From the Regulators

The vast majority of exemptions concerned proficiency requirements

By James Langton |

Securities regulators granted more than 600 requests for exemptions from various rules last year, most of them providing relief to registered reps from passing certain educational requirements.

The Investment Industry Regulatory Organization of Canada (IIROC) Monday published its latest report detailing the 616 exemptions that the regulator granted in 2014. Of these, 449 of the exemptions were granted from certain proficiency requirements. This total was up by 18% from the previous year, IIROC reports.

The proficiency exemptions included 322 requests from rewriting a particular requirement; 95 seeking an exemption from completing a proficiency requirement; 21 requests to accept alternative work experience and eight requests for an extension to complete a particular requirement.

IIROC's report says that 241 of the requests involved the Investment Management Techniques (IMT) and the Portfolio Management Techniques (PMT) courses, which largely involved registered reps seeking to add portfolio management services to their IIROC registrations; and, it says that in the vast majority of cases, the reps had already completed these courses outside the prescribed two-year validity period. Most of them also held other relevant designations and exceeded IIROC's minimum experience requirement to conduct discretionary portfolio management activities.

IIROC also received 51 applications for exemptions from writing the Canadian Securities Course (CSC); 34 relating to the Conduct and Practices Handbook Course (CPH); and, 26 involving the Partners, Directors and Senior Officers (PDO) course.

IIROC reports that its registration staff recommended refusal in 13 cases where proficiency exemptions were sought; and, in each case, the relevant District Council agreed with staff's recommendation. "In all of these cases, the individual applicants were not able to demonstrate that their education or experience was equivalent or relevant to the proficiency requirement for which the exemption was requested," it says.

While exemptions from proficiency requirements make up the bulk of exemption requests, the report notes that 120 exemptions were also sought from the trading rules. Of these, most of them, 84, involved requests for permission to act as principal or agent in off-marketplace trades.

Another, 40 exemptions from dealer rules were granted by IIROC's board, including 38 exemptions from the margin requirements for certain borrowing and lending arrangements. And, seven exemptions from dealer rules were granted by IIROC staff, which were not related to proficiency requirements — all of these involved bulk transfers of a large number of client accounts following mergers and acquisitions.

"The release of our annual exemption report highlights IIROC's ongoing commitment to transparency to our stakeholders," said Paul Riccardi, IIROC's senior vice president, member regulation.