OrionConsulting.services
Toronto, Canada
Securities Compliance Consulting
DEALER ADVISORY SERVICES
Expert guidance
IIROC sets regulatory and industry standards on investment dealers to protect investors, strengthen market integrity and support Canadian capital markets.
These standards are enforced by IIROC’s Financial and Operations Compliance (FINOPS), Trading Conduct Compliance (TCC), and Business Conduct Compliance (BCC) units monitoring each Dealer firm’s financial operations, trading practices and business conduct, with regular examinations to assess compliance with IIROC Dealer firm Rules, the Universal Market Integrity Rules (UMIR) and securities legislation.
IIROC’s risk-based approach considers the risk and impact of each Dealer firm on market integrity and investor protection, which determines the frequency and scope of compliance examinations.
We help Dealer firms tailor their financial operations, supervision and risk-management procedures to their business model in compliance with regulatory requirements.
Please see below for examples of our services provided in each compliance area.
FINANCIAL AND OPERATIONS COMPLIANCE (FINOPS)
Addressing FINOPS compliance risks
With pre-examination internal audits of FINOPS procedures, we aim to assist the Dealer firm identify, mitigate and manage the risks associated with financial and operational activities in compliance with IIROC rules.
The financial services industry is undergoing significant transformation, prompted in no small part by challenges of the pandemic.
COVID-19 has also created an environment where employees working from home have heightened the need for Dealer firms to make adequate preparations to deal with other potential emergency scenarios.
To meet the challenges of significant business interruption, we can help Dealer firms design and implement:
• cybersecurity risk management and cyber incident management plans to protect data, investor assets and market integrity; and
• business continuity policies and procedures with the appropriate financial and operational safeguards to resume service and facilitate prompt client access to their assets within an acceptable period of time.
TRADING CONDUCT COMPLIANCE (TCC)
Trading supervision
Supervision of trading requirements have evolved and Dealer firms must apply a principles-based approach to address the specific risks associated with their business models and trading activity.
IIROC will ensure during an examination that the risks identified are addressed in the Dealer firm’s policies and procedures and are reflected in the supervision conducted.
We can help Dealer firms assess and document the risks associated with their trading-related activities to determine where their compliance and supervisory efforts should be focused.
• We advise Dealer firms on how to implement, maintain and administer their compliance program equipped with risk assessment, monitoring, testing and surveillance functions to meet their regulatory, supervisory, corporate and fiduciary obligations to all stakeholders.
• We advise Dealer firms on their internal compliance surveillance system to monitor and detect improper trading and market manipulation, and implement necessary modifications to address deficiencies in trading supervision.
• We advise executing and non-executing Dealer firms on how to document and implement best execution policies and procedures of client orders; disclosure of best execution policies; and governance of best execution decisions.
BUSINESS CONDUCT COMPLIANCE (BCC)
Policies, procedures and controls
Dealer firms are monitored for compliance with business conduct rules with the testing of their implemented policies, procedures and controls to supervise their lines of business.
• Using algorithm logic to support Dealer firms’ compliance activities and supervisory processes, especially in account opening approval has come under business conduct scrutiny.
o We can help Dealer firms in their BCC review make their case for automation to reduce unnecessary costs and pursue innovation in the account opening approval process without risking investor protection.
• OEO Dealer firms who introduce new business lines with automated processes will be subject to regular Dealer Examinations.
o We can help Dealer firms report changes to business models, and test the modified supervisory procedures for compliance with the rules and regulations applicable to the proposed business model.
• The IIROC Client Focused Reforms (CFR) Amendments align the interests of Dealer firms and their clients, and clarify what clients should expect from their registrants.
o We can help Dealer firms meet their obligations under the amendments involving Relationship Disclosure, Know-Your-Client, Suitability, Conflict of Interests, and Product Due Diligence/Know-Your-Product provisions.
REGISTRATION AND APPROVAL
Firms and individuals
Before individuals can work at IIROC-regulated firms, they must be registered and approved. The IIROC Registration Department performs a “gatekeeper” function to screen all applicants and enforce industry standards.
National Instrument 33-109 Registration Information harmonizes registration requirements regarding the initial submission of registration information of firms, registered and permitted individuals; and the updating of that information.
Under the Securities Act (Ontario) the OSC assigns its registration powers and duties to IIROC to:
• review and approve applications for registration, reinstate registration and amend registration from individuals;
• Impose applicable terms and conditions on individuals; and
• review exemptions from proficiency requirements.
Every registrant or approved person must maintain their fitness for registration and conditions of approval on an ongoing basis; include acquiring the knowledge to stay current on new products, new rules and regulations, legal and compliance issues, emerging industry trends and other developments.
We can help Dealer firms with registration categories for firms and individuals, as well as approval categories for individuals to ensure that all those who conduct or supervise regulated activities meet requirements of proficiency, integrity, and experience.
