The Investment Industry Regulatory Organization of Canada (IIROC) has issued an exemption to allow investment dealers that employ mutual fund reps to also allow certain reps to trade in exempt securities.
Historically, IIROC has allowed investment dealers to employ mutual fund-only reps for up to 270 days, ostensibly while they upgrade their proficiency to full-service status.
At its meeting on Sept. 13, the IIROC board granted relief to dealers from the requirement to trade only in mutual funds, such that individuals employed by dealer and registered as both dealing representative (mutual fund dealer) and dealing representative (exempt market dealer) who transfer to the IIROC platform may continue to trade and advise in exempt market securities upon transfer, IIROC says in a notice.
“The board determined that this exemption is not prejudicial to the interests of [dealers], their clients or the public. Specifically: transitioning clients, who hold exempt market securities, to the IIROC platform is in the public interest since IIROC has robust rules and a mature supervisory regime and oversight. An uninterrupted relationship between clients and their financial representative is also in the [dealers’], the clients’ and the public’s interest,” the notice says.
The risk of client harm during the transition period is mitigated by the fact that the reps are registered with the provincial regulators, the notice says, and that IIROC dealers have their own supervisory structures, which are subject to IIROC’s oversight.