CSA Chairs decisions

On January 28, 2015, the Chair of the CSA issued a letter announcing certain decisions that had been made by the CSA (“CSA decisions”) with regard to the implementation of certain of the IIROC and CSA 2015 and 2016 CRM2 Amendments.  The letter set out the following decisions:

1. “The coming into force date of the requirement for registered dealers and registered advisers to deliver reports on charges to clients and on investment performance will remain July 15, 2016. However, firms that report for the calendar year 2016 will not be required to include comparative data from 2015 in their investment performance reports. They will be able to base their first investment performance reports on 2016 information alone.
2. The CRM2 Amendments applicable to registered dealers and registered advisers that are currently scheduled to come into force as of July 15, 2015 will instead come into force as of December 31, 2015.
3. The definition of “book cost” will not change. Registered firms that wish to provide tax-adjusted cost information to their clients can do so as supplementary information.”

Housekeeping rule amendments are necessary

While in many cases IIROC could have adopted these “CSA decisions” by simply announcing changes to the implementation dates previously announced in IIROC Rules Notice 15-0013, there were some instances where housekeeping rule amendments were necessary to adopt these decisions.  This is because:

• implementation dates are specifically referred to in some of the IIROC 2015 and 2016 CRM2 Amendments and these dates needed to be changed; and
• the IIROC 2015 and 2016 CRM2 Amendments currently require performance reports to expressly include comparative information that is prepared for a period beginning on or earlier than July 15, 2015.

Description of the housekeeping rule amendments

As a result, the following specific IIROC housekeeping rule revisions have been made to ensure that all of the CSA decisions were adopted by IIROC:

• Amend Dealer Member Rule subsection 200.1(b) [Definition of “cost”] in four instances to refer to “December 31, 2015” rather than “July 15, 2015”
• Amend Dealer Member Rule clause 200.2(f)(iv) [Performance report] to:
  • Allow that a performance report provided to clients that covers the 12-month period ending December 31, 2016 need not include any comparative information; and
  • Allow that subsequent performance reports provided to clients that cover the 12-month periods ending December 31, 2017 and each calendar year thereafter need not include pre-2016 data in the calculation of comparative information (both comparative dollars and percentages) included in the report
• Amend Dealer Member Rule subsection 200.3(a) [Option of earlier date] to refer to “December 31, 2015” rather than “July 15, 2015”

Other cosmetic wording changes have also been made to the following provisions to improve the clarity of the IIROC 2015 and 2016 CRM2 Amendments:

• Re-ordering and clarification of wording in Dealer Member Rule subsection 200.2(e)
• Clarification of wording in Dealer Member Rule subsection 200.3(b)
• Revision of rule cross-references in Dealer Member Rule subsections 200.3(c) and (d) resulting from amendments made to subsection 200.3(a)
• Revision of “Guide to interpretation of Section 200.2”, Items (e), (f) and (g) to make scope discussion within guidance consistent with scope mandated by the related requirements within Dealer Member Rule sections 200.2(e), 200.2(f) and 200.2(g).

Included as Attachments A and B are clean and black-line copies of the housekeeping changes to IIROC Dealer Member Rule 200 which were approved by the IIROC Board of Directors at its meeting of May 13, 2015. 

Reasons for the “housekeeping” classification

Collectively, the revisions that IIROC has made to codify the CSA decisions and to make clarification revisions (as discussed above) are not extensive.  In assessing whether these revisions collectively should be classified as either “public interest” or “housekeeping” amendments, we considered:

• the significance of the amendments themselves,
• whether receiving public comment on the revisions would provide us with valuable additional information to enable us to further assess their appropriateness, and
• whether asking public commenters to spend time commenting on what were in essence final CSA decisions would inappropriately waste public commenter’s time commenting on rule implementation timeline-related rule revisions that will not be subject to further change.

After completing our assessments, we concluded the revisions we propose to make to the IIROC 2015 and 2016 CRM2 Amendments to reflect the CSA decisions and to make clarification revisions are “housekeeping” in nature as these revisions are “reasonably necessary to conform IIROC’s Rules to applicable securities legislation, statutory or legal requirements”1.  This conclusion was reached based on our understanding that the implementation dates for the IIROC 2015 and 2016 CRM2 Amendments must be the same as the implementation dates for the CSA 2015 and 2016 CRM2 Amendments. 

The IIROC Board of Directors determined at its meeting of May 13, 2015 that these amendments are housekeeping in nature. 

Other changes necessary to adopt the CSA decisions

In addition to announcing that we’ve made the above housekeeping changes to Dealer Member Rule 200, this Rules Notice also announces that we are revising the effective dates for the 2015 and 2016 IIROC CRM2 Amendments.  The following are the revised effective dates [shown as a black-line comparison to the effective dates announced in IIROC Rules Notice 15-0013]:

Supporting documents

The following supporting documents for the housekeeping changes to the 2015 and 2016 IIROC CRM2 Amendments are attached:

Attachment A – Proposed housekeeping amendments

Attachment B – Black-line copy of the proposed housekeeping amendments

• 1Item 2 b.(i)(F) of the Joint Rule Review Protocol for IIROC