On June 1, 2023, the Canadian Investment Regulatory Organization ("CIRO") released its annual priorities for fiscal 2024 (the "Annual Priorities"). The Annual Priorities reflect the initiatives CIRO will be focusing on post-amalgamation of the Investment Industry Regulatory Organization of Canada ("IIROC") and the Mutual Fund Dealers Association of Canada ("MFDA") which took place on December 31, 2022, creating the New SRO on January 1, 2023. The New SRO changed its name to CIRO on June 1, 2023. This post summarizes the significant activities and priorities that CIRO will be committed to in the upcoming year.
In addition to the ongoing delivery of CIRO's core mandate of investor protection and market integrity, CIRO will be focusing on the following eight areas for the upcoming year:
- Determine mission, vision, values, and brand for CIRO and develop their three-year strategic plan. CIRO plans on publishing its strategic plan by the end of this fiscal year and will engage in consultation with all relevant stakeholders for guidance on missions, visions, and values for the new organization. Dealer members will have until December 31, 2024 to make updates necessary to reflect the new name, CIRO, and logo where required.
- Promote the investor perspective through the Office of the Investor and Investor Advisory Panel ("IAP"). CIRO will support the IAP in developing their workplan by providing dealer members and investors with education and guidance on many sectors of investor protection requirements such as complaint handling, designating trusted contact persons and determining client risk profile.
- Harmonize their regulatory approach. CIRO seeks to harmonize its predecessor IIROC/MFDA teams and practices in the next fiscal year in the areas of compliance, enforcement, proficiency and registration, and policy. Some of the projects it proposes include aligning the exam approach with the Canadian Securities Administrators ("CSA") for Client Focused Reform phase 2 work, establishing an integrated risk model, establishing a centralized complaint intake process for investors, harmonizing continuing education requirements, developing uniform sanction guidelines, consolidating the Investment Dealer and Mutual Fund Dealer rules and proposing an approach on directed commission/personal incorporation.
- Articulate the plan for an integrated fee model. CIRO has already begun working on determining a final fee model that addresses requirements set out in the Recognition Orders and Memorandum of Understanding (see here).
- Maintain an engaged, empowered, and unified staff. CIRO has expressed its dedication to progressing Equity, Diversity, Inclusion and Anti-Racism initiatives by creating educational events and ensuring their team engages in unconscious bias training.
- Continue to deliver on the regulatory mandate and
support investors through industry and regulatory
transformation.
- CIRO will be finalizing a joint report with the CSA on the Client Focused Reforms.
- CIRO is also looking to gain legislative authority to enhance its enforcement ability.
- The proficiency and registration regime will also be enhanced as CIRO will be finalizing competency profiles for dealer approval categories.
- With regards to market surveillance, CIRO plans on continuing to build on cross-asset surveillance capability (as outlined in the 2022 Memorandum of Understanding with the Montreal Exchange), administering an industry-wide business continuity planning test, working with the CSA on the Short Selling Consultation and creating a plan for external-facing access to aggregated Market Data (Public ADP).
- CIRO will be looking to finalize and implement amendments to modernize rule requirements for derivatives that are materially harmonized with National Instrument 93-102 Derivatives: Business Conduct.
- CIRO has begun the process of implementing rule amendments to support the industry's move to T+1 trade settlement as outlined in CIRO Notice 23-0054 Amendments to facilitate the investment industry's move to T+1 settlement (see here).
- CIRO will also continue to work with the CSA on a regulatory framework for the trading and offering of crypto assets to institutional and retail clients. In April 2023, CIRO conducted a roundtable exercise with dealer members who are approved to trade in crypto-asset products and some of their key counterparties.
- CIRO's Innovation Function will be focusing on (i) continuing industry engagement to discuss the modernization of rules around back-office arrangements and subordinated debt financing and (ii) conducting stakeholder outreach to determine areas of need, growth and transformation, and identify emerging trends.
- Strengthen stakeholder relationships. CIRO seeks to continue to strengthen its stakeholder relationships and work with other regulators on areas of mutual interest. In particular, CIRO will be collaborating with the Financial Services Regulatory Authority of Ontario to support the creation of a public registry for financial advisors/planners, collaborate with other regulators on financial title protection and implement mechanisms that allow for new MFD members to integrate seamlessly in Québec.
- Demonstrate progress on the integration of corporate systems and processes. CIRO will begin implementing its year one integration plan and begin strategic planning for years two and three. As a conduct and prudential regulator, CIRO is working to ensure that it takes a risk-based approach to the conduct of its dealer members and promote a strong culture of compliance. Dealer Members, investors, and other stakeholders are encouraged to read CIRO's quarterly Policy Priorities publications for upcoming policy initiatives.
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