Requirements for Membership

In order to qualify for Membership, an applicant must satisfy IIROC’s financial and operations compliance, business conduct compliance and registration requirements. These are described briefly below.

Dealer Registration

Registration or licensing as an investment dealer is a prerequisite for Membership in IIROC. The dealer license is issued by the securities commission of each province or territory in which the applicant intends to do business.  In the provinces of British Columbia, Alberta, Saskatchewan, New Brunswick and Newfoundland & Labrador IIROC will grant the dealer registration under delegated authority. Applications for registration should be made directly with the applicable securities commission(s) in all other provinces or territories.

The application for dealer registration should be filed at the same time as the application for Membership in IIROC. The applicant will not be admitted to Membership until the application has also been approved by the applicable securities commission(s) or by IIROC under delegated authority.

Please refer to the “Becoming a Registered Individual” section for individual requirements.

Capital

An applicant must have minimum capital of $250,000 (unless applying as a Type 1 Introducing Broker for which the minimum capital is $75,000). These are minimum capital levels only and a sufficient amount of operating capital for the applicant’s business activities must also be provided. The Form 1 sets out the calculation for minimum capital.

Applicants must complete a Form 1. The Form 1 must be audited and submitted with a date not longer than 90 days prior to the submission of the application for Membership.

Capital can take the form of share capital or subordinated debt. If subordinated debt will form part of the applicant’s capital, the standard Subordinated Loan Agreement must be provided in triplicate along with the application and the audited financial statements.

Once an application for Membership has been submitted, the applicant is required to submit a Monthly Financial Report (MFR) following each month end.

The Subordinated Loan Agreement can be found in the “Subordinated Loan Agreement” section.

Books and Records

An applicant is required to have a system of books and records to identify its business transactions and financial information properly.   Minimum record requirements are set out completely in IIROC Rule 3800.

Records that must be maintained and/or produced are:

  • accounting, trading and business conduct records;
  • data entry and output systems, although the EDP structure may be situated outside of  Canada;
  • records relating to cage, accounting and credit operations; and
  • all communications to clients.

A letter from the applicant’s auditors stating that the applicant maintains a proper system of books and records must accompany the audited Form 1 and the application for Membership. The report submitted by the Auditor can be found under “Forms and Templates” in the “Members” section.

Auditors

The applicant's auditors must be selected from IIROC’s approved panel.

A list of Panel Auditors and criteria for qualification as a Panel Auditor can be found under “Applicant Guidance” section - Panel Auditors and Criteria for Approval as a Panel Auditor.

Insurance

An applicant is required to have a Financial Institution Bond and Mail Insurance. Specific insurance requirements and amounts are set out in IIROC Rule 4400 Part C – Insurance Requirements.

Internal Controls

An applicant is required to establish and maintain adequate internal controls. Internal control policy requirements are contained in IIROC Rules 4100 Part A, 4200, 4300, 4400, and 4900.

Procedures

An applicant is required to establish supervisory procedures for dealing with clients that conform with prudent business practice. Checklists to aid in the development of adequate Policies and Procedures can be found under the “Application Guidance” Section. Some procedures, such as registration and supervision procedures, are applicable to all firms. Others, such as options and managed account procedures, should only be included if the firm engages in or intends to engage in these activities. The checklist is not exhaustive and the applicant may include additional relevant procedures in its manual.

Applicants are required to submit account opening documents that will be used by the firm. Only those documents that are relevant to the firm's business should be submitted.

Monthly statements and trade confirmations must include appropriate regulatory disclosures.  

Five-Year Business Plan

A five-year business plan to supplement the information in the corporate application form and supporting documents is required. The plan should take the form of both a narrative and financial forecast and include:

  • type of business activities;
  • nature of products;
  • strategy for the next three to five years;
  • statistics relating to sales volumes, sales force and finances.
  • a detailed monthly profit and loss projection for the first twelve months.
  • a monthly risk adjusted capital calculation and early warning estimate for the first twelve months.

Qualifications of Individuals

All courses must be valid at the time of application. Unless otherwise specified, courses are valid for three years from the latter of:

  • the date of completion of the course(s) or
  • from the date of termination as an Approved Person requiring the specific course.

Executives (Rule 2503)

  1. All Executives must complete the Partners, Directors and Senior Officers Course (PDO Course) administered by the CSI. Any Executive who also seeks registration/approval in a trading category must also complete the applicable proficiency requirements for that category.  For example, if seeking registration/approval to trade in securities for retail clients, the Canadian Securities Course, the Conduct and Practices Handbook Exam and the 90-day training program are required. 
  2. A Dealer Member’s partner, Director or officer who is involved in the Dealer Member’s senior management must seek approval in the Executive category.  This includes anyone fulfilling the role of chair or a vice-chair of the board of directors, chief executive officer, president, chief administrative officer, chief operating officer or a person acting in a similar capacity who is head of operations, Chief Financial Officer, Chief Compliance Officer, Ultimate Designated Person, member of an executive management committee or any other position that the Dealer Member designates as an Executive position. 
  3. Dealer Member’s must designate as many Executives as necessary to ensure compliance with IIROC requirements, taking into account the scope and complexity of the Dealer Member’s business.  See Rule 3905(2).
  4. Each Executive must supervise and direct the activities of the Dealer Member, and its employees and Approved Persons, in accordance with the areas of its responsibility, to provide reasonable assurance of compliance with IIROC requirements and securities laws.  See Rule 3909.
  5. For each significant area of risk within the Dealer Member, the Dealer Member must assign responsibility to an appropriate Executive.  See Rule 1502.  This rule also recognizes that for certain significant areas of risk, IIROC has assigned the responsibility to a specific Executive as set out in the IIROC requirements (example: CFO for financial risk).
  6. All Executives must be either:
    • actively engaged in the business of the Dealer Member and spend the majority of their time in the securities industry, except those on active government service, or who for health reasons are prevented from such active engagement, or
    • occupy a position equivalent to an Executive or Director at a related or affiliated firm registered with a securities regulatory authority, affiliated foreign securities dealer or advisor, or an affiliated Canadian financial institution, and
    • satisfy the applicable proficiency requirements of clause 2602(2)(xxvii).

    At least 60% of the Executives must have experience acceptable to IIROC in the financial services industry for at least five years or such lesser period as may be approved by IIROC.  “Financial services” in this context refers to a Canadian chartered bank, a Quebec savings bank, a trust or insurance company licensed to do business in Canada or a pension fund with total net assets over $5,000,000 which is an affiliate of the Dealer Member.

  7. The Executive functioning as the chief executive officer of the dealer must be appointed as the Ultimate Designated Person, responsible for the conduct of the firm and the supervision of its employees. Please refer to Rule 2507 for further detail.
  8. One Executive must be appointed the Chief Financial Officer and have the following additional qualifications:
    • successful completion of the Chief Financial Officers Qualifying Examination, administered by the CSI and
    • a financial accounting designation, finance related university degree or diploma, or equivalent work experience as may be acceptable to IIROC.
  9. One Executive must be appointed the Chief Compliance Officer and have the following additional qualifications:
    • Successful completion of the Chief Compliance Officers Qualifying Examination administered by the CSI and
    • Five years working for an investment dealer or registered advisor, with at least three years in a compliance or supervisory capacity or three years providing professional services in the securities industry, with at least 12 months experience working at an investment dealer or registered advisor in a compliance or supervisory capacity.

Directors (Rule 2502)

  1. No individual may become a member of the board of directors unless that individual has been approved as a Director by IIROC.
  2. 40% of the Board of Directors must have the following qualifications:
    • experience acceptable to IIROC in the financial services industry for at least five years or such lesser period as may be approved by IIROC.  “Financial services” in this context refers to a Canadian chartered bank, a Quebec savings bank, a trust or insurance company licensed to do business in Canada or a pension fund with total net assets over $5,000,000 which is an affiliate of the Dealer Member,
    • have successfully completed the PDO Course in the past 3 years or were previously registered or approved as a Director or Executive of a dealer within the past 3 years,
    • meet one of the following:
      • be actively engaged in the business of the Dealer Member and spend the majority of their time in the securities industry except those on active government service, or who for health reasons are prevented from such active engagement, or
      • occupy a position equivalent to an Executive or Director at a related or affiliated firm registered with a securities regulatory authority, an affiliated foreign securities dealer or advisor, or an affiliated Canadian financial institution.  

The remaining Directors must, if actively engaged in the business of the Dealer Member or its related company meet the proficiency requirements of clause 2602(3)(xxviii).

Investors (Rule 2555)

A Dealer Member’s Director, who directly or indirectly, owns or controls a voting interest of a Dealer Member of 10% or more, must:

  • complete the PDO Course
  • apply for the permitted individual category of Shareholder in specific jurisdiction(s) and the IIROC approval category of Investor.

Any individual, other than a Dealer Member’s Director, who:

  • is actively engaged in the business of the Dealer Member, and
  • directly or indirectly owns or controls a voting interest in a Dealer Member of 10% or more,

must

  • complete the PDO Course
  • apply for the permitted individual category of Shareholder in specific jurisdiction(s) and the IIROC approval category of Investor.

Supervisory Positions

A Supervisor is an individual who is given responsibility and authority by a Dealer Member to manage the activities of the Dealer Member or the Dealer Member’s Approved Persons or employees to provide reasonable assurance they comply with IIROC requirements and securities laws.  All Supervisors require IIROC approval.

In addition to the requirement for the appointment of Supervisors over Approved Persons, Dealer Members must appoint individual(s) to the following designated supervisory positions, as appropriate for their business model:

  • the opening of new accounts and the supervision of account activity under Part G of Rule 3900
  • discretionary accounts under Part G of Rule 3900
  • managed accounts under Part G of Rule 3900
  • options accounts under Part F of Rule 3900
  • futures contracts/futures contract options accounts under Part F of Rule 3900
  • pre-approval of advertising, sales literature and correspondence under Part A of Rule 3600
  • research reports under Part B of Rule 3600.

Refer to Rule 2602 for the proficiencies requirements for all Supervisors.

All other categories

For a description, and qualifications for all other categories, refer to Rule 1201 and Rule 2602.

Additional Information regarding Registration: Continuing Education

Under IIROC’s mandatory Continuing Education program, all individuals approved in a trading or supervisory capacity, must participate in IIROC’s Continuing Education program. For further information on these requirements, please refer to Rule 2700.

National Registration Database (NRD)

All individual applications must be submitted through NRD by an authorized firm representative. To have the applicant firm enrolled in NRD, and to receive a password and user ID for NRD, please refer to the instructions found on the NRD Info web site.