IIROC Proposes Prohibiting OES Dealers From Providing OES to Registered Dealers

September 11, 2018

On July 26, 2018, the Investment Industry Regulatory Organization of Canada (IIROC) proposed amendments to its Dealer Member Rules that would prohibit Dealer Members that provide order execution only services (OES Dealers) from providing OES to a client that is a registered dealer. The amendments would also require OES Dealers to assign unique identifiers to registered advisers and foreign adviser equivalents that have been granted trading authority, direction or control over an OES account. Definitions for “adviser” and “foreign adviser equivalent” would also be added to the Dealer Member Rules.

According to IIROC, permitting registered dealers to conduct investment dealer-type activity through an OES without IIROC oversight is inconsistent with the requirements for other electronic access channels and provides an opportunity for regulatory arbitrage.

Under the proposed amendments, registered dealers would still be able to trade through a Participant on an intermediated basis, or could register as an investment dealer and IIROC member and trade through a routing arrangement.

IIROC is accepting comments on its proposals until October 24, 2018. For more information, see IIROC Rules Notice 18-0141.

DISCLAIMER: This publication is intended to convey general information about legal issues and developments as of the indicated date. It does not constitute legal advice and must not be treated or relied on as such. Please read our full disclaimer at www.stikeman.com/legal-notice.

Stay in Touch with Knowledge Hub