The board of directors of the Investment Dealers Association has approved a new by-law, effective immediately, which lays out the protocol for using trade names.

Currently, the IDA has no clear by-laws or regulations addressing the use of trade names. The proposed by-law permits the use of trade names other than a firm’s legal name provided that those names are owned by the firm, an approved person of the firm or an affiliated corporation of either of them. The IDA must be notified of the use of such name.

In addition, a trade name may be used by only one dealer at a time, unless dealers are related or affiliated or they are involved in an introducing broker/carrying broker arrangement. This provision allows firms to comply with the requirements,which permit and in some cases, require, the name of both the introducing broker and carrying broker to be shown on documentation and correspondence with a client.

The provision also ensures that where for example, a discount division exists, it is permitted to display its identifiably separate trade name on documentation.

A firm’s legal name must be included in any contracts, account statements or confirmations. Where an approved person is using a trade name that is not owned by the firm, the firm must consent to such use. Trades names of an approved person may accompany, but not replace legal names and both must be displayed on materials in equal prominence.

The by-law also requires firms and reps to not use deceptive or misleading trade names and the IDA may prohibit the use of any trade name that it determines is objectionable.