Investor Alert:
CIRO is issuing a warning to Canadian investors regarding Canada Token Trade.
Effective Date: December 31, 2021
IIROC is publishing guidance on our procedures for granting exemptive relief regarding bulk account movements, pursuant to section 4866 of the IIROC Rules,1 (the Guidance).
The Guidance incorporates our existing internal exemption practices and seeks to:
This Guidance deals primarily with bulk account movements between two Dealers, as opposed to between a Dealer and another securities registrant such as a portfolio manager or a mutual fund dealer. Please speak with your Business Conduct Compliance or Financial Operations Compliance manager about bulk account movements involving non-Dealers as there may be additional considerations not contemplated by this Guidance.
Rule 4800, Part B.1, which govern account transfers, defines an “account transfer” as a transfer of a client account from one Dealer to another Dealer at the request of or with the authority of the client.3 In contrast, we consider bulk account movements to be movements of multiple client accounts as a result of a change in the parties responsible for the account that do not require the prior approval or authorization of the clients.
We consider the following types of changes to result in bulk account movements that may qualify for exemption under section 4866:
where there is a change in the Dealer or Dealers responsible for maintaining the impacted client accounts.
No, because the account transfers take place at the request or prior approval of the client. In contrast, account movements are not initiated by the client and do not require their prior approval.
Pursuant to section 4866, IIROC Staff can grant exemptive relief to Dealers from the obligation to complete the applicable account opening requirements of the IIROC Rules within the timeline set out in the rules, provided that IIROC Staff is satisfied that doing so would not be prejudicial to the interest of clients, the public or Dealers.
More specifically, IIROC Staff has the authority to provide relief to Dealers from the applicable timelines on a number of account opening requirements, such as the requirement:4
(referred to as the Repapering Requirements).
We intend to grant exemptive relief for bulk account movements for a limited amount of time, which we will determine based on the nature and complexity of the transaction.
The receiving Dealer should submit the application, as they are the Dealer to whom we will be granting exemptive relief from the Repapering Requirements.
The receiving Dealer should submit the application to our General Counsel’s Office.
When requesting exemption for a bulk account movement under section 4866, Dealers should submit a written request which includes all relevant information about the account movement, such as:
Dealers should also consider addressing the following questions in their applications for exemptive relief:
If so, we encourage Dealers to provide us with an external legal opinion that addresses this question for each of the agreements the existing Dealer has with its clients, including its:
If the agreement(s) are assignable to the receiving Dealer, the Dealer should advise us as to any applicable conditions for such assignment, such as the agreement is:
Only IIROC senior staff authorized by the IIROC Board of Directors to grant exemptive relief for bulk account movements pursuant to section 4866, has authority to do so.
We will grant an exemptive relief to the receiving Dealer in writing. We will generally only grant relief from the Repapering Requirements applicable to the specific bulk account movement. For example, if the receiving Dealer will not be opening options or futures contract accounts for the impacted clients, we will not grant them relief from the Repapering Requirements relating to those account types.
We will likely include certain conditions for the relief, such as:
IIROC Rules this Guidance relates to:12
This Guidance Note replaced Notice 21-0079 - Exemption Procedure for Bulk Account Movements.
This Guidance was published under Notice 21-0190 - IIROC Rules, Form 1 and Guidance.