When regulators come knocking in 2014, make sure you’re ready.
To prepare, take a look at IIROC’s 2013/2014 compliance report, which reveals several key areas the regulator will focus on in the coming year. This includes the following three categories:
1. Firm operations
IIROC will focus on balance sheet leverage, liquidity and outsourcing.
2. Surveillance and trading conduct
The commission will assess how firms are dealing with unreasonable and erroneous trades, electronic trading requirements and best execution.
3. Business conduct
IIROC will review CRM implementation, members’ outside business activities and social media use at firms.
Read: 10 tips for surviving compliance reviews
In the report, the regulator also discusses its part in the OSC mystery shop project, which was announced as part of OSC’s draft statement of priorities in April 2013. IIROC says the purpose of the project is to evaluate the quality of investment advice being provided to Ontario retail investors. Both commissions want to “gain first-hand knowledge of investors’ experiences.”
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What’s more, IIROC highlights the results of its targeted reviews over the past year. The regulator examined the use of items such as non-arm’s length products, advisor designations, third-party risk controls and stop-loss orders.
Read: Help clients understand your title
Overall, the commission found there were deficiencies related to how members handled:
- books and records;
- margin requirements for dealers engaged in underwriting;
- internal controls related to risk-adjusted capital calculations and intra-day inventory trading limits;
- the safekeeping and custody of assets;
- wash trades;
- the monitoring of deceptive practices;
- client complaints; and
- the sale of private placements to accredited investors.
Read more on IIROC’s assessment of the industry and how you can better meet member requirements.
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