On June 21, the Investment Industry Regulatory Organization of Canada (IIROC) released proposed guidance intended to assist dealers in understanding and complying with new know-your-client (KYC) and suitability determination requirements set to take effect on December 31, 2021.
As we discussed most recently in a March 2021 post, the Canadian Securities Administrators have adopted amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and its Companion Policy known as Client Focused Reforms (CFRs), which are intended to help ensure that the interests of the client come first in the client-registrant relationship. While some of the rules, such as those regarding conflicts of interest and referral arrangements, will come into effect on June 30, 2021, new KYC rules to require firms to collect an expanded list of information, and changes to the suitability determination rules, among others, will take effect on December 31, 2021.
The proposed guidance would, among other things, provide IIROC's interpretation of the CFR amendments, including its expectations and views on acceptable practices relating to the collection of KYC information, and how dealers can meet enhanced suitability determination obligations, and IIROC's interpretation of new terms, including the phrase "put the client's interest first". The proposed guidance would also clarify the principle that KYC is not "one-size-fits-all", including, through examples of the information dealers may want to collect, depending on their business model and clients. Finally, the proposed guidance would reflect updated requirements under IIROC Rules.
The proposed guidance would replace the current guidance set out in IIROC Notice 12-0109 of March 2012. IIROC is accepting stakeholder comment on the proposed guidance until August 20, 2021.
For more information, see IIROC Notice 21-0111.
Originally published 30 June 2021
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