The Investment Industry Regulatory Organization of Canada (IIROC) released its annual compliance priorities report for 2018/2019. It highlights current issues and challenges that dealers should address to improve investor protection and foster market integrity.
After a series of compliance reviews in 2017, IIROC implemented changes to its risk models, adding measures that consider each dealer’s potential impact to market integrity and investor protection: “We will consider both the risk and impact of each dealer to determine how often we will examine them.”
IIROC reported it has received interest from current and prospective dealers about digital assets: “We are working closely with the Canadian Securities Administrators (CSA) to develop an appropriate regulatory framework for this growing market that addresses both market integrity and investor protection concerns.”
Among IIROC’s continuing priorities is helping dealers with their cybersecurity preparedness: “In November 2018, we sent our second cybersecurity self-assessment survey to all dealers. Once we compile and review the results, we will respond with initiatives that help dealers further enhance their cybersecurity resilience.”
In addition, the regulator noted poor practices associated with electronic trading: “We continue to see issues with dealers’ electronic trading controls required under the electronic trading rules.”
Those practices specifically are: credit/capital limits that do not consider the “unique” needs of their clients and traders, and limits set well in excess of what would be appropriate or effective.