Implementation of Client Identifier Amendments for Listed Securities

21-0052
Type: Rules Notice> Technical
Rule connection:
IIROC Rules
UMIR
Legacy DMR Rules
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Contact:

Theodora Lam
Senior Policy, Counsel Market Policy
Telephone:
Email:

The amendments related to client identifiers become effective July 26, 2021 (Amendments1).  As of this date, Dealer Members must include client identifiers and/or certain designations on each order in a listed security sent to a marketplace that is regulated by IIROC.

As of April 5, 2021, Dealer Members can send orders with the new information to a marketplace on a voluntary basis, which would allow Dealer Members and their vendors to test the functionality before full implementation on July 26.

Dealer Members must take all appropriate steps to ensure full compliance with the requirements by July 26, 2021.  At this point in time, we expect that Dealer Members are well underway with their implementation efforts, and have identified the steps it needs to take to ensure compliance by July 26, 2021.

The steps that a Dealer Member must consider may include:

  • Ensuring having the requisite Legal Entity Identifiers (LEI) for the following clients:
    • Direct Electronic Access clients (DEA) and identified order execution only clients that are eligible to obtain an LEI under GLEIF standards
    • Routing Arrangement (RA) clients
    • clients that do not access the marketplace using DEA, RA or order execution only services and are supervised by the Dealer Member as institutional clients
    • Dealer Members that are not Participants.
  • Acknowledging receipt of encryption keys from IIROC.
  • Confirming responsibilities between executing and originating Dealer Members, such as:
    • ensuring the originating Dealer Member provides the applicable client identifier and/or designation to the executing Participant and that this information is included on an order that is sent to a marketplace
    • encrypting client LEIs before an order is sent to a marketplace.
  • Conducting workflow analysis to determine:
    • the applicable client identifier and/or designation required under the Amendments
    • the point of adding the new information to the order, including the point of encryption, in order handling across systems
    • which third party vendors or internal systems need to pass the new fields, from the point when the tags are added to the order to the point when the order is sent to a marketplace.
  • Making arrangements to test/certify with vendors and marketplaces
    • providing vendors with requirements and coordinating software updates, testing, FIX certification between systems and go live dates for production.
  • Updating policies and procedures to reflect the new requirements, such as:
    • using the applicable client identifier and/or designation on an order in a listed security that is sent to a marketplace
    • separately reporting to IIROC the name and account number of the DEA or identified OEO client that is not eligible to obtain an LEI under GLEIF standards
    • filing a Correction Report using the Regulatory Marker Correction System in the event of a missing or erroneous client identifier or marker on an order and the trade has been executed
    • conducting internal reviews to ensure the appropriate identifier and/or designation is being used across all applicable business units involved with orders in listed securities and/or the appropriate report has been filed with IIROC.

Dealer Members can access a number of resources to assist them as they prepare for the implementation of these requirements on IIROC’s website. It is incumbent on Dealer Members to ensure they understand how the Amendments apply to their business and are able to fully comply with the new requirements effective July 26, 2021.

Please direct questions with respect to the implementation of the Amendments to [email protected].

  • 1. IIROC Notice 19-0071 – Rule Notice – Notice of Approval – UMIR and DMR – Amendments Respecting Client Identifiers (April 18, 2019).