The Investment Industry Regulatory Organization of Canada (IIROC) is raising its fees as the self-regulatory organization (SRO) aims to build up its financial resources.
IIROC published its latest annual report for fiscal 2015 (ended March 31) on Monday, which indicates that the SRO expects its total operating expenses for the coming fiscal year to remain flat at just more than $90 million.
Although compensation expenses, consultant costs and costs for strategic initiatives are all forecasted to increase this fiscal year, these increases will be offset by reduced technology costs for the Equity DataWarehouse, lower telecommunications and information security costs as well as lower amortization expenses, IIROC’s annual report says.
Nevertheless, member investment dealers’ fees will increase by 1.8% for the year and equity market regulation fees will come in at 11.2% higher compared with 2015. Last year, market regulation fees were reduced by $2.65 million as prior year surpluses were used to cut fees; however, this is not the case for the current fiscal year.
“IIROC has in the past returned surpluses to maintain fees as low as possible,” the SRO’s report says. However, this year, it is planning to retain its surplus to cushion the impact of a new accounting standard and anticipated capital expenditures.
In addition, the IIROC report notes that $783,000 in debt market regulation fees is new for fiscal 2016, as the new debt market reporting system takes effect in November. Furthermore, the report says that IIROC’s revenue from underwriting levies is expected to be lower this year, given “lower prices in the oil and gas sector and uncertain global market conditions.”
IIROC’s report also provides an update on the fallout from a laptop containing client data that was lost by an IIROC employee in 2013. So far, the incident has cost the regulator $5.6 million, it reports, although only $163,000 of that was incurred in fiscal 2015. To date, IIROC says that it “has received no reports of identity theft or fraud resulting from the loss of the portable device.”
IIROC notes that it is still facing a potential class-action lawsuit over the loss of the laptop. However, the initial motion for certification of that suit was dismissed in 2014. An appeal of that decision is expected to be heard later this year, the report says: “Based upon the advice of counsel, management believes the action is without merit and will be defending the action vigorously.”
The SRO is also facing two lawsuits for wrongful dismissal, which it also says are both without merit and will be defended vigorously. The trial in one case is scheduled to begin on Sept. 15, the report says. There is no trial date set for the other lawsuit, but if it isn’t scheduled by Dec. 1, the action will be dismissed, IIROC reports.