For the purposes of section 2216, a “financial services entity” means an entity regulated by a securities regulatory authority or by another Canadian financial services regulatory regime such as banking, mutual funds, insurance, deposit-taking, or mortgage brokerage activities.
A Dealer Member may share premises with another financial services entity, whether or not they are related companies or affiliate companies, in accordance with section 2216. This section applies to Dealer Members dealing with retail clients.
A Dealer Member must ensure that clients clearly understand which legal entity they are dealing with.
A Dealer Member’s policies and procedures must specifically address:
supervision of shared office premises,
representative compliance with IIROC requirements, and
that clients clearly understand which entity they are dealing with.
- A Dealer Member must have:
- adequate supervisory resources to carry out its supervisory procedures,
- a system for communicating IIROC requirements to representatives at the shared office premises, and
- a process that provides reasonable assurance representatives understand and comply with IIROC requirements.
- A Dealer Member’s shared office premises must be laid out and operated in a manner that ensures the control and confidentiality of client information and client records by ensuring that client records and account process areas are effectively controlled and physically secure.
- A Dealer Member must have appropriate signs and disclosure which differentiates the entities sharing the premises.
- The legal names under which the Dealer Member and each of the other financial services entities operate must be clearly displayed in a prominent location, such as the office entrance door or reception area.
- The Canadian Investor Protection Fund logo and brochures must be displayed in a manner that makes it clear that they are applicable only to the Dealer Member and not to any other financial services entity.
- When doing business in shared office premises, a Dealer Member must comply with Part E of Rule 2200.
- A Dealer Member must keep client records separate from the records of another financial services entity as follows:
- the financial services entity must not have access to the client’s hard copy records, and
- electronic records must have separate passwords or another similar control to ensure the financial services entity has no access to the electronic client records of the Dealer Member.
- When a Dealer Member, operating in a shared office premises opens an account, the Dealer Member must obtain the client’s specific acknowledgement of a written disclosure statement:
- outlining the relationship between the Dealer Member and the financial services entity sharing the premises, and
- stating that the entities are separate.
- A Dealer Member must keep client information confidential and can only share the information with other financial services entities in the shared office premises if:
- the client has consented to the disclosure of confidential information in compliance with applicable federal, provincial, and territorial privacy legislation and regulations, and
- the client has consented to the disclosure of client information through a specific confirmation such as a signature or initials at a designated place. A Dealer Member must not obtain a client’s consent through a negative consent option.
- An employee who works for both the Dealer Member and another financial services entity must not disclose client information from one organization to the other unless performing a relevant service that the client has specifically consented to and the client has consented to the disclosure of the client information.
- Non-registered personnel employed by the Dealer Member or representatives of the financial services entity may not provide the following services on behalf of the Dealer Member:
- opening accounts,
- distributing or receiving order forms for securities transactions,
- assisting clients to complete order forms for securities transactions,
- giving recommendations or any advice on any activity,
- completing know-your-client information on a New Account Application, other than biographical information, and
- soliciting securities transactions.
- Non-registered personnel employed by the Dealer Member or representatives of the financial services entity may provide the following services on behalf of the Dealer Member:
- advertising the Dealer Member’s services and products,
- delivering or receiving clients’ securities,
- arranging client appointments or informing of deficiencies on completed forms,
- providing the status, balances, and holdings of client accounts,
- providing quotes and other market information,
- contacting the public, inviting the public to seminars, and forwarding non-securities information,
- distributing New Account Applications, subject to subsection 2216(17), and
- receiving completed New Account Applications to forward to the Dealer Member for approval.
- At the shared office premises, a manager, assistant manager or credit officer of the financial services entity who has a high degree of knowledge about the client’s financial affairs may help the client to complete the New Account Application, if:
- no Approved Person is available,
- the client’s Registered Representative, Portfolio Manager or Associate Portfolio Manager complies with IIROC requirements relating to know-your-client and suitability by reviewing the New Account Application with the client before any trade is conducted or a recommendation is made to a client, and
- a Supervisor has approved the New Account Application before any trade is conducted for a client.
- A mutual fund sales person may only accept orders for accounts at the dealer which he or she is registered with and may not:
- offer, or advise clients on, equities or other transactions for which specific proficiency is required, or
- communicate those client orders to a qualified person.
2217. – 2219. Reserved.