The Saskatchewan Securities Commission is the first provincial regulator dropping suitability requirements. The SSC has made a general ruling waiving the suitability requirement for members of the Investment Dealers Association who comply with the IDAÕs new suitability regime.

Under the new regime, the suitability requirement applies only to securities which IDA members recommend to their clients, provided that they comply with certain restrictions.

The SSC made the order in response to an application from SSC staff, after the IDA requested that securities regulatory authorities limit the application of the suitability requirement to securities that have been recommended by dealers. The SSC says that in its opinion, “it would not be prejudicial to the public interest to make this order”.

The move has been a long time coming for the IDA, which has been working on
it for the better part of 18 months, since the regulators first gave discount brokers the permission to waive suitability for unsolicited trades. It has argued that relief is a competitive necessity for dealers facing U.S. competition. Smaller dealers also have favoured it because it does not require them to set up discount arms simply to process trades.

The move has also been criticized as possibly compromising investor protection and opening the door to more client-firm disputes.