- The parties to an introducing broker / carrying broker arrangement between a Dealer Member and its foreign affiliate dealer must comply with the following conditions and requirements:
Annual disclosure requirement
The foreign affiliate, at least annually, must provide written disclosure in a form satisfactory to IIROC, to each of its clients whose accounts are carried by the Dealer Member outlining:
the relationship between the Dealer Member and its foreign affiliate,
the relationship between the Dealer Member and the foreign affiliate’s client, and
any Canadian Investor Protection Fund coverage limitations on those client accounts.
- Foreign jurisdiction approval
- The Dealer Member must provide written approval of the arrangement between the Dealer Member and its foreign affiliate from the foreign affiliate’s regulatory authority.
- Responsibility for compliance
- The Dealer Member’s foreign affiliate is not required to comply with IIROC requirements solely because of the arrangement.
- Reporting balances
- When calculating risk adjusted capital the Dealer Member must report on Statement A and Schedule 4 of Form 1 and the Monthly Financial Report one balance owing to or from its foreign affiliate representing the accounts of the clients it carries on behalf of its foreign affiliate.
- Segregating securities
- The Dealer Member must segregate securities it holds for its foreign affiliate’s clients in accordance with IIROC requirements relating to segregation.
- The Dealer Member must include all accounts introduced to it by its foreign affiliate when calculating client net equity for minimum Financial Institution Bond coverage under section 4457 and 4458.
2437. – 2459. Reserved.