In addition to the Amendments affecting registrants, generally, summarized below are some of the key changes under the Amendments that will impact IIROC members.
Avoidance of Conflicts (Managed Accounts)
Where a registered investment dealer is also an adviser to a managed account, the Companion Policy emphasizes that proper policies and procedures should be in place to sufficiently mitigate the conflicts of interest inherent in trades between inventory accounts and managed accounts. The policies and procedures should consider best execution requirements, fair pricing and appropriate oversight.
Exemptions from Certain Requirements of NI 31-103
Unless it is also registered as an investment fund manager, an investment dealer is exempt from certain of the requirements of sections 12 (financial condition), 13 (dealing with clients) and 14 (handling client accounts) of NI 31-103 as itemized in section 9.3 (further proposed amendments to NI 31-103 clarify that in order to rely on the section 9.3 exemptions, the IIROC member firm must be in compliance with its IIROC obligations). Subsection 5 has been added to section 12.1 which provides that an IIROC member firm that is also registered as an investment fund manager is not required to comply with certain of the requirements of section 12.1 provided the firm has a minimum capital as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report (Form F1) and it meets certain other conditions set out in section 12.1(5).
Registered investment dealers should review their IIROC obligations in respect of the exemptions and are reminded that the exemptions do not exempt firms from their registration obligations under other categories of registration.