Investor Alert:
CIRO is issuing a warning to Canadian investors regarding Canada Token Trade.
IIROC is publishing for comment proposed amendments (Proposed Amendments) to the Universal Market Integrity Rules (UMIR) and the Dealer Member Rules (DMR) that would require Dealer Members to report client identifiers to IIROC.
We originally published proposed amendments relating to Client Identifiers on May 17, 2017 (Initial Proposal) to solicit feedback from the industry and received eight comment letters. Appendix F provides a summary of the public comments received and our responses. In our Initial Proposal, we committed to revising the Initial Proposal and publishing for another comment period.
If approved, the Proposed Amendments would require client identifiers and/or certain designations on:
Where a client identifier is required, Dealer Members would need to provide:
In order to enhance our surveillance capacity, the Proposed Amendments would also require a unique identifier for each client of a foreign dealer equivalent whose orders are both:
In this case, the Participant would need to provide:
Entity |
Information to be included as part of the order in equity securities |
Participant |
Participant number |
Routing arrangement client that is a foreign dealer equivalent |
LEI of foreign dealer equivalent |
Client of foreign dealer equivalent whose orders are automatically generated on a predetermined basis |
Unique identifier |
Impacts
IIROC acknowledges that the impacts of the Proposed Amendments on Dealer Members, marketplaces, investors and vendors may be significant. We expect these impacts would include:
As part of the comment process, we request specific comments on the following aspects of the Proposed Amendments:
The text of the Proposed Amendments is set out in Appendix A and a blackline of the changes is set out in Appendices B, C, D and E. If approved, the Proposed Amendments would be effective on the following days after publication of the Notice of Approval:
The Dealer Member Rules are undergoing a plain language rewrite (PLR).1 Clean and black-lined copies of the Proposed Amendments to the current Dealer Member Rules (DMR) are provided in Appendix C. Clean and blacklined copies of the proposed PLR sections are provided as Appendix D.
If the Proposed Amendments are approved and implemented prior to the implementation of PLR, the changes to the DMR as outlined in Appendices A and C will come into effect.
If the Proposed Amendments are approved and implemented after the implementation of the PLR, the changes to the plain language version of the DMR as outlined in Appendices A and D will come into effect.
How to Submit Comments
We request comments on all aspects of the Proposed Amendments, including any matter that they do not specifically address. Comments on the Proposed Amendments should be in writing and delivered by September 26, 2018 to:
Theodora Lam
Policy Counsel, Market Regulation Policy
Investment Industry Regulatory Organization of Canada
Suite 2000, 121 King Street West
Toronto, Ontario M5H 3T9
e-mail: [email protected]
A copy should also be provided to the CSA by forwarding a copy to:
Market Regulation
Ontario Securities Commission
Suite 1903, Box 55, 20 Queen Street West
Toronto, Ontario M5H 3S8
e-mail: [email protected]
Commentators should be aware that a copy of their comment letter will be made publicly available on the IIROC website at www.iiroc.ca. A summary of the comments contained in each submission will also be included in a future IIROC Notice.
We committed in the Initial Proposal to revising and publishing the proposal for an additional comment period. We also struck an industry working group composed of representatives from Dealer Members, vendors, marketplaces and the CSA (Working Group). We have been working with this group since July 2017 to gain their feedback and discuss how best to revise our Initial Proposal. We have included a summary of the working group discussion in section 6 of this Notice.
We initially proposed the following requirements in May 2017:
Based on the comments we received and the additional consultation with our Working Group, we have revised the Initial Proposal as outlined below.
In order to leverage off of existing systems, we would:
We have revised the proposal to reduce the scope of clients that would need to use an LEI as the client identifier:
Who would use an LEI |
Who would use an account number |
|
Debt securities |
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Equity securities |
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|
Debt securities
For transaction reporting in debt securities:
The data elements for the Customer LEI and the Customer Account Identifier are currently optional under DMR 2800C Transaction Reporting for Debt Securities.5 The Proposed Amendments would change the reporting of these data elements to mandatory.
Equity securities
For orders and trades in equity securities, we would require an LEI for:
All other client orders in equity securities would use an account number.
Orders originated from accounts that are supervised under DMR 2700
We are proposing that the requirement to use an LEI be generally limited to clients whose accounts are handled through a Dealer Member’s institutional trading business where the trading activity is supervised under DMR 2700 Minimum Standards for Institutional Customer Account Opening, Operation and Supervision and not DMR 2500 Minimum Standards for Retail Customer Account Supervision. We have used this difference in supervision to delineate “institutional” from “retail” lines of business.
The purpose of basing the LEI requirement on the method of supervision of the account rather than on the definition of an “institutional customer” is to minimize the impact on Dealer Members. This approach would eliminate the need for Dealer Members to identify clients on their retail networks who meet the definition of institutional client (e.g. family trusts that meet the monetary threshold).
Orders originating from accounts that are not supervised under DMR 2700 would generally use an account number as the client identifier.
LEIs for DEA, RA and identified OEO clients
The use of LEIs for DEA, RA and identified OEO clients would replace the current practice of Dealer Members reporting the TraderIDs or account numbers with the corresponding client names to IIROC on a regular basis. Dealer Members currently attach TraderIDs for DEA and RA clients, or account numbers for identified OEO clients, on each order sent to a marketplace, and separately report those identifiers with the corresponding client names to IIROC. Since the LEI database is publicly searcheable, Dealer Members would no longer need to report the corresponding client names to IIROC.
A DEA client or identified OEO client who is ineligible for an LEI would use an account number as the client identifier. Dealer Members would continue to report the client name associated with the account number to IIROC.
LEI Renewals
For debt transaction reporting, reporting Dealer Members would continue to use an LEI under Item 14 of subsection 2.4(c) of DMR 2800C. Reporting Dealer Members would need to annually renew their LEIs to ensure that their registration status does not lapse.
For both debt and equity securities, Dealer Members would not need to ensure that client LEIs are annually renewed. One of the fundamental principles of the LEI code is its uniqueness: once it is assigned to a legal entity, it can never be re-assigned to another entity.6 Since the main purpose in requiring LEIs is to identify the client, we are focusing on whether LEIs are obtained and attached on the order where applicable, rather than whether its registration status has lapsed. However, we may revisit this requirement if we find that accurate Level 2 information7 , which is provided with renewed LEIs, would be useful for regulatory purposes.
The introduction of separate designations for DEA, RA and OEO clients would increase the level of transparency in our regulatory data. While DEA and RA clients are currently identified using TraderIDs, there is no ability to differentiate between DEA or RA clients in real-time. The new DEA and RA designations would allow IIROC staff to determine in real-time whether a client is accessing the marketplace using DEA or a routing arrangement. Similarily, the new OEO designation would flag all OEO clients in real-time.
The DEA, RA and OEO designations would be part of IIROC’s private regulatory data and would not be publicly visible.
Where an LEI is required, Dealer Members must initially verify that the LEI reported by the client is accurate. Dealer Members can use the publicly accessible LEI database to verify whether the client is reporting the correct LEI. We would expect that Dealer Members conduct this check when first receiving the LEI from their client. Once the initial check for accuracy has been completed, Dealer Members would not need to check the status of the LEI at the time of every order entry or amendment.
Clients that do not have an LEI can apply for one from a Local Operating Unit (LOU) of the Global Legal Entity Identifier Foundation (GLEIF).8 GLEIF provides a list of LOUs that are authorized to issue LEIs in Canada.9 While LOUs operate on a cost-recovery basis10 their fees may differ depending on their operations. GLEIF has also introduced registration agents to help legal entities in the application process for LEIs.11
Where an LEI is required but a client has not yet obtained one, the Dealer Member can continue to trade for the client using an account number as the identifier in the interim. However, Dealer Members should take reasonable steps to ensure that the client obtains an LEI, which may include applying for an LEI on the client’s behalf. This is consistent with MiFID II requirements, where ESMA allowed a six-month period for investment firms to continue to trade for clients without LEIs, as long as the investment firm obtained the necessary documentation from the client to apply for the LEI on its behalf.12
Equity securities
Dealer Members would not need to include a client identifier on an order sent to a marketplace that is bundled for more than one account type (i.e. CL, NC, IN) or grouped together for more than one client. Rather than a client identifier, the Dealer Member would use one of the following markers:
or
The MC designation would be used for orders that are grouped together for unrelated clients that do not have a common parent LEI. For example, if a Dealer Member receives an order from a fund company that would be allocated to multiple funds post-execution, we would expect the Dealer Member to report the LEI of the fund company, rather than use the MC marker.
Dealer Members would not need to report allocations for bulk orders on a post-trade basis for executions from BU or MC orders. However, Dealer Members must keep allocation records including LEI information as part of the audit trail and record keeping requirements for seven years.14 Dealer Members must also make these records available upon IIROC’s request.
We would monitor the use of the BU and MC markers after implementation. If we find that the use of the either marker impacts our ability to effectively supervise trading, we would revisit the requirement to provide post-trade allocations.
Debt securities
Dealer Members are currently not required to report client allocations of bulk trades that occur after the trade reporting deadline, as long as there is no change to the information in any data element in section 2.4(c) of DMR 2800C other than the Client LEI or the Client Account Identifier.15 This would not change under the Proposed Amendments.
Equity securities
The Proposed Amendments impose reporting obligations on both non-executing and executing Dealer Members. A non-executing Dealer Member would need to provide a client identifier for its client as part of the order information it sends to its executing Dealer Member. For grouped or bundled orders originating from a non-executing dealer member, the BU or MC would be required.
Executing Participants would also need to include the identifiers of their direct and immediate clients on orders sent to a marketplace, regardless of whether the reported entity is the ultimate end-client. For example, where the client of a Dealer Member is a foreign dealer equivalent, the foreign dealer equivalent would be identified by an LEI but its end-client(s) would not be identified on the order.
Debt securities
Dealer Members currently identify whether they are an introducing or carrying broker in transaction reporting for debt securities under subsection 2.4(c) of DMR 2800C. This would not change under the Proposed Amendments.
Under the Proposed Amendments, a Participant would need to use a unique identifier for clients of a foreign dealer equivalent that automatically generate orders on a predetermined basis. This identifier would not need to take the form of an LEI, account number or client name, however it does need to be unique to the client. The Participant or client of the Participant can generate the identifier, which could take the form of an alphanumeric code that is unique within the foreign dealer equivalent or Participant. The purpose of the unique identifier is to allow IIROC to segregate the client specific automated/algorithmic trading.
This proposed requirement would apply to the direct client of the foreign dealer equivalent. The Participant would not need to determine the ultimate end-client of an order where there may be multiple layers of clients involved.
As with other regulatory markers such as insider or significant shareholder, the Participant may rely on what is reported by its client. While the Participant would need to document this process as part of its records under audit trail requirements and UMIR 7.1, there is no additional requirement for Dealer Members to independently verify what is being reported to them by the foreign dealer equivalent.
The unique identifier would be part of IIROC’s private regulatory data that is not publicly disclosed.
Equity securities
Dealer Members (both executing and non-executing) would need to file correction reports using the Regulatory Marker Correction System (RMCS) to rectify errors or omissions for the following:
Correction reports would only be required when an order in equity securities has been executed (fully or partially) on a marketplace, and would not be required for unfilled orders. If the Proposed Amendments are approved, we would update the guidance on RMCS to reflect these changes.
Debt securities
For debt securities, Dealer Members currently file correction reports for all data elements in section 2.4(c) of DMR 2800C using MTRS 2.0.16 This would extend to client identifiers once they become mandatory fields under the Proposed Amendments. If the Proposed Amendments are approved, we would update the MTRS 2.0 User Guide to reflect these changes.
For both equity and debt securities, Dealer Members must submit correction reports within a reasonable time upon becoming aware of the error or omission.
If the Proposed Amendments are approved, Dealer Members would need to include the use of designations and identifiers as part of the supervisory obligations of the:
Dealer Members must update their policies and procedures to document a process to:
Dealer Members would continue to monitor OEO clients on a monthly basis17 to determine whether any client fits the criteria under DMR 3200 of an identified OEO client.
To ensure the confidentiality of client information for data in transit, IIROC would:
Using encryption for LEI information for equity orders
To protect client confidentiality, Dealer Members may encrypt the LEI so that it is not visible to a marketplace. While we would support the use of encryption for client LEIs, encryption would not be mandated by IIROC. Dealer Members would be able to send the client LEI without encryption if they choose to do so. IIROC would specify the encryption method and level as part of the implementation plan, taking into account any feedback from industry stakeholders or the public.
Account numbers would not be encrypted, as account numbers would be specific to each Dealer Member and the corresponding client identity would not be readily available.
The following diagram provides a general description of the encryption process for LEIs:
Data handling and storage at IIROC
Data handling and storage at the CSA
Other Use of Data
Under limited circumstances, IIROC may provide access to data to external non-regulatory participants, such as academic researchers. In the past, IIROC has provided access to a limited subset of the dataset of messages received from the marketplaces for a specific period of time, with masked market-, broker-, and user attribution to protect confidentiality.19 In addition to these data elements, client identifiers (LEIs and account numbers) would also be removed or masked as part of any data set that may be made available to external non-regulatory participants (i.e. not part of the CSA or Bank of Canada).
Other jurisdictions also require client identifiers in the trading of securities. This is largely driven by the desire to enhance transparency in order to improve the risk management, surveillance and investigatory capabilities of regulators.
Client identifiers are currently required in various requirements pertaining to derivatives trading in Canada. In Ontario, OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting requires eligible counterparties participating in transactions reportable under the rule to obtain, maintain and renew an LEI.20 If a counterparty is not eligible to receive an LEI, it must be identified with an alternate identifier. Similar requirements are included in Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting,21 Regulation 91-507 respecting Trade Repositories and Derivatives Data Report22 in Québec and Manitoba Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting.23
MiFID II came into effect on January 3, 2018. The purpose of MiFID II is to “ensure fairer, safer, and more efficient markets and facilitate greater transparency for all participants.”24 Transaction reporting is one the MIFID II requirements.
What needs to be reported
Under MiFID II, investment firms25 must report the purchase or sale of financial instruments to the regulator on a T+1 basis.26 Financial instruments include those admitted to trading on a trading venue, regardless of whether the transaction was actually executed on the trading venue.27 Regulators, such as the competent authorities28 and ESMA29 , would have access to the reported data.
Type of Client Identifier used
Investment firms must use LEIs in their transaction reporting to identify clients that are eligible to obtain an LEI.30 When using an LEI, the investment firm must verify that the client’s LEI is in the LEI database, and is accurate.31 For clients who are natural persons ineligible to obtain an LEI, investment firms must use a national identifier, which may be a combination of the individual’s first and last name, birthdate, passport number and/or identity code etc., depending on the country of nationality.32
Report who decided how to invest and how to execute
In addition to the client identity, investment firms must specify the person making the investment decision if it is different from the account holder.33 If the investment firm has discretionary authority over the client account, the person or algorithm responsible for the investment decision must be identified.34 In addition to the investment decision, the investment firm must also specify who executed, or decided how to execute, the transaction (including whether an algorithm was involved).35
How to handle bulk orders and allocation reporting
Investment firms must flag bulk orders when using an aggregation account.36 Investment firms must also report the identity of each client that received a subsequent allocation.37
How to handle situations where the client does not have an LEI but wants to trade
ESMA has delayed the implementation of the “no LEI no trade”38 requirement under MiFID II for six months from January 3, 2018.39 During this period, investment firms could continue to trade for clients that do not have an LEI, as long as they immediately applied for an LEI on the client’s behalf and submitted the LEI when reporting the transaction.
Corrections
Investment firms must notify the regulator of any errors or omissions in their transaction reports.40 Investment firms must also have arrangements in place to:
In 2012, the U.S. Securities and Exchange Commission (SEC) adopted Rule 613 under the Securities Exchange Act of 1934 that required the creation of a national market system plan to govern the creation, implementation and maintainence of a consolidated audit trail (CAT).43 In November 2016, the SEC approved the Consolidated Audit Trail National Market System Plan (CAT NMS Plan).
What needs to be reported
Under SEC Rule 613(c), each member of a national securities exchange or national securities association (Industry Member44 ) must record and report data to the Central Repository on a T+1 basis.45 The reported data includes order and trade information in NMS securities46 , even if the order was sent to a foreign market for execution.47 A reportable event includes the receipt, modification, cancellation, routing and execution of an order.48
Type of Client Identifier used
Industry Members must report the Customer Identifying Information (CIS) and the Firm Designated ID for each account to the Central Repository.49 CIS includes:50
Once the CIS has been submitted to the Central Repository, Industry Members can assign an unique identifier to a customer (Firm Designated ID) and use the Firm Designated ID to report the receipt and origination of an order. Industry Members can change the Firm Designated ID as long as they submit updates to the Central Repository regarding newly established or revised Firm Designated IDs and associated reportable customer information. With this information, the Plan Processor would be able to link order and trade activity for each customer across all broker-dealers.51 Certain regulatory staff at the SEC and FINRA would be able to access the reported transactions with the customer information, which is subject to higher security and confidentiality standards as CIS is considered Personally Identifiable Information (PII).52
Who provided trading instructions
Industry Members must report the person authorized to give trading instructions to the broker-dealer, if it is different from the account holder.53 While there is no need to report whether algorithms were used as part of an order’s special handling instructions, this information must be provided to regulators upon request.54
How to handle bulk orders and allocation reporting
For bulk orders, Industry Members must report the Firm Designated ID used for the trade execution, as well as file an Allocation Report to specify allocations to any subaccounts.55
Corrections
Industry Members must file corections for each reportable event (which includes both orders and trades) sent to the Central Repository by T+3.56 A maximum error rate of 5% has been set for data reported to the Central Repository, which will be periodically reviewed by the Operating Committee.57
IIROC struck a Working Group to solicit feedback on our Initial Proposal. The Working Group is composed of 27 members who represent a cross-section of industry stakeholders including a range of Dealer Members (such as bank-owned dealers, regional dealers, independent dealers, a dealer that is a full-service provider for retail accounts, dealers providing order-execution only services, etc.), an institutional client, a depository and clearing provider, third-party vendors, exchanges, an alternative trading system, and CSA members. We held nine meetings from July 2017 to April 2018. We thank the Working Group for their invaluable contributions in helping us revise the Initial Proposal.
The following is an overview of the themes discussed and some of the main takeaways.
Method of Reporting
Members considered the following methods to report client identifiers to IIROC in equity securities:
Most Members were of the view that even though post-trade reporting would address some confidentiality concerns as the information would not pass through the marketplace, it should not be required because post-trade reporting would:
One Member indicated that real-time reporting would have less impact for self-directed orders (such as DEA, RA or OEO clients), but could be challenging for traders on a cash equities desk who would need to manually input the client identifier in a fast-moving environment.
Who is required to use an LEI
Some Members were of the view that requiring all eligible clients use LEIs would increase the ability to track a larger subset of clients across platforms, assets and Dealer Members. However other Members felt that this requirement would be overly broad and capture a large portion of retail clients that meet the definition of an institutional client that currently do not have LEIs and may rarely trade.
Most Members indicated that institutional clients likely already use LEIs in the trading of other assets, such as fixed income or OTC derivatives. Since the technology at many Dealer Members already segregate along retail and institutional clients, requiring LEIs for retail clients would require linkages of systems that are not linked today.
Some Members were of the view that a threshold approach should be based on trading frequency or volume, rather than the financial ability of the client. Most Members agreed that a threshold approach would be too complicated for Dealer Members to implement.
Alternatives to LEIs
Some Members indicated that while using account numbers would not raise privacy concerns and would avoid the expense of using LEIs, there are limits to the usefulness of using account numbers as client identifiers as there is no ability to track the same client across different Dealer Members.
One Member suggested a solution similar to the Large Trader IDs in the U.S., however, other Members indicated that this is part of the account onboarding and settlement mechanism in the U.S., rather than attached to each order that is sent to a trading venue.
LEI Renewals
Several Members raised concerns about requiring annual renewals, as they would need to find a process to validate LEIs every year. Some Members suggested putting the responsibility for renewals on the client rather than the Dealer Member.
Foreign Dealer Equivalents
Members raised concerns that executing Participants may not have the ability to verify what is being reported by the foreign dealer equivalent. Some Members were of the view that this requirement may discourage foreign clients from accessing Canadian marketplaces. One Member indicated that this information should be obtained via joint arrangements between securities regulators, rather than from Participants in Canada.
Some Members were of the view that the lack of a requirement for client identifiers (in the form of an account number or LEI) for clients of foreign dealers would mean less transparency into end-clients. Many executing Participants take their order flow from their U.S. affiliate, where no end-client identification would be required. Some Members indicated that this may also negatively impact the competitiveness of Canadian dealers, as they would be required to disclose their client identities whereas foreign dealers would not.
Client confidentiality
Most Members were of the view that client identifiers should not be visible to marketplaces. One Member indicated that where an executing Participant receives an order from a non-executing Dealer Member, the executing Participant should not be able to see the client identifier.
One Member suggested that each Dealer Member create a mapping list for their clients’ LEIs. Rather than attaching the LEI on the order, the Dealer Member would include the mapped value on the order and encrypt that value, before sending the order to the marketplace.
Another Member raised a concern that some Dealer Members may have difficulty managing latency issues posed by encryption.
One Member asked for clarification of data handling and storage policies at the regulator, including whether data would be encrypted, the period of storage, and which regulatory staff would have access to the client identifiers.
The Proposed Amendments would make it significantly easier for IIROC to carry out its public interest mandate. We do not currently receive client identity information for each order and trade executed on a marketplace or reported pursuant to Rule 2800C. This information would enhance IIROC’s ability to perform a range of regulatory functions, including conducting:
Trade analysis initially involves mapping out client identities and linking them to each order and trade on a marketplace, which can be time-consuming and inefficient. Currently, we compile data from different sources of information (trade tickets and blotters, trade reports, allocation reports etc.) in order to link client identities to each event on the marketplace. Depending on the length of the period of review, the liquidity of the security, and the number of clients under review, we may have to send multiple information requests to Dealer Members to validate client order activity. This results in delays in reconciling information into a usable form.
We believe the Proposed Amendments would increase IIROC’s efficiency in linking client identities to marketplace activity, as well as reduce the number and size of information requests we send to Dealer Members.
The use of LEIs may also enhance cross-asset surveillance for trading in listed equities as well as OTC fixed income securities. The LEI reference database has Level 1 information and may soon incorporate Level 2 reference data.58 Level 1 reference data includes “business card” information, such as the entity’s legal name and address.59 Level 2 reference data would include information regarding the entity’s corporate hierarchy and affiliations.60 Access to Level 2 information would increase our visibility into the entity’s relationships as part of its corporate structure and allow us to more quickly link entities to immediate and ultimate parents, subsidiaries, or affiliates. This added transparency would enhance IIROC’s ability to monitor potential market abuses. While we would not require Dealer Members to ensure that client LEIs are being annually renewed, clients may opt to renew their LEIs pursuant to regulations applicable to trading in other assets and/or jurisdictions.
Requiring the use of LEIs would help ensure accuracy and consistency in order information across all marketplaces and in reported debt securities transactions. A current limitation with the regulatory data is that multiple identifiers may be used for the same client. For example, there may be multiple Trader IDs for the same DEA or RA client either at the same Dealer Member or across multiple Dealer Members. Using LEIs would allow IIROC to aggregate information from all accounts held by the same client across different platforms and Dealer Members for surveillance and regulatory purposes.
Requiring the use of account numbers would benefit both IIROC and the CSA in terms of:
The CSA and the Bank of Canada also support the Proposed Amendments because the changes would:
The use of LEIs may help Dealer Members:
The efficiencies gained by using LEIs may result in savings for the Dealer Member. For example, when looking at the use of LEIs in the capital markets, GLEIF and McKinsey & Company estimate that “… approximately one-third of the industry’s operating costs of $5 billion is spent on activities such as client onboarding, client trade reconciliations, trade allocations to clients, and verification of client reference data. All such activities could be simplified if LEI use were more broadly adopted throughout the lifecycle of the client relationship … introducing the LEI into capital market onboarding and securities trade processing could reduce annual trade processing and onboarding costs by 10 percent.”62
We also expect that more granular client-level data would reduce the size and frequency of regulatory requests and could help Dealer Members process the data requests that they do receive more efficiently.
The use of LEIs, together with DEA and RA designations, would also eliminate the need to:
IIROC acknowledges there would be significant effort required by Dealer Members, marketplaces, and investors to achieve compliance with the Proposed Amendments. We would consider these impacts when determining the appropriate implementation periods for the proposed three phases. IIROC believes the effort required in the implementation is proportionate to the regulatory benefit of increased market integrity and investor protection through enhanced oversight and supervision capabilities. The Proposed Amendments are consistent with other global initiatives regarding the transparency of client identities in the trading of securities.
We are proposing a three-phase implementation plan as follows:
Phase 1: Debt securities
Phase 2: Equity securities
Phase 3: Equity securities
As part of the comment process, we are specifically asking for comments from stakeholders regarding:
These comments are important to develop a full understanding of the impacts, which will assist in determining the implementation process.
The Proposed Amendments would affect surveillance and operations at IIROC. Specifically, IIROC would need to:
The Proposed Amendments would affect Dealer Members and marketplaces and may vary based on the implementation. Possible impacts on Dealer Members include:
Possible impacts on marketplaces include:
The Proposed Amendments may affect investors in that certain investors may be required to apply for LEIs in order to trade on a marketplace or in debt securities.
Impacts on investors required to obtain LEIs would include:
Investors that are required to use LEIs but have not yet obtained one would still be able to trade by using an account number in the interim. (Please see section 3.91 of this Notice on Missing and Incorrect Client Identifiers.)
While we request comment on all aspects of the Proposed Amendments, we specifically request comment on the following questions:
The Proposed Amendments would:
The Board of Directors of IIROC (Board) has determined the Proposed Amendments to be in the public interest and on May 24, 2018 approved them for public comment.
The Market Rules Advisory Committee (MRAC) considered this matter as proposed in concept by IIROC staff. MRAC is an advisory committee comprised of representatives of each of the marketplaces for which IIROC acts as a regulation services provider, Dealer Members, institutional investors and subscribers, and the legal and compliance community.63
After considering the comments on the Proposed Amendments received in response to this Request for Comments together with any comments of the CSA, IIROC may recommend that revisions be made to the applicable proposed amendments. If the revisions and comments received are not material, the Board has authorized the President to approve the revisions on behalf of IIROC and the proposed amendments as revised will be subject to approval by the CSA. If the revisions or comments are material, the Proposed Amendments including any revisions will be submitted to the Board for approval for re-publication or implementation, as applicable.
Appendix A – Text of UMIR, DMR and PLR Proposed Amendments
Appendix B – Blackline of UMIR Proposed Amendments
Appendix C – Blackline of DMR Proposed Amendments
Appendix D – Blackline of PLR Proposed Amendments
Appendix E – Blackline of UMIR Proposed Amendments following the adoption of of PLR
Appendix F – Comments Received in Response to IIROC Notice 17‑0109 and IIROC Reponses
06/28/18
18-0122