Self-regulatory organizations (SROs)
The following organizations have been given the power and responsibility
to regulate the activities of their members:
IIROC carries out its regulatory responsibilities through setting
and enforcing rules regarding the proficiency, business and financial
conduct of dealer firms and their registered employees and through
setting and enforcing market integrity rules regarding trading activity
on Canadian equity marketplaces. To fulfill our mandate as a national
self-regulatory organization, we must act with integrity, transparency
and fairness.
What IIROC does:
- Writes rules that set high regulatory and investment
industry standards.
- Screens all investment advisors employed by IIROC-regulated
firms to ensure they are of good character, are properly trained
and have successfully completed all the required educational courses,
background checks and programs.
- Conducts financial compliance reviews and sets minimum
capital requirements to ensure that firms have enough capital for
the specific nature and volume of their business. This reduces the
possibility of firms failing by preventing excessive leverage and
risky business practices. (IIROC-regulated firms also participate
in the Canadian Investor Protection Fund which protects individual
investors in the unlikely event that a firm should go bankrupt.)
- Conducts business conduct compliance reviews to check
that firms have procedures in place to properly supervise the handling
of client accounts and that advice and transactions appropriately
reflect the client’s needs and instructions. IIROC-approved
advisors must follow suitability and “know your client” rules
by being familiar with a client’s financial situation, investment
needs, objectives, investing experience and tolerance for risk.
- Conducts trading conduct compliance reviews to check
trading firms' trade-desk procedures. The reviews assess whether
trade-desk procedures comply with the Universal Market Integrity
Rules (UMIR) and applicable provincial securities law.
- Conducts market surveillance and trading review analysis
to ensure that trading is carried out in accordance with UMIR and
applicable provincial securities law.
- Investigates possible dealer or marketplace misconduct
by its dealer firms, approved persons and other market participants
and can bring disciplinary proceedings which may result in penalties
including fines, suspensions and permanent bans or terminations for
individuals and firms. (Money from fines and settlements is contributed
to IIROC’s restricted fund, which IIROC uses to fund capital
expenditures necessary to address emerging regulatory issues, projects
relating to investor and industry education, and other uses authorized
under IIROC’s Recognition Orders.)
The MFDA is
the national self regulatory organization (SRO) for the distribution
side of the Canadian mutual fund industry.
It was established in June 1998 at the initiative of the Canadian
Securities Administrators. The MFDA regulates the operations, standards
of practice and business conduct of its Members and their representatives
with a mandate to enhance investor protection and strengthen public
confidence in the Canadian mutual fund industry.
The MFDA does not regulate the funds or the fund manufacturers. That
responsibility will remain with the provincial securities commissions.
