Compliance Reviews and Reports

Risk Models

The business conduct, financial and operations and trading conduct compliance teams use harmonized risk models to help assess the risk of and prioritize the review of our Dealers, including the review of business locations as part of business conduct examinations.

It is important that we assess the risk of our Dealers consistently as it is:

• the basis for allocating compliance resources
• used to determine the Dealer’s examination cycle and inform the scope of compliance examinations.

Annual Risk Questionnaire (ARQ)

The Compliance teams ask our Dealers to complete an ARQ to create efficiencies and eliminate duplication of requests for information.

The information requested is necessary to assess the compliance risk of the Dealer and is also used as part of our regular examination planning process.

The ARQ seeks to capture material changes that have occurred at our Dealers in the past year including changes to business lines, relationship/arrangements, governance, operational and supervisory controls relating to the financial and operations, business and trading conduct (where applicable) activities at the firm. The ARQ can also be used as a tool for CIRO to assess how our Dealers react to trends or have addressed new or recent amendments to CIRO and/or CSA rules and reforms.

Risk Trend Reports (RTRs)

RTRs are issued to all Dealers every 3 years and to high-risk Dealers annually. The report provides a high-level assessment of the risk of a Dealer in relation to its peers and the industry, along with key recommendations on how it can reduce its risk with respect to its business conduct, financial and operations and trading conduct compliance. The objective of RTRs is to encourage Dealers, particularly those designated as high-risk, to strengthen their governance, internal controls, and risk-management practices.

The RTR informs Dealers of their risk ranking and their respective examination cycle.

Examination Cycles

Based on a Dealer’s risk rating and pre-determined impact factors, their examination cycle will vary. Dealers assessed with a higher-risk score and impact score are examined on a shorter cycle than Dealers assessed with a lower-risk score and impact score. Each compliance area uses a one- to four-year cycle.

Compliance Examinations

Using a risk-based approach, the Compliance teams schedule and conduct examinations of Dealers to assess compliance with CIRO Rules and applicable securities legislation. We focus on those Dealers and/or activities that present heightened regulatory risk. After each review is complete, we issue a report to the Dealer regarding their compliance, highlighting the areas that they need to address, improve or change.

The Compliance teams also work closely with Market and Member Regulation Policy teams on rulemaking and guidance, and with the Enforcement team which investigates potential cases of wrongdoing.

Annual Compliance Priorities Report

Each year, CIRO issues a Compliance Priorities Report. This report highlights Compliance’s areas of focus including common exam deficiencies and emerging issues to help Dealers and registered individuals establish and maintain a strong culture of compliance.