IIROC’s 2019 priorities include seniors, innovation

IIROC dealers could soon have authority to better protect vulnerable senior clients.

That’s because in fiscal 2019 (April 2018 to March 2019), IIROC plans to propose a safe-harbour rule, giving dealers the ability to place temporary holds on clients’ accounts where financial exploitation or diminished capacity is suspected. The plan is part of the SRO’s 2019 strategic priorities, published Monday.

In the report, the SRO says it continues to make the exploitation of seniors and vulnerable investors an enforcement priority.

In total, the report outlines 10 areas of focus where IIROC will take action in the current fiscal year. The priorities support the SRO’s objectives as outlined in its three-year strategic plan published in May 2016.

The 10th strategy—supporting industry transformation—is new this year, and reflects the rise of fintech, blockchain and digital assets.

“We expect that our efforts in this strategy will result in new, supporting priorities and multi-year initiatives across the other nine core strategies,” says IIROC in the report.

Regarding the strategy, the SRO says it will prepare to regulate blockchain applications and digital assets. “We have formed a working group that will build on IIROC’s knowledge and recommend a potential regulatory response,” says the report.

IIROC will also complete an industry consultation on the evolution of advice, and identify improvement opportunities: the SRO is collaborating with Accenture to study a cross-section of industry participants in relation to regulation and innovation.

“Our goal is to facilitate innovation and accommodate changes in business models to meet investor needs,” says the report.

Read: How regulators are adapting to robo growth

Related to market supervision, IIROC says its new surveillance system, which will enable cross-product and cross-asset surveillance, will be fully implemented in fall 2018.

Read: Regulators talk tech, with tips for dealers

Here are priority highlights from IIROC’s other strategies:

• Policy development—IIROC says it will issue additional guidance on compensation-related conflicts, and align with CSA on recently proposed client-focused reforms and ban on deferred sales charges.

Read: What’s loved and loathed about CSA’s latest proposals

• Enforcement—The SRO will continue to pursue additional power, protections and tools, including the ability to require cooperation at disciplinary hearings from individuals and entities not under IIROC jurisdiction (a power already granted in Alberta and P.E.I.).

Read: How new Quebec legislation boosts IIROC enforcement

• Conduct and prudential supervision—The SRO plans to implement improved trading and business conduct compliance risk models, which measure, respectively, the relative likelihood of a dealer failing to uphold market integrity and the relative potential harm to investors. IIROC will “test and implement enhancements to those models” during the fiscal year, the report says.

There will also be a second self-assessment to improve dealers’ cybersecurity preparedness, and a final rule on requiring dealers to report cybersecurity incidents.

For small and medium-sized dealers in Toronto and Calgary, “table-top exercises” will be conducted to simulate cybersecurity breaches.

• Investor awareness—IIROC will continue to rebuild its website to improve user experience.

Read: SIPA to regulators: Fix advisor registration sites, titles

Related to other strategies, IIROC says it will continue to work with other regulators to reduce regulatory arbitrage and increase information sharing.

For more details, read IIROC’s priorities report for fiscal 2019.

Also read:

IIROC now responsible for debt statistics reporting

OSC’s ‘slow’ pace on priorities irks investor groups