Frequently Asked Questions

During the implementation period for the Amendments Respecting Client Identifiers (Amendments), IIROC staff will publish responses to “Frequently Asked Questions” concerning the implementation of the Amendments. The FAQs represent the views of IIROC staff and are intended to assist IIROC Dealer Members with the implementation of the Amendments. However, please note that the FAQs do not constitute rules or requirements and have not been approved by the IIROC Board or the Canadian Securities Administrators.

FAQ Topics:

Debt Securities:

Listed Securities:

Listed and Debt Securities:


Debt Securities: Bulk orders and allocations

1. For reportable debt transactions, are dealers required to report allocations that occur after the transaction reporting deadline? (amended on 10/16/2019)

Dealers should provide the most granular information that they have at the time of reporting.

Dealers should report trade allocations if they have received the allocations at the time of reporting. For example, if at the time of reporting, the dealer has allocations for individual sub-funds that:

  • have separate LEIs
    • the dealer would report the allocations using each subfund’s LEI
  • do not have separate LEIs
    • the dealer would report each allocation using the parent’s LEI.

Allocations made after the time of reporting do not need to be provided to IIROC. IIROC continues to have the ability to request this information at a later date and dealers should continue to maintain records of the allocations for audit trail purposes.

2. Where the dealer does not have the allocations at the time of reporting, what identifier should the dealer include? (added on 10/16/2019)

Dealers should provide the most granular information that they have at the time of reporting. For example:

OEO client is: Dealer should report:
Bulk account for a portfolio manager  LEI of portfolio manager if supervised as an institutional client, otherwise the account number for the bulk account
Funds that have a common parent entity  LEI of parent entity

 

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Listed Securities: General

1. Who is responsible for including client identifiers on an order? (added on 09/06/2019)\

The Amendments apply to all IIROC Dealer Members, which include executing Participants, as well as non-executing IIROC Dealer Members that are not Participants.

A list of all IIROC Dealer Members can be found here.

2.  What should be reported on an order that is sent to a marketplace? (amended on 02/19/2021)

To help IIROC Dealer Members understand what needs to be on an order, staff created three documents:

We also created a video to show how the Decision Tree and Scenario Chart work together. These two documents provide different ways of visualizing the same requirements. For example, each outcome from the Decision Tree has a number, and that number corresponds with the same scenario in the Scenario Chart.

The outcomes from the Decision Tree are also color-coded to match the same colors in the Scenario Chart (under Column A).

Please note that the Decision Tree and Scenario Chart discussed in this video have been recently updated. Please see the Decision Tree and Scenario Chart for more details.

2a.  The scenarios outlined in the Decision Tree / Scenario Chart are not representative of the order flow at my firm. What should I report on the order under the Client Identifiers Amendments? (added 02/19/2021)

The Decision Tree / Scenario Chart are tools to guide Dealer Members and may not address every type of order flow in listed securities. We have updated the Decision Tree / Scenario Chart based on additional feedback from Dealer Members. But if the order flow at your firm is not depicted in these tools, we strongly encourage Dealer Members to contact us directly at [email protected] so that we may assist you in complying with the Client Identifiers Amendments.

3. Where an account number is required under the rule, can a dealer can create and use a different unique identifier for a client? (added on 09/06/2019)

No, if the rules require an account number as the client identifier, the IIROC Dealer Member must include an account number on the order.

4. Which clients need to be identified under the Amendments? Is the IIROC Dealer Member expected to determine the ultimate end-client for an order? (added on 09/06/2019)

No, the Amendments only affect the direct client of an IIROC Dealer Member, regardless of whether the reported entity is the ultimate end-client for the order.

An IIROC Dealer Member may choose to send its order to another IIROC Dealer Member that is a Participant for execution on a marketplace. In that instance, the non-executing IIROC Dealer Member is still expected to comply with the requirements and include the identifier of its direct client when sending the order to the executing Participant.

5. I am an IIROC Dealer Member that relies on my foreign affiliate to leverage off their scale and infrastructure for technology and/or operational support, as such services are not available at my firm. This means that my orders are sent to my foreign affiliate before reaching an executing Participant. Which scenario in the Decision Tree or Scenario Chart should I follow? (added 02/19/2021)

As there are a number of various factors to take into consideration in the above scenario, we cannot provide one answer that is appropriate for all dealers. We therefore strongly encourage you to contact us at [email protected] so that we can better understand your firm’s circumstances and appropriately guide your firm to a reporting solution in compliance with the Client Identifiers Amendments.

6. If a Participant uses an order type with a specific duration (e.g. Good Til Date or Good Til Cancelled order) and sends that order to the marketplace before July 26, 2021, does the Participant need to cancel or amend that order on July 26, 2021 in order to add the applicable markers and/or identifiers required under the Client Identifiers Amendments? (added on 06/07/2021)

No, we do not expect Participants to cancel or amend open orders that have been sent to a marketplace before July 26, 2021 (and remains in the order book on July 26) for the purpose of adding markers and/or identifiers that will become effective under the Client Identifiers Amendments on July 26, 2021. However, Participants would need to include the applicable markers and/or identifiers under the Client Identifiers Amendments when sending a new order to the marketplace as of July 26, 2021.

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Listed Securities: Order execution only

1. If the dealer supervises all of its order-execution only clients on a retail platform, can the dealer use an account number as the client identifier? (added on 09/06/2019)

Not necessarily. If any of the OEO clients are “identified OEO clients”, which is a defined term under the rules, then an LEI must be used as the client identifier.

Identified OEO clients:

  • are active OEO clients that have more than an average of 500 orders a day, or
  • are registered as an adviser, or
  • act in a manner analogous to an adviser in a foreign jurisdiction.
OEO client is: What to include on the order
“identified OEO client” LEI if eligible to obtain one, otherwise an account number (and IIROC Dealer Member separately reports client name to IIROC)
Not an “identified OEO client” and supervised as a retail client    
 Account number
Not an “identified OEO client” and supervised as an institutional client    LEI

     

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Listed Securities: Bulk transactions

1. What client identifier should a dealer use if it groups together orders for more than one client to send to a marketplace (added on 09/06/2019)

Order contains  What to include on the order: Client Identifier  What to include on the order: BU or MC Designation
Client order(s) combined with principal order(s) and/or non-client order(s)    None  Bundled order (BU) marker
More than one client order from clients that have a common parent entity (no principal or non-client order) LEI of parent entity None
 
More than one client order from clients that do not have a common parent entity (no principal or non-client order) None Multiple Client (MC) marker

 

In all cases for a bulk order – the IIROC Dealer Member is not required to report allocations after the execution of the trade.

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Listed Securities: Managed accounts

1. If a portfolio manager makes investment decisions for multiple managed accounts, how should the IIROC Dealer Member report the client identifiers? (added on 09/06/2019)

The Amendments focus on who holds the account, rather than who makes the investment decisions for the account.

IIROC Dealer Member’s client is: Which client identifier to include on the order
Portfolio Manager (PM) Accesses the marketplace as a DEA, RA or Identified OEO client LEI if eligible to obtain one, otherwise an account number (IIROC Dealer Member separately reports PM’s name to IIROC)
Supervised as an institutional client by the IIROC Dealer Member LEI
Supervised as a retail client by the IIROC Dealer Member Account number
Managed Account(i.e. PM works at the IIROC Dealer Member) Accesses the marketplace as a DEA, RA or Identified OEO client LEI if eligible to obtain one, otherwise an account number (IIROC Dealer Member separately reports holder of managed account to IIROC)
Supervised as an institutional client by the IIROC Dealer Member LEI
Supervised as a retail client by the IIROC Dealer Member Account number

 

IIROC Dealer Member groups together an order from a PM or a Managed Account with another order
The other order(s) is/are: What to include on the order:
Principal and/or Non-Client order(s) Bundled order (BU) marker
From another client(s) that shares the same parent entity LEI of parent entity
From another client(s) that do not share the same parent entity Multiple client order (MC) marker


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Listed Securities: Encryption

1. Which FIX tags/fields needs to be encrypted? (added on 09/20/2019)

Client LEIs (including LEI of the foreign dealer equivalent) will be encrypted.

The LEI of a Dealer Member that is not a Participant would not be encrypted, as non-Participant Dealer Members are similar to jitney Participants, which have never been included as an encrypted field.

2. When would a Dealer Member encrypt a client LEI on an order? (added on 09/20/2019)

Encryption is mandatory for client LEIs at the point when an order is sent to the marketplace.

Non-executing dealers may choose to:

  • encrypt the client LEI before sending the order to an executing Participant, or
  • allow the executing Participant to encrypt the client LEI.
     

3. How can Dealer Members avoid double encryption when encrypting client LEIs? (added on 04/12/2021)

Double encryption is not supported by IIROC (i.e. Dealer Members should not re-encrypt LEIs that are already encrypted).

To avoid double encryption, the executing Participant can assume that the LEI has already been encrypted by the non-executing dealer if the LEI value is longer than 20 characters (the length of an unencrypted LEI).
Non-executing dealers can choose to encrypt client LEIs with their own encryption key, or ask executing Participants to encrypt using the executing Participant’s encryption key. The encrypting dealer must use their own encryption key and include its dealer ID on the order. IIROC will be able to decrypt the client LEI using the appropriate key according to the encrypting dealer’s unique ID on the order. (For more information, please go to Strategy for Encryption of Client Identifiers under Technical Specifications.)

4. If a client does not want to randomize the encryption counter block with respect to encrypting its LEI, can the Dealer Member use the same counter block values for encrypting its LEI which will result in same set of values of the 52-character string on every order message sent to a marketplace for that client? (amended on 12/21/2020)

Yes, the client can use the same counter block without randomization, but as a best practice, it would be appropriate for the Dealer Member to ensure that the client understands that its encrypted LEI as seen by the marketplaces will have the same string value.

5. What are IIROC’s expectations on client LEI encryption for open orders that stay on the marketplace past an encryption key renewal date? Would Dealer Members be required to re-encrypt client LEIs for open orders using the new encryption key?

Example: On December 28, 2020, a Dealer Member encrypts a client LEI using the 2020 encryption key and enters a good-till-cancel order on the marketplace. At the end of 2020, the GTC order remains unexecuted on the marketplace, the 2020 encryption key expired and the Dealer Member was provided with 2021 encryption keys. Does the Dealer Member need to re-encrypt the client LEI using 2021 encryption keys for open orders that stayed in the marketplace from 2020?

No, the Dealer Member is not required to re-encrypt client LEIs for open orders that stay on the marketplace after the expiry of encryption keys. An exception is where the Dealer Member wants to amend the open order (e.g. change the price), in which case the Dealer Member should also re-encrypt the client LEI using the new encryption key.

6. What are IIROC’s expectations on client LEI encryption for open orders that have not yet been entered on a marketplace? (added on 10/26/2020)

Example: On December 31, 2020, an originating Dealer Member encrypts the client LEI using its 2020 encryption key, and sends the order to an executing Participant for entry on a marketplace. The executing Participant splits the order into smaller quantities to be entered on a marketplace over several days, which goes past the January 2021 encryption key rollover date. In January 2021, can the executing Participant enter the remaining order quantity (where the LEI was encrypted using the 2020 key) on a marketplace?

With respect to orders that have not been entered on a marketplace and where the client LEI was encrypted using a key that has since expired (2020 key in the above example), the executing Participant would need to ask the originating Dealer Member to re-encrypt the client LEI using the current encryption key (2021 key) and resend the order to the executing Participant. To prevent this scenario from occurring, Dealer Members can put processes in place to manage open orders that may run past an encryption key rollover date and have not yet been entered on a marketplace. Depending on the size of the original order, Participants should also note that UMIR 6.3 Exposure of Client Orders continues to apply.

7. What are IIROC's expectations of the marketplace if the client LEI is not encrypted on an order sent to a marketplace? (added on 08/04/2020)

The marketplace is not expected to verify encryption as the client LEI is a pass-through field. Orders with unencrypted client LEIs will not be rejected by the marketplace. IIROC will implement monitoring to verify encryption and will follow up with the originating Dealer Member, as necessary.

8. Do originating brokers need to complete IIROC’s dealer enrollment form for encryption keys if they intend to rely on their executing Participants to encrypt client LEIs? (added on 09/22/2020)

Effective July 26, 2021, every Dealer Member (including both executing and non-executing Dealer Members) is required to ensure that the client LEI is encrypted before an order is sent to a marketplace that is regulated by IIROC. Originating dealers and executing Participants can decide between themselves who will encrypt client LEIs for the originating dealer when sending orders to a marketplace.

To facilitate the implementation process for the Client Identifiers Amendments, IIROC expects every Dealer Member that trades in listed securities on a marketplace that is regulated by IIROC to:

  • complete and return the dealer enrollment form
  • acknowledge receipt of the encryption key in production.

This applies to originating Dealer Members that rely on an executing Participant for the encryption of client LEIs, as well as executing Participants.

Completing the enrollment form and acknowledging receipt of the encryption key does not obligate an originating dealer to use this key if the originating dealer has agreed with its executing Participant that the executing Participant will encrypt client LEIs before sending an order to a marketplace. This process will allow an originating dealer to more easily encrypt its own client LEIs in the future should it wish to do so.

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Listed Securities: Unique identifiers

1. What are the specifications for the unique identifier for clients of a foreign dealer equivalent that use an algorithm to generate orders? (amended on 03/11/2021)

The FIX tag to be used for the unique identifier will be included in our FIX Specifications. The unique identifier only needs to be an alphanumeric code that is unique to the particular client within the foreign dealer equivalent, and does not need to take the form of an LEI/account number/client name etc. This field will be an alpha-numeric free format string that can be populated with any code as long as it has a maximum of 20 alphanumeric characters.

This field would not be encrypted but would still be a private regulatory field that is not publicly disclosed.

2. When should a unique identifier be used for the client of a foreign dealer equivalent (FDE)? (added on 01/14/2021)

Participants would need to include a unique identifier for the FDE’s client where the FDE’s client is using its own algorithm to automatically generate orders on a predetermined basis to a marketplace regulated by IIROC. A unique identifier is not required where the FDE’s client uses an algorithm that is provided by the FDE, or the Participant.

3. Some of the FDE’s clients use their own algorithms to generate orders automatically on a predetermined basis. Rather than specify which of the FDE’s clients use an algorithm to trade, can a Participant provide unique identifiers for all of the FDE’s clients? (added on 01/14/2021)

Yes, Participants can use unique identifiers for each of the FDE’s clients, regardless of whether that FDE’s client uses an algorithm to generate orders.

  • If one of the FDE’s clients has more than one account, and it would be possible for the one client to use the same unique identifier for all of its accounts at the FDE, then we would expect to see one unique identifier for all of the accounts held by the same client.
  • However, if it is not possible to group all the of accounts held by the same client together under one unique identifier, then we would expect to see one unique identifier for each account at the FDE. There cannot be more than one unique identifier per account. Each client of the FDE (or alternatively, each account of the FDE) must have one exclusive, unique identifier.

    Example: There are 3 clients that hold a total of 10 accounts at the FDE.

    In terms of unique identifiers, the FDE can provide either:
    • 10 unique identifiers, one for each account, OR
    • 3 unique identifiers, one for each client
  • The unique identifier for the FDE’s client would continue to use FIX 4.2 Tag 8026 (which was originally contemplated for the AlgoID in the FIX Specifications).

4. One of the FDE’s clients is Client XYZ. XYZ automatically generates some, but not all, of its orders on a predetermined basis using XYZ’s algorithms. Do Participants need to specify, on a per-order basis, which of XYZ’s orders are generated using an algorithm with the unique identifier, or can XYZ’s unique identifier be included on all of XYZ’s orders that are sent to a marketplace? (added on 01/14/2021)

If it is possible to specify which of the orders of the FDE’s client (e.g. XYZ) was generated by an algorithm, and only use the unique identifier for those specific orders, then we would expect to see the unique identifier on those orders only. However, if it is not possible to specify the use of an algorithm on a per-order basis, then the unique identifier can be used on a per-client basis - i.e. one unique identifier for XYZ for all of XYZ’s orders (regardless of whether an algorithm is used for only some of XYZ’s orders and not all).

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Listed Securities: Regulatory Marker Correction System (RMCS)

1. When should Dealer Members submit a report to the Regulatory Marker Correction System (RMCS) for an erroneous or missing identifier/marker including with respect to the new identifiers/markers under the Client Identifiers Amendments? (amended 06/22/2021)

Where a trade has been executed and the Dealer Member either reported the wrong identifier or marker on the order, or failed to report an identifier or marker when it was required on the order, the Dealer Member is expected to file an RMCS report promptly upon discovering the error.

RMCS is not intended to support a secondary method for Dealer Members to report information. The rule requirement is for the correct marker or identifier to be on the order itself.

2. How should Dealer Members proceed if they want to submit bulk corrections in RMCS for multiple client LEIs? (added on 08-04-2021)

When submitting a bulk correction for client LEIs in RMCS, Dealer Members need to indicate a “Client LEI” in the marker table. If the bulk correction is for more than one Client LEI, Dealer Members can enter a dummy LEI in the form of “00000000000000000000” (20 characters consisting of all zeros) in the marker table before uploading the file attachment.

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Listed and Debt Securities: General

1. How should the dealer proceed if there are legal barriers preventing the reporting of client LEIs in the client’s jurisdiction? (amended on 09/24/2019)

The dealer would need to apply for an exemption from the requirement to provide an LEI for its client. Exemption applications should include the following information:

  • Account documentation for the client, which includes at a minimum:
    • Name of client
    • Account number of client
    • Location of client.
  • Evidence of reasonable efforts by the dealer to obtain the client LEI, which may include:
    • Dealer’s policies and procedures regarding its process on client outreach, and
    • Correspondence between the dealer and the client.
  • Explanation of the legal barrier preventing the dealer from providing the client LEI, which may be in the form of a legal opinion.

For information on the exemption application process, please see IIROC Notice 18-0080 – Rules Notice – Exemption applications relating to IIROC Dealer Member rules. As set out in Notice 18-0080, please send your application to IIROC’s General Counsel’s Office at [email protected].

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