The Toronto Stock Exchange has proposed an amendment to its rules to accommodate the possible relaxation of suitability requirements for full-service dealers.

The TSE is now requesting comment on a rule change that would expand the definition of an order-execution account. On May 29, the TSE’s board approved an amendment to do just that. Now that amendment is out for comment for 30 days.

The TSE has already accommodated similar changes that were made to allow discount brokers to drop suitability reviews for non-solicited trades. In April 2001, the Investment Dealers Association made application to the CSA to expand the relief from suitability to include those broker/dealers offering both an advisory and an order-execution only service. These proposed amendments have not as yet been finalized.

TSE Regulation Services says it is in favour of dropping suitability for non-solicited trades. It says the requirement “has created an inefficiency in the Canadian capital markets where there are Canadian customers who are capable of making, and want to make, their own investment decisions with no assistance from a dealer, and who also want to enter orders at the lowest cost, with maximum efficiency of execution.”

“These customers are not only required to pay for services they do not desire, as a result of the suitability review, they also experience delays in having their orders executed.”