1201. Definitions

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    1. Some terms used throughout the IIROC requirements are defined in subsection 1201(2). Additional terms are set out in IIROC General By‑Law No. 1 and in Form 1. Terms that are used only in a single Rule are defined in that Rule.  

      Any term not defined in subsection 1201(2), in IIROC General By‑Law No. 1, in Form 1 or in a specific Rule, which is defined in securities laws, has the same meaning as provided for in the securities laws.

      When a prescribed or adopted policy defines a term that IIROC requirements also defines, the definition contained in the policy prevails to the extent of any inconsistency, when interpreting that policy.

    2. The following terms have the meanings set out when used in the IIROC requirements:

      “acceptable clearing corporation”

      The same meaning as set out in Form 1, General Notes and Definitions.

      “acceptable counterparty”

      The same meaning as set out in Form 1, General Notes and Definitions.

      “acceptable exchange”

      The same meaning as set out in Form 1, General Notes and Definitions

      “acceptable institutions”

      The same meaning as set out in Form 1, General Notes and Definitions.

      “acceptable foreign marketplace”

      Any entity operating as:

      1. an exchange, or a quotation and trade reporting system, or an alternative trading system for securities or derivatives transactions that is subject to legislation and oversight by a central or regional government authority in the country of operation, or
      2. a quotation and trade reporting system, or an alternative trading system for securities or derivatives transactions that is subject to the rules of a self‑regulatory organization, which is subject to legislation and oversight by a central or regional government authority in the country of operation. 

      The legislation or oversight regime must provide for or recognize the exchange’s, or the quotation and trade reporting system’s, or the alternative trading system’s powers of compliance and enforcement over its members or participants.

      “acceptable securities locations”

      The same meaning as set out in Form 1, General Notes and Definitions.

      “actively engaged in the business of the Dealer Member”

      Participating in the Dealer Member’s regular business activities, operations or promotion of a Dealer Member’s services. It does not include participating in board or board corporate governance committee meetings or occasional referrals to the Dealer Member that were not solicited on the Dealer Member’s behalf. 

      “advertisement”

      Any commercials, commentaries and any published materials promoting a Dealer Member’s business, including materials disseminated or made available electronically.

      “advisory account”

      An account which is subject to a suitability obligation where:

      1. the client is responsible for all investment decisions but is able to rely on advice given by a Registered Representative, and
      2. the Dealer Member and the Registered Representative are responsible for all advice given.

      “advisory capacity”

      Providing advice to an issuer in return for remuneration other than trading advice or related services.

      “affiliate”

      Where used to indicate a relationship between two corporations, means:

      1. one corporation is a subsidiary of the other corporation,
      2. both corporations are subsidiaries of the same corporation, or
      3. both corporations are controlled by the same person.

      “agent”

      An individual who is subject to the principal and agent relationship requirements set out in Rule 2300.

      “applicable District Council”

      The District Council for the District in which:

      1. an applicant for Membership or a Dealer Member has its head office and, in the case of a holding company of an incorporated Dealer Member, where the incorporated Dealer Member has its head office,
      2. a business location is located,
      3. an individual applicant for approval or  Approved Person resides, or
      4. the activities that are the subject of an enforcement proceeding under Rule 8200 primarily occurred, provided that, if the activities that are the subject of the proceeding primarily occurred in more than one District or outside of any District, then a hearing panel assigned to the proceeding shall exercise its discretion to determine the applicable District Council, taking into account: 
        1. the Districts in which any clients or other witnesses expected to testify in the proceeding reside, 
        2. the District in which the head office of a Dealer Member that is the sole respondent in the proceeding, if applicable, is located, and 
        3. any other factors that the hearing panel considers relevant. 

      “applicable exchange”

      The same meaning as set out in Form 1, General Notes and Definitions.

      “applicable laws”

      All laws, statutes, ordinances, regulations, rules, orders, judgments, decrees or other regulatory directions, applicable to a Regulated Person or its employees, partners, directors or officers, in the conduct of their business.

      “approved investor”

      An industry investor (defined in clause 2102(1)) or any other person who requires the approval of IIROC to invest in a Dealer Member

      “Approved Person”

      An individual approved by IIROC under the IIROC requirements to carry out a function for a Dealer Member, namely, the following individuals:

      1. Associate Portfolio Manager,
      2. Chief Compliance Officer,
      3. Chief Financial Officer,
      4. Director,
      5. Executive,
      6. Investment Representative,
      7. Portfolio Manager,
      8. Registered Representative,
      9. Supervisor,
      10. Trader, or
      11. Ultimate Designated Person.

      “associate”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “Associate Portfolio Manager”

      An individual designated by the Dealer Member and approved by IIROC to provide discretionary portfolio management for managed accounts under the supervision of a Portfolio Manager.

      “beneficial owner”

      A person who has beneficial ownership of securities. 

      “beneficial ownership”

      Beneficial ownership of securities includes ownership:

      1. of securities by:
        1. a corporation, or 
        2. affiliates of a corporation, that is controlled by a person

        3. or

      2. by a corporation of securities beneficially owned by the affiliates of the corporation. 

      “Board”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “business day”

      A day other than Saturday, Sunday and any statutory holiday in the relevant District.

      “business location”

      A location where an activity that requires registration or IIROC approval is carried out by or on behalf of a Dealer Member, and includes a residence 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.

      “carrying broker”

      A Dealer Member that carries client accounts for another Dealer Member, which includes the clearing and settlement of trades, the maintenance of records of client transactions and accounts, and the custody of client cash and securities, in accordance with the requirements set out in Rule2400.

      “CDS”

      CDS Clearing and Depository Services Inc.

      “CIPF” or “Canadian Investor Protection Fund” 

      The same meaning as set out for the term CIPF in General By‑law No. 1, section 1.1.

      “CIPF Disclosure Policy”

      The policy setting out the Canadian Investor Protection Fund’s membership disclosure requirements, as made available on CIPF’s website. 

      “chartered bank”

      A bank incorporated under the Bank Act (Canada).

      “Chief Compliance Officer” 

      An individual approved by IIROC to act as the chief compliance officer of a Dealer Member.

      “Chief Financial Officer” 

      An individual approved by IIROC to act as the chief financial officer of a Dealer Member.

      “clearing day”

      Any day CDS or another acceptable clearing corporation is open for business.

      “control”

      Where used to indicate control of a corporation, means a person who has beneficial ownership of voting securities in the corporation that carry more than 50% of the votes for election of directors of the corporation and such votes allow the person to elect a majority of the directors; but if a hearing panel or District Council orders that a person does or does not control the corporation under IIROC requirements, that order defines their relationship under IIROC requirements.

      “correspondence”

      Any advertisements or business related communication, including written or electronic communications, prepared for distribution to a single current or prospective client, but not for distribution to multiple clients or the general public.

      “Dealer Member”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “Dealer Member related activities”

      Acting as a Dealer Member, or carrying on business that is necessary or incidental to being a Dealer Member. The Board may include or exclude any activities from this definition. 

      “Dealer Member’s auditor”

      An auditor on the IIROC approved list of accounting firms chosen by the Dealer Member to be its auditor.

      “debt security”

      Any security that provides the holder with a legal right, in specified circumstances, to demand payment of the amount owing and includes a debtor‑creditor relationship. The term includes securities with short‑term maturities or mandatory tender periods such as commercial paper and floating rate notes as well as traditional notes and bonds.

      “derivative”

      A financial instrument whose value is derived from, and reflects changes in, the price of the underlying product. It is designed to facilitate the transfer and isolation of risk and may be used for both risk transference and investment purposes.

      “designated Supervisor”

      A Supervisor that the Dealer Member makes responsible for a supervisory role defined in the IIROC requirements, including a Supervisor responsible for:

      1. the supervision of futures contracts and futures contract options trading accounts under Part D of Rule 3200,
      2. the supervision of options trading accounts under Part D of Rule 3200,
      3. the supervision of discretionary accounts under Part E of Rule 3200, 
      4. the opening of new accounts and the supervision of account activity under Part B of Rule 3900,
      5. the supervision of managed accounts under Part G of Rule 3900, 
      6. the pre‑approval of advertising, sales literature and correspondence under Part A of Rule 3600, and 
      7. the supervision of research reports under Part B of  Rule 3600.

      “Director”

      A member of a Dealer Member’s board of directors or an individual performing similar functions at a Dealer Member that is not a corporation.

      “discretionary account”

      An account which is subject to the suitability obligation and over which the client has given discretionary authority where:

      1. the Dealer Member has not solicited the discretionary authority, 
      2. the discretionary authority is accepted to accommodate a client who is frequently or temporarily unavailable to authorize trades, 
      3. the discretionary authority has not been renewed, and
      4. the term of the discretionary authority does not exceed 12 months.

      “District”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “District Council”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “early warning excess” 

      This is calculated and has the same meaning as set out in Statement C of Form 1.

      “early warning reserve”

      This is calculated and has the same meaning as set out in Statement C of Form 1.

      “equity security”

      An interest, investment or security in a corporation the holder of which has no legal right to demand payment until the corporation or its board of directors has passed a resolution declaring a dividend or other distribution or a winding up of the corporation.

      “employee”

      An employee or agent of a Dealer Member. 

      “Enforcement Staff”

      IIROC staff who are authorized to conduct enforcement activities on behalf of IIROC, including conducting investigations and initiating and conducting disciplinary proceedings.

      “Executive”

      A Dealer Member’s partner, Director or officer who is involved in the Dealer Member’s senior management, including anyone fulfilling the role of chair or 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.

      “free credit balance”

      Free credit balance means:

      1. for cash and margin accounts, the credit balance less an amount equal to the aggregate of:
        1. the market value of short positions, and
        2. margin required on those short positions, and
      2. for futures accounts, the credit balance less an amount equal to the aggregate of:
        1. margin required to carry open futures contracts or futures contract option positions, less
        2. any equity in those contracts, plus
        3. any deficits in those contracts.

      However, the aggregate amount must not exceed the dollar amount of the credit balance.

      “futures contract”

      A contract to make or take delivery of the underlying interest during a designated future month on terms agreed to when the contract is entered on a commodity futures exchange.

      “futures contract option”

      A right to acquire a long or short position in connection with a futures contract on terms agreed to at the time the option is granted and any option that has a futures contract as its underlying interest.

      “guarantee”

      An agreement to be responsible for the liabilities of a person or to provide security for a person; and includes an agreement to:

      1. purchase an investment, property or services,
      2. to supply funds, property or services, or
      3. to make an investment, 

      if the agreement’s main purpose is to allow a person to perform its obligations under a security or investment, or to assure an investor in a security that the person will perform its obligations. 

      “hearing”

      A hearing in connection with a proceeding, proposed proceeding or other matter under IIROC requirements, other than a prehearing conference (defined in section 8402).

      “hearing committee”

      A hearing committee of a District appointed under Rule 8300.

      “hearing panel”

      A panel selected by the National Hearing Coordinator to conduct a hearing or prehearing conference (defined in section 8402).

      “holding company”

      Of a corporation means either:

      1. another corporation that owns :
        1. more than 50 per cent of each class or series of the voting securities, and
        2. more than 50 per cent of each class or series of the participating securities,

        either directly in the corporation or in the holding company of that corporation, 

      2. but does not include:

      3. an industry investor (defined in clause 2102(1)(i))  that owns the corporation’s securities in the capacity of an industry investor
      4. or
      5. a corporation that the District Council has ordered is not a holding company of that corporation.

      “IIROC”

      The same meaning as the term Corporation as set out in General By‑law No. 1, section 1.1.

      “IIROC Membership Disclosure Policy”

      The policy setting out IIROC’s Membership disclosure requirements, as made available on IIROC’s website.

      “IIROC requirements”

      Requirements set out within IIROC’s articles, by‑laws and rules, along with all other instruments prescribed or adopted within IIROC’s by-laws and rules, and rulings of IIROC and the District Councils.

      “individual”

      A natural person.

      “industry member”

      A current or former director, officer, partner or employee of a Member or Regulated Person, or an individual who is otherwise suitable and qualified for appointment to a hearing committee.

      “institutional client”

      1. An acceptable counterparty,
      2. an acceptable institution,
      3. a regulated entity,
      4. a registrant under securities law, other than an individual registrant, or
      5. a non-individual with total securities under administration or management of more than $10 million.

      “internal controls”

      The financial and operational policies and procedures established, maintained and applied by the Dealer Member’s management toprovide reasonable assurance of the orderly and efficient conduct of the Dealer Member’s business.

      “inter-dealer bond broker”

      A person that provides information, trading and communications services for domestic debt securities trading among inter‑dealer bond broker clients (defined in section 7302).

      “introducing broker”

      A Dealer Member that introduces its client accounts to one or more carrying brokers, in accordance with the requirements set out in Rule 2450.

      “investigation”

      The powers of IIROC to initiate and conduct enforcement investigations as set out in Rule 8100.

      “Investment Representative” 

      An individual, approved by IIROC, to trade in, but not advise on, securities, options, futures contracts or futures contract options, on the Dealer Member’s behalf, including where that individual deals only in mutual funds. 

      “managed account”

      An account which is subject to a suitability obligation where:

      1. investment decisions are made on a continuing basis by a Portfolio Manager or an Associate Portfolio Manager or a third party hired by the Dealer Member, and
      2. the Dealer Member, or a third party hired by the Dealer Member, and the Portfolio Manager or Associate Portfolio Manager are responsible for all investment decisions made.

      “manipulative and deceptive activities”

      Any manipulative or deceptive methods, act or practice in connection with any order or trade on a marketplace, and includes the entry of an order or the execution of a trade that would create or could reasonably be expected to create:

      1. a false or misleading appearance of trading activity in or interest in the purchase or sale of a security, or
      2. an artificial ask price, bid price or sale price for the security or a related security.

      “Marketplace”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “Marketplace Member”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “market value”

      The same meaning as set out in Form 1, General Notes and Definitions.

      “Member”

      The same meaning as set out in General By‑law No. 1, section 1.1.

      “Membership”

      IIROC membership.

      “Monitor”

      A person appointed under section 8209 or 8212 to monitor a Regulated Person’s business and affairs and to exercise powers granted by a hearing panel.

      “National Hearing Coordinator”

      A person appointed by IIROC who is responsible for the administration of enforcement and other proceedings under IIROC requirements and other employees of IIROC to whom the person delegates the performance of such functions.

      “non-client accounts” or “non-client orders”

      Accounts or orders in which the Dealer Member or an Approved Person has a direct or indirect interest other than the commission charged.

      “officer”

      A Dealer Member’s chair or vice‑chair of the board of directors, chief executive officer, president, chief administrative officer, Chief Compliance Officer, Chief Financial Officer, chief operating officer, vice‑president, secretary, any other person designated an officer of a Dealer Member by law or similar authority, or any person acting in a similar capacity on behalf of a Dealer Member.

      “option”

      A derivative contract that:

      1. gives the purchaser the right, but not the obligation, to buy or sell an underlying asset at a certain price (exercise price) on or before an agreed upon date, and
      2. imposes on the seller an obligation, if called upon by the purchaser, to buy in the case of puts, or sell in the case of calls, at the exercise price.

      “order execution only account”

      An account which is not subject to a suitability obligation where:

      1. the client is solely responsible for making all investment decisions, and
      2. the Dealer Member provides no recommendation to purchase, sell, hold or exchange any security, including any class of security or security of a class of issuer.

      “party”

      A party to a proceeding under IIROC requirements, including Enforcement Staff and IIROC staff.

      “person”

      An individual, a partnership, a corporation, a government or any of its departments or agencies, a trustee, an incorporated or unincorporated organization, an incorporated or unincorporated syndicate or an individual’s heirs, executors, administrators or other legal representatives.

      “Portfolio Manager”

      An individual designated by the Dealer Member and approved by IIROC to provide discretionary portfolio management for managed accounts.

      “President”

      The same meaning as set out in General By-law No. 1, section 1.1.

      “public member”

      A public member in relation to a hearing committee  means: 

      1. a current or retired member of the law society of a province, other than Québec, who is in good standing at the law society, or
      2. in Québec, a current or retired member of the Barreau du Québec, who is in good standing at the Barreau.

      “recognized foreign self-regulatory organization”

      A foreign self‑regulatory organization which offers reciprocal treatment to Canadian applicants and which has been recognized by IIROC as such.

      “records”

      Books, records, client files and information and other documentation, including electronic documents, related to the Regulated Person’s business.

      “Registered Representative” 

      An individual, approved by IIROC, to trade, or advise on trades, in securities, options, futures contracts, or futures contract options with the public in Canada, on the Dealer Member’s behalf, including where that individual  deals only in mutual funds or only with institutional clients

      “regulated entity”

      The same meaning as set out in Form 1, General Notes and Definitions.

      “Regulated Persons”

      The same meaning as set out in General By-law No. 1, section 1.1.

      “related company”

      A sole proprietorship, partnership or corporation that is a Dealer Member and is related to another Dealer Member because:

      1. it, or its Executives, Directors, officers, shareholders or employees (individually or collectively) have at least a 20% ownership interest in the other Dealer Member, or
      2. the other Dealer Member, or its Executives, Directors, officers, shareholders or employees (individually or collectively) have at least a 20% ownership interest in it,

      where the ownership interest includes an interest as a partner or shareholder, either directly or indirectly, or an interest through one or more holding companies.

      But if the Board has ordered that two persons are, or are not, related companies under the IIROC requirements, that order defines their relationship under the IIROC requirements.

      “remuneration”

      Any benefit or consideration, including goods and service, monetary or otherwise that could be provided to or received by a person.   

      “repurchase agreement”

      An agreement to sell and repurchase securities.

      “research report” 

      Any written or electronic communication for distribution to clients or prospective clients containing an analyst’s recommendation about the purchase, sale or holding of a security, excluding any government debt security or any government guaranteed debt security.

      “respondent”

      A person who is the subject of a proceeding or settlement under IIROC requirements.

      “reverse repurchase agreement”

      An agreement to purchase and resell securities.

      “retail client”

      A client that is not an institutional client.

      “risk adjusted capital” 

      The capital level maintained by a Dealer Member, calculated in accordance with IIROC requirements set out in Form 1.

      “Rules of Procedure”

      The rules of practice and procedure under Rule 8400.

      “safekeeping”

      The holding of securities by a Dealer Member for a client in accordance with the requirements set out in Part A of Rule 4400.

      “sales literature”

      Any written or electronic communication for client use which contains a recommendation relating to a security or trading strategy (defined in section 3602), but does not include:

      1. any communication that is an advertisement or correspondence, or
      2. preliminary prospectuses and prospectuses.

      “sanction”

      A penalty imposed by a hearing panel or a penalty or other measure imposed under a settlement agreement.

      “securities laws”

      Any laws about trading, distributing, advising or any other related activities in securities, futures contracts, futures contract options or derivatives in Canada enacted by the government of Canada or any province or territory in Canada and all regulations, rules, orders, judgments and other regulatory directions relating to such laws.

      “securities regulatory authority”

      Any commission or person in Canada, or any province or territory in Canada, authorized to administer securities laws and any person approved, recognized or authorized as an SRO by such commission.

      "securities related business"

      Any business or activity (whether or not carried on for gain) engaged in, directly or indirectly, which constitutes trading or advising in securities or exchange contracts (including futures contracts and futures contract options) for the purposes of securities laws, including for greater certainty, sales pursuant to exemptions under securities laws.

      “segregation”

      A practice whereby a Dealer Member holds in trust client securities that are:

      1. held free and clear of any charge, lien, claim or encumbrance of any kind,
      2. ready for delivery to a client on demand, and
      3. held separate from the Dealer Member’s own security holdings.

      “settlement agreement”

      A written agreement between IIROC staff and a respondent to settle a proceeding or proposed proceeding under Rule 8200.

      “settlement hearing”

      A hearing relating to a settlement agreement.

      “shared office premises”

      Premises a Dealer Member shares with another regulated Canadian financial service entity that is involved in financial activities, such as banking, mutual funds, insurance, deposit taking or mortgage brokerage activities. 

      “significant area of risk”

      A function, process or an activity within a Dealer Member in which a failure to mitigate or control its risk could lead to material harm to the Dealer Member’s liquidity, solvency, operational capabilities, clients, client assets and other client positions.

      “SRO”

      The same meaning as defined in National Instrument 14‑101.

      “subordinated debt”

      Debt that does not entitle the holder to be paid in priority to any senior class of debt.

      “subsidiary”

      Subsidiary of an entity means:

      1. an entity it controls,
      2. a corporation it controls and one or more corporations controlled by that corporation, or
      3. a corporation controlled by two or more corporations it controls

      and includes a corporation that is a subsidiary of another subsidiary of a corporation.

      “Supervisor”

      An individual given responsibility and authority by a Dealer Member, and approved by IIROC, 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.

      “total margin required”

      The same meaning as set out in Statement B of Form 1.

      “Trader”

      An individual, approved by IIROC as a trader, whose activity is restricted to trading through a Marketplace Member’s trading system, and who may not advise the public.

      “Ultimate Designated Person” 

      An individual approved by IIROC to be responsible for the conduct of a designated Dealer Member and the supervision of its employees and to perform the functions for an ultimate designated person described in the IIROC requirements.

      “written cash and securities loan agreement”

      A written cash loan agreement or securities loan agreement, other than an overnight cash loan agreement (as defined in section 4602), where the Dealer Member receives or pays cash or, provides or receives securities, that contains the minimum provisions described in Part B of Rule 4600.

    1202. – 1299.  Reserved.

    There is no history log for this rule.