Revision of credit risk assessment and margin-related lists for the purposes of IIROC Rules and Form 1

21-0227
Type: Rules Notice> Technical
Rule connection:
IIROC Rules
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Contact:

Member Regulation Policy
Email:
Mindy Sequeira
Senior Information Analyst, Member Regulation Policy
Telephone:
Email:

In preparation for the implementation of the IIROC Rules and Form 1, we have identified two lists that require revision. The revisions are necessary to generally update these lists and to ensure alignment with the approved amendments published in Notice 19-0146  and further amended in Notice 21-0190. IIROC will continue to monitor and make additional updates as required. These revised lists will become effective December 31, 2021.

  1. Revisions to the list of “Exchanges/Associations whose members qualify as Regulated Entities”

In order to determine domestic and foreign dealers that IIROC Dealer Members can transact with on a value for value basis1 , IIROC maintains a list of exchanges and associations whose dealer participants are subject to comparable regulatory oversight to that performed by IIROC over its own Dealer Members. Although this list was also referenced within some margin-related rules under the current Dealer Member Rulebook, its creation and intended use was solely to determine dealers that IIROC Dealer Members can transact with on a value for value basis.

Further, this list of “Exchanges/Associations whose members qualify as Regulated Entities” is not current as:

  • it includes exchanges that no longer have regulatory oversight over the financial solvency and non-market-related conduct of their participants (e.g. the London Stock Exchange, the Montreal Exchange, the New York Stock Exchange, and the Toronto Stock Exchange, etc.) and
  • the titling of the list excludes (technically) regulatory organizations other than exchanges and associations from being included on the list (e.g. IIROC, UK FCA and US FINRA).

As part of the plain language rule re-write project, we removed references to this list in the margin-related rules. To ensure this list is current, we have:

  • removed those exchanges and associations that do not have dealer regulatory oversight or do not meet the definition of a “regulated entity” in the general notes and definitions to Form 1, and
  • retitled the list to “list of regulators and self-regulatory organizations with adequate dealer regulatory oversight”.
  1. Revisions to the “list of foreign market indices whose constituents are eligible for margin”

This list identifies the market indices outside of Canada and the United States whose constituent securities are eligible for margin at 50% under section 5312 of the IIROC Rules. We have moved certain exchanges outside of Canada and the United States from the Exchanges/Associations whose members qualify as Regulated Entities list to this list (where appropriate).

Specifically, we have revised this list by:

  • including the respective acceptable exchange for each index and
  • adding the FTSE Straits Times Index which tracks the top 30 companies on the Singapore Exchange Ltd. (SGX).
  1. Attachments

Attachment 1 - List of regulators and self-regulatory organizations with adequate dealer regulatory oversight

Attachment 2 - List of foreign market indices whose constituents are eligible for margin

  • 1As set out in the definition of “regulated entity” in the general notes and definitions of Form 1, a Dealer Member may deal on a value for value basis with an entity that is classified as a “regulated entity”.