IIROC has issued the latest edition of its Compliance Priorities Report covering the 2016/2017 period. In the report, key compliance and registration priorities were identified based on new risks and trends, past targeted reviews and surveys, and observed examination deficiencies. Highlighted priority issues were related to members’ financial operations, registration requirements, and business and trading conduct.
“We encourage firms to use this report, together with our annual compliance conferences, guidance notices and day-to-day interactions with IIROC staff to ensure they comply with our high standards of conduct,” said IIROC Senior Vice President for Member Regulation and Strategic Initiatives Wendy Rudd.
Fintech is an area of concern: aside from certain firms having to be advised by an IIROC cybersecurity specialist starting this month, further guidance and regulatory amendments may be supplied for order-execution-only (OEO) service and automated advice providers. The regulator also noted continuing issues in electronic trading, specifically in relation to pre-trade risk controls that may lead to market disruptions and financial loss.
As for client protection, IIROC will continue to prioritize the enhancement of compliance examinations relating to “know your client” and suitability obligations in the coming year. Compliance with CRM2 reporting requirements will also be examined.
The regulator is also analyzing results of a follow-up with respondents to an in-depth survey involving possible compensation-related conflicts. Rule amendments, additional guidance, or enhanced business conduct compliance test process may be required, depending on the findings.
Internally, IIROC will conduct a comprehensive review and possible recalibration of its risk models. The review aims to ensure that the models remain current and reflect the areas with the most significant risks and, consequently, the highest need for regulatory attention.
“By reviewing our risk models we can ensure that resources are allocated as needed and continue to focus on areas that present the highest risk,” said Senior Vice President for Market Regulation and Policy Victoria Pinnington. “We will continue to work proactively with investment dealers to address significant compliance findings and develop a strong compliance culture.”
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