On August 17, the Investment Industry Regulatory Organization of Canada (IIROC) recently published New Guidance on how dealer member firms should report in writing any material changes to their business activities.
The following material changes should be reported:
The introduction of a business model, line of business, client base, service or product offering that:
- is a marked departure from the Dealer’s existing business activities, and/or
- requires the Dealer or its staff to obtain new or additional registrations or approvals (new business),
Changes to material existing or new business-related operational processes relating to order submission, trade execution, trade clearing, trade settlement or position custody functions (changes to material operational processes), or
The elimination of a business model, line of business, client base, service or product offering.
‘Materiality’ will have to be determined on a case by case basis and based on dealers’ professional judgement.
IIROC provides some examples to assist Dealers in making the determination.
The New Guidance replaces IIROC’s 2010 guidance on material change reporting. The changes will be effective as of December 31st 2021.