Investor Alert:
CIRO is issuing a warning to Canadian investors regarding Canada Token Trade.
Effective Date: December 31, 2021
Each Dealer Member (Dealer) must have a Chief Financial Officer (CFO).1 Each CFO must also be approved as an Executive.2 As an Executive, the CFO must be actively engaged in the Dealer’s business.3 However, this does not need to be on a full-time basis, if appropriate for the Dealer’s business.4
A Dealer may employ a CFO on a part-time basis. The same individual may be approved by IIROC to perform the role of CFO for more than one Dealer.
This notice sets out our expectations regarding part-time CFOs5 .
The IIROC Registration department reviews and evaluates every CFO application, and consults with the IIROC Financial and Operations Compliance department staff as required.
CFO applications are reviewed based on the “fit and proper” test.6 In the case of a part-time CFO applicant, we may review the number of Dealers the applicant works for and the circumstances of those Dealers. In doing so we may ask for additional supporting documentation.
The CFO role must align with the principles set out in this notice and encompass all of the obligations and functions of a CFO and an Executive. A part-time CFO’s employment terms must not prevent them from carrying out their role and responsibilities. IIROC staff may at any time request a copy of any employment or services contract relating to the CFO.
A CFO plays an important role in ensuring investor protection. CFO’s specific responsibilities are set out in section 3913:
A CFO is responsible for the Dealer’s compliance with IIROC’s financial and operational rules. This includes:
A part-time CFO’s regulatory obligations are the same as those of a full-time CFO. The duties and responsibilities of the CFO still apply if the CFO works off-site or with multiple Dealers.
It is the responsibility of each Dealer and CFO to determine how much time the CFO should be working on-site (and, if applicable, at what intervals on-site work should be scheduled) in order to meet their regulatory obligations and the needs of the business. A CFO who routinely works with multiple Dealers must always be prepared to devote more time to a particular Dealer as needs and situations arise.
Whether regularly working on-site or not, the CFO would, among other supervisory responsibilities, participate in executive management meetings and inquire about and review relevant contracts, ongoing liabilities, future commitments and operational matters that may impact the Dealer’s balance sheet and capital position. Dealers must give any part-time CFO unrestricted access to their books and records.
The CFO must be apprised of all relevant commitments under consideration by the Dealer. This includes contracts under negotiation, corporate finance transactions in progress, etc. If the CFO works off-site, they are expected to be in regular communication with the Dealer, and remain current on management and financial matters.
A Dealer with a part-time CFO should continually evaluate the growth and development of the business and consider whether this continues to be appropriate for the scale and scope of their business activities.
Dealers must supervise their CFO’s activities. This applies even to part-time CFOs.
If a CFO works with multiple Dealers, each Dealer must actively manage conflicts of interest and preserve confidentiality. Dealers must implement appropriate policies and procedures to do so. The CFO must disclose to each Dealer the nature of his/her roles (in the context of the other Dealer’s business models, where relevant). For example, if a CFO works with one Dealer involved in corporate finance and another Dealer where the CFO holds an account, or sits on a research or portfolio committee, both Dealers must be aware of these roles to ensure appropriate controls are in place to manage conflicts and protect confidential information.
IIROC Rules this Guidance Note relates to:
This Guidance Note replaces IIROC Rules Notice 14-0280 - Part Time Chief Financial Officers (December 1, 2014).
This Guidance Note was published under Notice 21-0190 - IIROC Rules, Form 1 and Guidance.