From the Regulators

The SRO has granted exemptions to 24 firms for which the annual cost and performance reporting requirements are redundant or unnecessary

By James Langton |

The Investment Industry Regulatory Organization of Canada (IIROC) is granting exemptions from new annual cost and performance reporting requirements under the second phase of the client relationship model (CRM2) reforms for certain firms for which this type of reporting is redundant or otherwise unnecessary.

In a notice, IIROC sets out the decisions that its board has made on applications for exemptions from the new requirements to provide annual reports on account performance and fees and charges. The exemptions cover certain unusual cases, such as firms that only operate retail accounts for management and their families; firms that already provide this reporting for clients with accounts for trading futures, foreign exchange (forex) or contracts of difference (CFDs); and arrangements that see account services shared between two registered firms.

IIROC's notice indicates that the self-regulatory organization has granted exemptions to nine firms that utilize another registered firm for client-facing activities, which will provide the required CRM2 reporting to clients, and to 13 firms for their futures, forex and/or CFD accounts.

"Given that the positions and transactions in these accounts involve highly leveraged instruments whose values may fluctuate significantly on a daily basis, the board determined that requiring the provision of additional annual performance and fee/charge information was not warranted," IIROC's notice states, adding that these exemptions are subject to the condition that clients continue to receive monthly and quarterly performance and fee/charge information.

Finally, IIROC also granted exemptions to two firms that only operate retail accounts for these firms' management and their relatives, ruling that these clients "already have access to adequate performance and fee/charge information."