CIRO Insights Page

Timeline

New Developments

Rules

Restructuring Options

Registration Requirements

Enforcement and Examinations

Québec Considerations

Directed Commissions

Proficiency and Continuing Education

Disclosure Requirements

Membership Fees

CIRO

New Developments

Timeline

Dual registration. Dealer entities may choose to hold both investment dealer and mutual fund dealer registrations, rather than only one. Dual Registration Process published by New SRO and broadcast by the CSA

Restructuring Options

Introducing arrangement. This is a formal partnership between a mutual fund dealer and investment dealer for product-specific introductions, like ETFs, or for broader business collaborations where the investment dealer serves as the carrying broker.

Status quo. Retain current operations and study the options as they develop.

Rules

Restructure. Evaluate potential operational modifications such as consolidating or outsourcing various functions like product management, compliance, back-office tasks, and operations.

Registration Requirements

Compliance examinations. CIRO will continue its compliance examination activities with registered firms. For dual-registered firms, the approach will depend on the nature of the firm’s operations, organizational structure, lines of business and degree of integration.

Enforcement priorities. CIRO’s stated enforcement focus going forward will be “compliance with and enforcement of high industry standards and regulatory requirements”. Its website reinforces that it is committed to “the protection of investors … and building Canadians’ trust in financial regulation and the people managing their investments”.

Enforcement and Examinations

on the later of:

on any other date determined by the AMF, on a consultative basis

Québec Considerations

Proficiency and Continuing Education

All investment dealers, mutual fund dealers and dual registrants have until December 31, 2024, to comply with the membership disclosure policy.

Mutual fund dealers are now subject to the CIPF membership disclosure policy. Existing members have until December 31, 2024, to comply.

Disclosure Requirements

Mutual fund dealer representatives in a principal/agent relationship, including individuals who are registered with dual-registered firms, may continue to direct commissions to a business corporation in jurisdictions where permitted: British Columbia, Saskatchewan, Manitoba, Ontario, New Brunswick, Newfoundland and Labrador, and Nova Scotia. Representatives wishing to direct commissions to business corporations continue to be required to file certain forms with their local securities regulator. Neither Alberta nor Quebec permit these arrangements.

Investment dealer representatives continue to be prohibited from directing commissions.

Directed Commissions

Harmonized options are being studied by the CSA and CIRO. A CIRO Policy paper is in development. The policy paper will assess policy alternatives and recommend both an interim and long-term approach.

Timeline

New Developments

Rules

Re-Structuring Options

Registration / Membership Approval

Enforcement & Examinations

Quebec Considerations

Directed Commissions

Proficiency & Continuing Education

New Name and SRO/CIPF Membership Disclosure

Membership Fees

The New Self-Regulatory Organization of Canada

Interim Fee Models – The New SRO has published Interim Fee Models that will apply to each dealer type. In the future there will be a harmonized fee model, to be developed with member consultation.

Dual Registered Entities – Mutual fund dealer business will be subject to the Interim Fee Model for mutual fund dealers, and investment dealer business will be subject to the Interim Fee Model for investment dealers.

Integration Cost Recovery Fee – There will also be an “Integration Cost Recovery Fee” applied to dual registered firms and firms with affiliated mutual fund and investment fund dealers.

Membership Fees

New SRO name – Canadian Investment Regulatory Organization (“CIRO”) - The new name is subject to a member ratification vote on April 24, 2023, and CSA approval. Dealers must implement Membership Disclosure including the new name, by Dec. 31, 2024.

Canadian Investor Protection Fund (“CIPF”) – Mutual Fund Dealers are now subject to the CIPF Membership Disclosure policy and existing members have until Dec 31, 2024, to comply.

New Name and SRO/CIPF Membership Disclosure

Proficiency & Continuing Education

Mutual Fund Dealer Registrants in a principal/agent relationship may continue to direct commissions to a business corporation, in jurisdictions where it is permitted. This includes individuals who are registered with dual registered entities.

Investment Dealer Registrants continue to be prohibited from directing commissions.

Harmonized Options are being studied by the CSA and the New SRO.

Directed Commissions

Quebec Considerations

Enforcement & Examinations

With Existing Dealer Registration:

No change for existing investment dealer or mutual fund dealer entities.

Continue to provide any dealer related registration updates to the applicable provincial / territorial securities regulator.

Apply to the New SRO for membership or approval following a new application process.

New or existing dealers seeking to become a dual registered member firm must:

Individuals

Registration / Membership Approval

Re - Structuring Options

Rules

The recent journey to SRO reform

Mutual fund dealers are governed by the Mutual Fund Dealer Rules (MFD Rules)

Investment dealers are governed by the Investment Dealer and Partially Consolidated Rules (IDPC Rules)

Dual registrants are governed by the Investment Dealer and Partially Consolidated Rules. If a mutual fund dealer-related matter is not addressed in these rules, the applicable Mutual Fund Dealer Rule will apply.

Market Participants, Access Persons and Marketplaces remain subject to the Universal Market Integrity Rules (UMIR)

Interim rules apply to dealers according to their registration.

The integration of IIROC and MFDA has resulted in opportunities for dealer members to review and consider their business model:

Individual representatives of mutual fund dealers, including mutual fund dealers who are part of a dual registered entity, will continue to register with the applicable provincial or territorial regulator. Individual representatives of investment dealers will continue to register through CIRO

Apply to the applicable provincial or territorial securities regulator for registration

Apply to CIRO for membership or approval following a new application process.

Apply to the applicable provincial or territorial securities regulator for registration

Apply to CIRO for membership or approval following a new application process.

Review the Membership Application Readiness Questionnaire, Guidance for Applicants (pdf) and the New Membership Application – Documentation Checklist and Membership Application Form

For dealers with existing registration. No change. Continue to provide any dealer-related registration updates to the applicable provincial or territorial securities regulator.

Individuals

For new dealers.

For existing dealers seeking to become a dual-registered member firm.

Review the dual-registration questionnaire for existing members, the dual-registered firm documentation checklist and the Membership Application Form

Complaints filing. Currently, investment dealers (who were formerly IIROC members) will continue to use the ComSet system for filing complaints and mutual fund dealers will continue to use the METS system. Dual-registered firms must file reports about complaints using the ComSet system, including reports related to activity that occurred at the time the member’s mutual fund dealer operations were run separately under an MFDA member. Mutual fund dealer members will eventually use the ComSet system in place of the METS system.

Hearing Panels. The former MFDA Regional Councils and IIROC District Hearing Committees, and their members, will be reconstituted into ten CIRO District Hearing Committees. Although current committee members will continue to serve the terms of their original appointments, which will provide continuity, CIRO’s Appointments Committee will have the responsibility for appointing members to the hearing committees going forward and membership is likely to change over time.

Membership. On January 1, 2023, mutual fund dealers registered in Québec became members of CIRO.

Oversight of the firm. During the current “transition period”, the AMF continues to oversee the business of all Québec-registered mutual fund dealers, including national mutual fund dealers registered in Québec. Québec-registered mutual fund dealers are not currently subject to the rules of CIRO (except for its operating rules) and continue to be subject to the regulatory framework applicable in Québec prior to January 1, 2023, including National Instrument 31-103 and the requirements of the Chambre de la sécurité financière (CSF).

Transition period. The transition period will end

the implementation date of CIRO’s harmonized rule book,

the date that is 18 months after AMF approval of CIRO’s harmonized rule book; or

CIRO has published an interim fee model for investment dealers and marketplace members and an interim fee model for mutual fund dealer members. A harmonized fee model will be developed with member consultation.

Membership Fees

For dual-registered entities, the mutual fund dealer business will be subject to the interim fee model for mutual fund dealers and the investment dealer business will be subject to the interim fee model for investment dealers.

An integration cost recovery fee will be applied to dual-registered firms and firms with affiliated mutual fund and investment fund dealers. Single platform firms, operating as either an investment dealer or a mutual fund dealer, that do not have an affiliated member, will not be charged for the costs of integration.

Interim fee models

With Existing Dealer Registration:

For dealers with existing registration. No change. Continue to provide any dealer-related registration updates to the applicable provincial or territorial securities regulator.

Apply to the applicable provincial or territorial securities regulator for registration

Review the Guidance for Applicants (pdf) and the New Membership Application – Documentation Checklist

For existing dealers seeking to become a dual-registered member firm.

For dual-registered entities, mutual fund dealer business will be subject to the interim fee model for mutual fund dealers and investment dealer business will be subject to the interim fee model for investment dealers.

Oversight of individuals. Dealing representatives, for their activities in Québec, continue to be required to be members of the CSF and do not currently need to be authorized by CIRO.

January 3, 2023 – New SRO launches

April 24, 2023 – Membership ratifies a new name: Canadian Investment Regulatory Organization (CIRO)

June 1, 2023 – New name takes effect

December 31, 2024 – Membership disclosure requirement (all dealers) to use new name and mutual fund dealers to disclose CIPF membership.

November 18, 2021 – CSA, IIROC, and MFDA agree to pursue creation of one SRO

May 12, 2022 – New SRO board named

May 12, 2022 – CSA publishes draft recognition orders, rules, and oversight memorandum of understanding

In all cases, when preparing to make an application investment dealers should contact the membership Intake team at membershipcoordinator@iiroc.ca and mutual fund dealers should contact membershipservices@mfda.ca

January 3, 2023 – New SRO launches Office of the Investor, along with a reconstituted independent Investor Advisory Panel, chaired by Dorothy Sanford

June 27, 2022 – CEO of new SRO announced

September 29, 2022 – SRO member dealers approve amalgamation into new SRO

November 24, 2022 – New SRO recognized as a self-regulatory organization by the CSA and New CIPF approved or accepted as a compensation/contingency fund by the applicable CSA members

January 3, 2023 – New Canadian Investor Protection Fund (CIPF) launches (merger of MFDA Investor Protection Fund and Canadian Investor Protection Fund), with new President and CEO Toni Ferrari

And, more to come - In the future we await proposals for harmonization, which may include the rules, fee models, continuing education and directed commissions.

December 12, 2019 – CSA commences in-depth review

June 5, 2020 – CSA consultation paper on the SRO framework

August 3, 2021 – CSA position paper

Membership Disclosure Requirements. On July 13, 2023, CIRO released a Rules Bulletin with detailed information to help dealer members update their membership disclosures from MFDA or IIROC names and logos, to the CIRO name and logo, by the deadline of December 31, 2024.

Dual Registration – One firm registered as mutual fund dealer and investment dealer – follow dual registration process published by CIRO

For dealers with existing registration. No change. Continue to provide any dealer-related registration updates to the applicable provincial or territorial securities regulator.

Proposed Proficiency Model. On July 7, 2023, CIRO released for comment a new proficiency model for Approved Persons, which reflects a shift from a course-centric model with exams tied to courses, to an assessment-centric model with some mandatory education and training. Feedback is due by September 20, 2023, with the goal of launching the new standards in 2026.

New Business Change Template. On July 7, 2023, CIRO released a new “user friendly” template for dealer members to submit requests for business changes, along with a webcast to introduce the new template and review the business change notification requirement.

Current Proficiency Requirements. Currently, there are no changes to proficiency requirements as a result of the SRO consolidation. The Interim Rules do not require individuals to complete the CPH to be approved to deal in mutual funds only, even if they are an employee of a firm registered as both an investment dealer and a mutual fund dealer.

Proficiency. There have been no changes to proficiency requirements as a result of the SRO consolidation. CIRO is considering requiring mutual fund dealer representatives to complete a conduct and practices course.

Canadian Investment Regulatory Organization (CIRO)

On July 13, 2023, CIRO released a Rules Bulletin to help dealer members update their membership disclosures from MFDA or IIROC names and logos, to the CIRO name and logo, by the deadline.

Canadian Investor Protection Fund (CIPF)

Canadian Investment Regulatory Organization (CIRO). All investment dealers, mutual fund dealers and dual registrants have until December 31, 2024, to comply with the membership disclosure policy.

All investment dealers, mutual fund dealers and dual registrants have until December 31, 2024, to comply with the membership disclosure policy.

Canadian Investor Protection Fund (CIPF). Mutual fund dealers are now subject to the CIPF membership disclosure policy. Existing members have until December 31, 2024, to comply.

On August 3, 2023, CIRO together with the CSA released Joint Canadian Securities Administrators / Canadian Investment Regulatory Organization Staff Notice 31 – 363 Client Focused Reforms: Review of Registrants’ Conflicts of Interest Practices and Additional Guidance, which summarizes their review and provides additional guidance on conflicts of interest practices by registrants.

Client Research Project. On August 4, 2023, CIRO released a bulletin stating they will request investment dealers and mutual fund dealers to provide detailed information on the investments held by their retail clients for the purpose of producing a Client Research Report. This is a continuation and expansion of the project undertaken in the past by the Mutual Fund Dealers Association (MFDA). CIRO intend to contact Dealer Members with significant retail investor holdings to obtain feedback, recommendations, and advice on how to make the report as beneficial as possible, and the process of collecting data, as efficient as possible.

allow Dealer Members and Approved Persons to better understand the proficiency expectations and potentially play a more active role in meeting those standards and maintaining the competence of Approved Persons.

Continuing education. There are no changes to the former IIROC and MFDA continuing education cycle and programs for the interim period. Harmonization may occur in the future.

Proposed Registration and Proficiency Amendments. On Aug. 31, 2023, CIRO released for comment Proposed Clarifying Amendments to Registration and Proficiency Requirements in the Investment Dealer and Partially Consolidated Rules (IDPC Rules). Comments are requested by Oct. 2, 2023.

Investment Dealer Anti-Money Laundering Compliance Guidance. On Aug. 16, 2023 CIRO released updated guidance to assist investment dealers with their AML/ATF obligations. In the Guidance, CIRO outline the AML/ATF regulatory requirements and expectations applicable to Investment Dealers. They also include links to resources to assist Investment Dealers in meeting their obligations.

Proposed amendments published to facilitate move to T+1 settlement.

Quebec. The transition period for mutual fund dealers in Quebec to move from AMF oversight to CIRO oversight will end when the CIRO harmonized rule book is implemented. See Quebec Considerations for more details.

Financial advisor title. CIRO is working with FSRA and the OSC to have the authority to grant credentials and permit the use of the financial advisor title in Ontario.

CIRO Annual Priorities for fiscal 2024 published.

Dual Registration Process published by New SRO and broadcast by the CSA.

New SRO name. On June 1, 2023, the new SRO was renamed the Canadian Investment Regulatory Organization (CIRO). Members must make all updates related to the new name and Membership Disclosure by December 31, 2024. Mutual fund dealers must comply with the Canadian Investor Protection Fund (CIPF) Membership Disclosure Policy by December 31, 2024.

CIRO Releases Competency Profiles for Approved Persons (Investment Dealers) On September 25, 2023 CIRO published updated Approved Person competency profiles. The previously published competency profiles were updated in response to comments received following notices published between 2020 to 2022. The updates also reflected regulatory changes made since initial publication, and address inconsistencies and improvements otherwise identified by CIRO.

CIRO Elects 14 Board Directors On September 26, 2023 at the annual general meeting of members 14 Directors were elected to the Board. The new directors will all serve a two year term.

CIRO Releases First Annual Report On September 25, 2023 CIRO released its first Annual Report. In the report CIRO outlined the progress made on its first year priorities. The report also highlights the organization's efforts to support Canadians by protecting investors, fostering healthy Canadian capital markets, and prioritizing industry transformation.

CIRO receives delegation of powers for mutual fund dealers in Quebec On October 5, 2023, the Quebec government and the Autorité des marchés financiers (AMF) approved a delegation of powers from the AMF to CIRO, which will allow CIRO to register mutual fund dealer representatives in Quebec, as well as conduct compliance examinations for mutual fund dealers with activities in Quebec. CIRO and the AMF will work on a timeline for implementation, which will include a transition period to allow Québec-registered mutual fund dealers to make the necessary systems changes to integrate into CIRO's platform. CIRO's regulatory requirements, with the exception of the rules necessary to ensure its smooth functioning, will not apply to the dealers' activities in Québec during this transition period.

Proposed Proficiency Model. CIRO released for comment a new proficiency model for Approved Persons, which reflects a shift from a course-centric model with exams tied to courses, to an assessment-centric model with some mandatory education and training. Feedback is due by September 20, 2023, with the goal of launching the new standards in 2026.

represent a proficiency benchmark allowing CIRO to evaluate course providers,

provide education service providers with guidance on content development, and

Continuing education. There are no changes to the former IIROC and MFDA continuing education cycle and programs for the interim period. Harmonization may occur in the future.

represent a proficiency benchmark allowing CIRO to evaluate course providers,

On October 12, 2023, the Joint Regulators Committee (JRC) of the Ombudsman for Banking Services and Investments (OBSI), which is comprised of representatives from the CSA and CIRO, stated that it supports the ongoing work of the CSA to provide OBSI with the authority to make binding awards. The JRC has flagged settlements in which firms settled below OBSI recommendations as an area of concern in OBSI's dispute resolution process, and has observed a rise in complaints regarding restricted dealers and crypto assets as well as mutual funds and issues of suitability. These will likely be priorities for OBSI going forward.

Request for Feedback on December 2022 SEC Market Structure Proposals and Potential Impact on Canadian Capital Markets - On October 19, 2023 the CSA and CIRO released a Staff Notice requesting comment on significant market structure proposals under consideration by the SEC. The SEC proposals will have a likely impact on Canadian Markets. The CSA and CIRO are seeking stakeholder feedback. The comment period is open until December 4, 2023.

Rule Consolidation Project – Phase 1 - On October 20 2023, CIRO released for comment Phase 1 of the proposed changes to harmonize the two rule sets currently applicable to investment dealers and to mutual fund dealers into one set of rules. The Phase 1 changes deal principally the items covered in Rule 1000 of the current investment dealer rules, and, they relate to interpretation, definitions, exemptions and general standards of conduct. The comment period is open until December 19, 2023.

On October 12, 2023, the CSA and CIRO jointly published CSA Staff Notice 31-364, which serves as the Annual Report of the Joint Regulators Committee (JRC) of the Ombudsman for Banking Services and Investments (OBSI). The JRC comprises representatives from the CSA and CIRO and was formed with a mandate to facilitate information sharing and monitor the OBSI's dispute resolution process. The report outlines the activities and initiatives conducted by OBSI in 2022, including its progress toward creating an authority framework that would allow it to make binding awards.

Membership Disclosure — CIRO Official Brochure On October 19, 2023 CIRO announce the availability of a revised Official Brochure, reflecting new content relevant to all dealer members and CIRO branding. Member dealers may begin to provide the new brochure to clients at any time. Investment dealer members will be required to distribute the new brochure by December 31, 2024. At present, there is no mandatory transition date upon which mutual fund dealers will be required to provide the CIRO Official Brochure. The new brochure can be found here.

Canadian Investment Regulatory Organization (CIRO)

By-law No. 1 sets out the constitution and general operating structure for CIRO.

CIRO has published an update on its rule consolidation project. To date, it has been determined that the draft consolidated rules will be organized and numbered in the same manner as the Investment Dealer rules, a standard approach will be used to draft each consolidated rule requirement, the rules will be drafted in plain language, and changes will be published in five phases over the next two years. CIRO’s goal is to minimize stakeholder disruption.

CIRO has published FAQs to help interpret the interim rules. A harmonized rule book has been promised, however there is no clear timeline for implementation.

CIRO has initiated a project to harmonize the mutual fund dealer and investment dealer rules. CIRO estimates that it will take two years for staff to develop consolidated rules and publish them for public comment. However, the time taken by CSA staff to review and approve these rules for implementation will add to the timeline for this project.

CIRO Rule Consolidation Project: The journey begins - On July 21, 2023 BLG and AUM Law published an article summarizing process adopted by CIRO for harmonizing the investment dealer and mutual fund dealer rules.

On November 30, 2023 the Canadian Securities Administrators (CSA) set out a proposed regulatory framework for an independent dispute resolution service whose decisions would be binding. Under the proposed framework, it is expected that the Ombudsman for Banking Services and Investments (OBSI) would be the designated or recognized independent dispute resolution service for the investment industry. British Columbia Securities Commission (BCSC) supports the intended outcomes but is not participating in the proposal as it is considering legislative changes that may achieve the same results. Autorité des marchés financiers (AMF) already provides conciliation and mediation services to consumers of financial products and services and is participating in the consultation by proposing to maintain the dispute resolution exemption applicable to Quebec-registered firms. There is a 90-day comment period, and stakeholders are invited to provide comments in writing on or before February 28, 2024.

Rule Consolidation Project – Phase 2 - On January 11, 2024, CIRO released for comment Phase 2 of the proposed changes to harmonize the two rule sets currently applicable to investment dealers and to mutual fund dealers into one set of rules. The Phase 2 changes concern rules to be retained that are unique to the IDPC or MFD Rules and have been assessed as not having a material impact on stakeholders. The Phase 2 Proposed DC Rules involve the adoption of rules relating to margin, debt markets and Inter-Dealer Bond Brokers (IDBBs), and trading. The comment period is open until March 11, 2024.

CIRO Approved for Financial Advisor Title Use - On January 23, 2024. the Financial Services Regulatory Authority of Ontario (FSRA) approved the Canadian Investment Regulatory Organization (CIRO) as a credentialing body under Ontario's Financial Professionals Title Protection Act, 2019 (FPTPA). CIRO now has the authority to grant credentials that permit individuals to use the Financial Advisor title in Ontario. The categories of individuals approved by CIRO, that may use the Financial Advisor title are: Registered Representative; Mutual Fund Dealing Representative; Portfolio Manager; and Associate Portfolio Manager.

On December 6, 2023 the CSA and CIRO released an updated Client Focused Reforms FAQ, consisting of new guidance (starting at Q.43) on Advisor Ranking Contests/Lists.

On December 21, 2023 CIRO released Harmonized Sanction Guidelines and Enforcement Staff Policy Statements, which replace the previous versions from IIROC and the MFDA. The Sanction Guidelines set out the general principles and key factors for determining an appropriate sanction in enforcement matters. The Enforcement Staff Policy Statements provide stakeholders with policy guidance regarding enforcement issues.

On January 9, 2024, CIRO announced they will be moving their office, and as of February 12, 2024, they will be located at 40 Temperance Street, Suite 2600, Toronto ON M5H 0B4. The move is part of a strategy to come together as one organization following the amalgamation of the former IIROC and MFDA.

On December 21, 2023 CIRO released Harmonized Sanction Guidelines and Enforcement Staff Policy Statements, which replace the previous versions from IIROC and the MFDA. The Sanction Guidelines will be effective February 1, 2024, and set out the general principles and key factors for determining an appropriate sanction in enforcement matters. The Enforcement Staff Policy Statements provide stakeholders with guidance regarding CIROs approach to: Credit for Cooperation, Early Resolution Offers, Suspensions and Permanent Bars, and Internal Discipline by a Dealer Member

On November 23, 2023, CIRO and the Chambre de la sécurité financière (CSF) announced that they have agreed to exchange Continuing Education (CE) course completion information for individuals who are subject to both CIRO’s Mutual Fund Dealer CE Program and the CSF’s CE Program requirements, which will reduce the duplication of reporting efforts for these individuals. The CSF has agreed to provide CIRO with reporting of individuals who have completed the CSF CE requirements. CIRO will use this information to evidence completion of the CIRO Professional Development and Business Conduct credits. Participants will still need to complete their CIRO MFD Compliance Credits. CIRO will also provide the CSF with information on those individuals who have completed their CIRO MFD Compliance Credits, which will be applied towards their requirements as a participant in the CSF CE Program.