IIROC to Consider Exemptive Relief Applications from Firms Experiencing COVID-19 Hardships

April 6, 2020

Exemptive relief issued by the Investment Industry Regulatory Organization of Canada (IIROC) is intended to provide flexibility during COVID-19 pandemic.

On March 31, IIROC announced that it will consider applications for exemptive relief from a number of Dealer Member Rule requirements to assist firms experiencing hardships due to the COVID-19 pandemic. According to the notice, IIROC’s objective in considering such exemptions is to provide firms the flexibility to be able to continue servicing clients within a “challenging operational environment.”

Areas of Exemptive Relief

According to the notice, IIROC will consider:

  • Alternatives to obtaining a client signature (such as keeping a record of the client’s instructions) where a client is unable to provide an electronic signature and does not want to be physically present to provide a wet signature;
  • Relief from the requirement to file an Approved Person information update within 10 days, and from the normal filing period for a notice of termination;
  • Relief from the audit requirement that individual Panel Auditors be present at the physical security counts at the Dealer Member premises, provided that alternate audit procedures are performed to support an unqualified audit opinion;
  • Alternative approaches to performing pre-approvals of advertising and sales literature, and for performing pre-trade approvals for individuals requiring trade pre-clearance;
  • Providing additional time to complete daily and monthly trade reviews, as well as branch office reviews;
  • Suspending late filing fees;
  • Relief regarding margin-related matters, including allowing additional time to provide for swap contract market value deficiencies, and relief from the requirement to obtain margin from a client where a “clear client hardship situation” exists and the firm has adequate capital to provide the margin;
  • Relief in regards to the completion of Approved Person proficiency requirements;
  • Relief from the rule prohibiting using the same staff to respond to both order execution only and advisory account inquiries within the same dealer or affiliated dealers;
  • Relief from the requirement that firms ascertain the identity of an individual that controls or has direction over more than 10% of a corporation or similar entity, so long as this verification is undertaken for those individuals whose control or direction exceeds the threshold set out in federal anti-money laundering identification requirements.

Process for Requesting Relief

IIROC will consider exemption applications (by email).  Applications must describe the specific relief requested and the effects of the COVID-19 pandemic that have made the relief necessary. In order to process requests in a timely manner, IIROC has delegated discretion to certain senior staff members to assess and make decisions on individual applications.

In exercising their discretion, IIROC staff will consider whether an exemption would be prejudicial to the interests of the member firm, its clients or the public. The staff member granting the relief may impose terms and conditions considered reasonable in the circumstances. Exemptive relief will also be subject to coordinated action with members of the Canadian Securities Administrators (CSA) where similar CSA requirements exist.

Exemptive relief decisions will be communicated to the applicant by email, and applicants will have the same right of appeal as with an exemption decision issued by the IIROC Board. Exemptive relief, if available, will be granted for a period up to six months, renewable once for up to three additional months.

For more information, see IIROC Notice 20-0063.

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.

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