IIROC has promised to actively participate in the CSA’s consultation on enhancing registrant obligations towards clients, specifically with regards to reforms for enhanced proficiency requirements.
In an illustrative proposal, IIROC had suggested the elimination of its current requirement for individuals to be qualified, within nine months of approval as a dealing representative on the IIROC platform, to offer a full range of investment products. Under the proposal, firms and individuals that do not upgrade their qualifications would be allowed to offer only mutual funds and ETFs.
The group received 36 public comment letters from various stakeholders reacting to the proposal, including individuals, IIROC dealer members, portfolio managers registered with multiple CSA jurisdictions, and advocacy organizations. Comments on the proposed move varied from full support to fully opposition.
Supporters cited various anticipated benefits, namely the removal of unnecessary barriers for registrants; reduced need for investors to switch firms as their investing requirements become more sophisticated; and possible consolidation of systems, platforms, operational functions, and oversight.
On the other hand, those opposed stated that a higher proficiency standard would be better for investors; the proposed measure would be disruptive to the MFDA; and that the proposal is not a priority with respect to investor protection.
One of the key themes noted by IIROC from the comments was the importance of regulatory harmonization and efficiency. The current environment is challenging for registrants who have to deal with multiple platforms, as they have to actively reconcile or work around inconsistencies, overlaps, and regulatory arbitrage. Commenters also pointed out the need for Canadian regulators to collaborate towards increasing the effectiveness of regulation without compromising investor protection.
In a published response to those and other comments, the group has committed to pursue several actions, including participating in the CSA’s invitation for input on its Consultation Paper 33-404.
“The targeted reforms on proficiency put forward by the CSA would result in a more harmonized proficiency standard across regulatory platforms. If implemented, these reforms could make the elimination of IIROC’s proficiency upgrade requirement unnecessary or less impactful on industry participants,” said the group in its statement.
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