments to the Dealer Member Rules are provided in Appendices 1 and 2, respectively.

  1. Proficiency and Education

The Amendments to DMR 2900 will give Dealers and individual registrants the flexibility to meet certain proficiency requirements. Once the amendments are effective:

  • an individual seeking registration as a Registered Representative, Investment Representative or Supervisor will have the option of completing the Canadian Securities Course (CSC) or Level I or higher of the Chartered Financial Analyst (CFA) program as a proficiency requirement4,
  • Supervisors will no longer be required to complete the Effective Management Seminar (EMS) as a post-licensing requirement5 . In conjunction, the automatic suspension for not completing the EMS will be eliminated6 ,
  • all courses will be valid for three years from the date of completion for consistency with section 3.3(1) of NI 31-1037 , and
  • registrants involved in the trading or supervision of options or futures will have the option to complete Derivatives Fundamentals and Options Licensing Course (DFOL) as an alternative to the Derivatives Fundamentals Course (DFC) and Options Licensing Course (OLC).


Blackline and clean copies of the Amendments to the Dealer Member Rules are provided in Appendices 1 and 2, respectively.

  1. Implementation

The Amendments will be effective on January 1, 2021. 

  1. Appendices

Appendix 1 – Blackline copy of Amendments to the Dealer Member Rules

Appendix 2Clean copy of the Amendments to the Dealer Member Rules

Appendix 3 – Response to public comments on Notice 20-0162