(May 4 – 18:30 ET) – CIBC Investor Services Inc., CIBC’s discount broker, has received permission from the Ontario Securities Commission to use full-service brokers as discount brokers, in an effort to deal with the booming demand for its services.
The discount broker was granted relief to use full-service brokers on the phones on the discount side, subject to several conditions. These so-called “temporary salespersons” can only be paid an hourly wage. They can only accept orders made over the phone. They can’t offer advice. They must preserve client confidentiality and the “Chinese Wall” between their roles at the discounter and the full-service dealer. This relief is temporary, expiring in six months.
This strategy comes on the heels of a move by the Investment Dealers Association and provincial regulators to loosen suitability requirements and speed up the training process for discount brokers who have been crippled by vast volume increases. CIBC for example reports that between October 1, 1999 and January 31, 2000, it experienced an unanticipated 96% increase in the number of phone calls received during a normal trading day.