A new fee model kicks in on Saturday to finance the Investment Industry Regulatory Organization of Canada’s (IIROC) new job as the information processor for corporate debt markets.
IIROC announced on Friday that its fee model as debt information processor (IP) has received regulatory approval. Under the new model, fees for government securities dealers, which are authorized to buy government securities directly from the Bank of Canada, apply starting April 1 while fees for other dealers will begin July 1. IIROC will issue its first invoices under the new model in July.
The self-regulatory organization (SRO) began serving as IP for corporate debt in July 2016 and proposed a new cost-recovery fee model for this service in December last year. That model is based on each dealer’s proportion of publicly reported corporate debt transactions. IIROC indicates in Friday’s notice that its services as debt IP are budgeted for $461,000 in 2018.
So, between April 1 and June 30, when only government securities dealers will be charged, “our costs at an estimated 60,000 reported transactions per month are estimated to be 64¢ per transaction,” IIROC says.
Once all dealers are paying, with an estimated 100,000 reported transactions a month, those costs would drop to an estimated 38¢ per reported transaction, IIROC notes.
In addition, IIROC will review how well the fee model is working in the future as this is a new area, the SRO’s notice says.