Competency Profiles for Approved Persons (Investment Dealers)
Over the last few years, the Canadian Investment Regulatory Organization (CIRO), through one of its predecessor organizations, the Investment Industry Regulatory Organization of Canada (IIROC), has worked on developing and publishing competency profiles for all its (investment dealer) Approved Person categories. The competency profiles were published in three phases. In 2020, we published a consultation paper on the first phase of this project, which involved the development of competency profiles for our Registered Representative (RR) and Investment Representative (IR) categories (the 2020 Notice).1 In 2021, we published phase II competency profiles for our Director, Executive, Ultimate Designated Person (UDP), Chief Compliance Officer (CCO) and Chief Financial Officer (CFO) categories (the 2021 Notice).2 Last year, we published phase III competency profiles for our Supervisor, Trader, and Associate Portfolio Manager (APM) and Portfolio Manager (PM) categories (the 2022 Notice).3
The competency profiles have since been updated in response to the comments received, where appropriate. They have also been updated to reflect regulatory changes since their initial publication, and to address inconsistencies and opportunities for improvements otherwise identified. We are publishing this Notice with the updated copies of the competency profiles.
- 1 IIROC Notice 20-0174 Consultation Paper- Consultation Paper - Competency Profiles for Registered Representatives and Investment Representatives, Retail and Institutional | IIROC
- 2 IIROC Notice 21-0153 Consultation Paper (Phase II) - Competency Profiles for Directors, Executives, Ultimate Designated Persons, Chief Compliance Officers, and Chief Financial Officers | IIROC
- 3 Consultation Paper (Phase III) - Competency Profiles for Supervisors, Traders, Associate Portfolio Managers and Portfolio Managers | IIROC
CIRO, through one of its predecessor organization IIROC, committed to setting and publishing competency standards in order to strengthen and enhance confidence in its proficiency regime. The background relating to the decision to develop and publish competency profiles for all IIROC Approved Persons, and the structure of the various phases, was fully discussed in the 2020 Notice. Additional information relating to the various competency profiles were set out in the 2021 Notice and 2022 Notice.
We are publishing this Bulletin to provide updated copies of the competency profiles. The previously published competency profiles and related reference documents have been updated in response to comments received following the notices published between 2020 to 2022. Updates also reflect regulatory changes since their initial publication, and address inconsistencies and opportunities for improvements otherwise identified.
Similar to the approach outlined in the previous notices, this phase of the project also involved participation across multiple departments, and external industry committees and groups. The updates did not result in substantive changes to the previously published competency profiles although we made a number of changes to the language and structure of the profiles for consistency among the profiles and alignment with the regulatory requirements. These are further discussed in section 4 below.
Purpose of published competency profiles
A competency profile is generally a set of knowledge, behaviour and skills that an individual must have to preform effectively in their role.
As stated in the previous notices, the publication of competency profiles will:
- represent a proficiency benchmark allowing us to evaluate course providers,
- provide education service providers with guidance on content development, and
- allow Dealer Members and Approved Persons to better understand the proficiency expectations and potentially play a more active role in meeting those standards and maintaining the competence of Approved Persons.
In the previous notices, we committed to publishing the final competency profiles for all approval categories well in advance of the expiry of the contract with the Canadian Securities Institute (CSI), our current education service provider.4 We recognize that the profiles may need to be updated from time to time to reflect updated regulatory requirements. At this time, we are not planning on publishing another update prior to December 31, 2025 although we will continue to assess the impact of other initiatives on the published competency profiles in order to determine whether further updates may be required before this date. We also plan to update the competency profiles periodically, going forward.
On October 11, 2022, we published a Request for Expression of Interest (REOI)5 for prospective education services vendors. We plan to publish a Request for Proposal (RFP), later this year. As noted in the REOI, one of the primary purposes of the competency profiles is to provide vendors with information to support education content and examination development. We are of the view that the updated competency profiles, and related reference documents, published with this Bulletin provide the relevant information to vendors.
Publication of competency profiles
Approach to updating competency profiles
Given the volume and complexity of the categories involved, the competency profiles were developed in three phases over the course of a few years:
- Phase I: RRs and IRs (published for comment on August 18, 2020)
- Phase II: Executives, Directors, UDPs, CCO, and CFOs (published for comment on August 31, 2021)
- Phase III: Supervisors, Traders, APMs and PMs (published for comment on August 29, 2022)
We reviewed the competencies, sub-competencies, and reference documents in all phases in order to:
- Address comments received in response to the consultation paper(s) where appropriate,
- Incorporate regulatory changes since the profiles were initially published, and
- Ensure consistency among the different competencies, sub-competencies, and reference documents.
We received a total of 8 comment letters for the 2020 Notice, 2 for the 2021 Notice and 4 for the 2022 Notice. We have also included in Appendix 19 our responses to the comment letters received on the previously published competency profiles.
Participants & Consultation
We recognize the need to engage a diverse group of subject-matter experts to assist in the development of competency profiles. The participants varied depending upon the category under consideration.
In addition to our internal review and consultation, we consulted externally with the Proficiency Committee, as well as the relevant Conduct, Compliance and Legal Committee (CCLS) and Financial Operations Advisory Section (FOAS) sub-committees.
Amendments to the previously published profiles
We have included updated competencies, sub-competencies and reference documents for each of the previously published profiles as set out in appendices 1-18. Our review and updates include the following:
- We reviewed and updated the competencies, sub-competencies and reference documents in response to comments, where appropriate.
- We also updated the competencies to reflect recent regulatory changes including:
- SRO consolidation,
- Client Focused Reforms,
- Registration Information Modernization,
- Derivatives Modernization (proposed) Rules
- We made updates in the competency and sub-competency name and organization, and details of reference documents to provide clarity, better reflect the regulatory requirements, and ensure consistency among the various profiles. Our updates include the following:
- Name and characterization of the retail RR and IR competencies and sub-competencies, and updated the reference document for better alignment with other competency profiles, and with regulatory changes including the areas of account appropriateness, know-your-client, suitability, know-your-product, conflicts and misleading communication.
- Name and characterization of institutional RR and IR competencies and sub-competencies and updated the reference document for better alignment with other competency profiles, and with regulatory changes and consistency with the other profiles. This included updates to the conflicts of interest, and conduct and compliance related sub-competencies.
- Better alignment with regulatory changes including conflicts of interest and acting in the best interest of the clients in the APM and PM competencies. In response to comments received, we added references to personal preferences or values of the client as part of the knowledge for investment constraints and portfolio restrictions.
- New Ethics, Conflicts of interest and Confidentiality sub-competency for Traders in response to feed back received.
- Expanded on fixed income products related sub-competencies for Traders.
- Ethics and risk management sub-competency updates for Directors, Executives and UDPs to improve alignment with relevant compliance oversight obligations over dealer operations, lines of business, significant areas of risk, and employees which include specific requirements towards Approved Persons.
- Aligned complaint-handling sub-competencies between Supervisor and CCO competency profiles.
- Updated the sub-competency relating to CCO duties and expanded on client-focused reform changes that affect the sub-competencies relevant to compliance oversight of the dealer and its Approved Person.
- Name and characterization of the Supervisor sub-competencies and updated the Supervisor sub-competencies relating to supervision of Approved Persons engaged in trading.
As noted in the REOI, we plan to initiate the RFP process in the fall that will eventually lead to the selection of education service providers. We plan to select the education service providers well in advance of the expiry of the CSI contract on December 31, 2025 in order to ensure sufficient transition and implementation periods.
We separately published a consultation paper on a proposed proficiency model approach. Subject to the feedback received, this model will inform the elements of the RFP process.
Along with the process to finalize the proficiency model and the procurement process, Staff will also conduct a review of the relevant proficiency rules to determine what, if any, changes need to be made to the existing Investment Dealer and Partially Consolidated Rules. We will then proceed with bringing back to the Board, by June 2024, proposed rule amendments to reflect our proposed proficiency model. As part of the consultation process, we will consult the Canadian Securities Administrators with any alignment that may be needed.
Applicable Rules- Investment Dealer and Partially Consolidated Rules
Rule 1200 - Definitions of Approved Person, Registered Representatives, Investment Representatives, Chief Compliance Officer, Chief Financial Officer, Director, Executive, Ultimate Designated Person, Supervisor, Trader, Associate Portfolio Manager, Portfolio Manager
Rule 2553- Approval of Registered Representatives, Investment Representatives, Portfolio Managers, Associate Portfolio Managers and their obligations
Rule 2600- Proficiency requirements and exemptions from proficiency requirements
Appendix 1 - Competency Profile- Retail Registered Representatives and Investment Representatives
Appendix 2 - Competency Profile- Institutional Registered Representatives and Investment Representatives
Appendix 3 - Competency Profile- Directors
Appendix 4 - Competency Profile- Executives
Appendix 5 - Competency Profile- Ultimate Designated Persons
Appendix 6 - Competency Profile- Chief Compliance Officers
Appendix 7 - Competency Profile- Chief Financial Officers
Appendix 8 - Competency Profile- Supervisors
Appendix 9 - Competency Profile- Traders
Appendix 10 - Competency Profile- Associate Portfolio Managers and Portfolio Managers
Appendix 11 - Reference document for competency profile- Retail RR and IR
Appendix 12 - Reference document for competency profile- Institutional RR/IR
Appendix 13 - Reference document for competency profiles- Directors, Executives and Ultimate Designated person
Appendix 14 - Reference document for competency profile- Chief Compliance Officer
Appendix 15 - Reference document for competency profile- Chief Financial Officer
Appendix 16 - Reference document for competency profile- Supervisors
Appendix 17 - Reference document for competency profile- Traders
Appendix 18 - Reference document for competency profile- Associate Portfolio Managers and Portfolio Managers
Appendix 19 - Response to comments on previously published competency profiles
- 4The contract renewal with the Canadian Securities Institute was discussed in: IIROC to consult on competency profiles for registered and investment representatives | IIROC
- 5Request for Expression of Interest (REOI) For Education Services (iiroc.ca)