From the Regulators

A new report states that IIROC has observed “a dramatic decrease in the number of applicants and [reps] with solvency and integrity issues”

By James Langton |

 

There's evidence to suggest investment dealers are stepping up their hiring practices, according to a new report from the Investment Industry Regulatory Organization of Canada (IIROC) on exemption activity

The report details the exemption requests that IIROC has handled over the past year, including applications for exemptions from trading rules, certain dealer rules and from proficiency requirements.

As such, the report states that IIROC received 328 applications for proficiency-related exemptions in 2016, of which 276 proceeded to a decision by a district council, with 266 being approved, nine extensions granted and one rejected. (Another 52 applications were withdrawn after IIROC staff indicated they would recommend rejection.)

The report indicates that the number of applications that proceeded to a decision declined by 46.7% from the previous year and it credits several factors for this, including, "more stringent hiring practices by [dealers] such that individuals meet the proficiency requirements upon registration."

In addition, IIROC has also observed "a dramatic decrease in the number of applicants and [reps] with solvency and integrity issues," the report says.

Of the applications that were withdrawn, IIROC says in these cases, "the individual applicants were not able to demonstrate that their education or experience was equivalent or relevant to the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 they requested an exemption."

Most of the refusals related to writing, or rewriting, the Conduct and Practices Handbook (CPH), the report says, noting that IIROC staff rarely recommends CPH exemptions.

"The CPH is an ethics and conduct course. We are of the view that high proficiency standards play a key role in investor protection and the integrity and efficiency of capital markets," the report says. "It is rare that an application demonstrates equivalency on the CPH course content."

In addition to the proficiency-related exemptions, the report also details various exemptions from certain reporting requirements under the second phase of the client relationship model reforms; exemptions from the requirement to send fade confirmation in cases in which mutual fund companies send these directly to clients; and two exemptions to allow registered representatives to serve on the board of an unrelated dealer.

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