Guidance for Firm Applications

1. Minimum Requirements for Accepting an Application

An Application is considered incomplete if it does not contain sufficient information and supporting documentation for CIRO to commence a meaningful review. Applications that are missing any of the following are deemed to be incomplete and will not be accepted for review:

    1.1 Application Form
    • For new firm applicants, a completed CIRO Membership Application and Form 33-109F6 (“F6”).
    • For existing Dealer Members, a completed Notice of Material Business Change or equally robust written notice containing sufficient information and materials for CIRO to commence a meaningful review of the Application, and Form 33-109F5 (“F5”), as applicable.
    1.2 Audited Form 1
    • For new firm applicants, a complete, audited Form 1 that has been prepared and signed by a panel auditor within 90 days prior to the date the Application is submitted, confirming that the firm meets CIRO's capital requirements.
    • Projected or actual negative risk adjusted capital (“RAC”) or early warning test failures, as reported in the Form 1, is an indication that the firm does not meet CIRO’s capital requirements.
    1.3 Books and Records Auditor’s Report
    • If the firm uses a system of books and records that is not recognized by CIRO for the proposed business, a complete CIRO-prescribed Report on Accountants’ Procedures & Findings for Minimum Books and Records for New Dealer Member Applicants with Proprietary EDP Service Providers (the “Proprietary Books and Records Auditor’s Report”).
    • Examples of a books and records platform that are not recognized by CIRO for the firm’s proposed business include the following:
      • the system has been used by a Dealer Member in Canada for institutional business but not for retail business (or vice versa),
      • the system has been used by a Dealer Member in Canada for traditional securities business but not for digital assets (or vice versa),
      • the system has been used by the Dealer Member’s affiliate in the U.S. (or another jurisdiction) but has not been used by a Dealer Member in Canada
    • A panel auditor must perform and report on all procedures listed in the Proprietary Books and Records Auditor’s Report for the report to be considered complete. In addition, the Auditor's Report must be prepared and signed by a panel auditor within 90 days prior to the date the Application is submitted.
    1.4 Qualified UDP & CCO (and CFO, where applicable)
    • Individual(s) who already meet the applicable proficiency and experience requirements of the firm's UDP, CCO and CFO, or are committed to meeting those requirements within 60 days of the Application date
    1.5 Policies & Procedures Manual(s)
    • Written policies & procedures for the firm's business activities, operations and supervision
    1.6 Business Plan with supporting Financial Projections
    • The firm’s Business Plan, which includes, at a minimum:
      • a detailed description of the firm's business model and proposed business activities, including the products & services it intends to offer,
      • a description of the firm's targeted client base and its business strategy for building its business,
      • financial projections and their underlying assumptions,
      • a description of the firm's commercial relationships with service providers
    • For new firm applicants, the Business Plan must cover both a minimum 12-month period and a 5-year horizon, supported by:
      • detailed 12-month financial projections, and
      • 5-year financial projections, including underlying assumptions, sufficient to demonstrate the sustainability of the proposed business and compliance with CIRO’s capital requirements

    2. Material Deficiencies

    An Application is considered to have material deficiencies if any of the items listed below are identified and are applicable to the Application. Applications with material deficiencies will take longer to review. Similarly, a staggered submission of key information and materials creates inefficiencies and often requires CIRO staff to reassess parts of the Application, which adds to the time and resources required for CIRO's review.

    In accordance with CIRO's Integrated Fee Model, if the Application remains under compliance review for more than 6 months, CIRO may seek reimbursement for the additional costs. This reimbursement is in addition to the required fee for the Application. Refer to the Fee Model for full details on the applicable fees.

    We encourage firms to resolve any identified deficiencies before moving forward with the Application. If the firm chooses to proceed with an Application with material deficiencies, the firm will be asked to:

    • complete an acknowledgement that the firm wishes to proceed with the Application despite the material deficiencies and the potential reimbursement for additional costs and expenses that may occur as a result; and
    • provide an undertaking to resolve the material deficiencies within 30 days.

    Where material deficiencies remain unresolved after 30 days, the firm will need to resubmit the Application and any non-refundable fees will be forfeited to CIRO.

      2.1 Adherence to Response Deadlines
      • The firm is not providing substantially complete and accurate responses or requested materials within the deadlines set by CIRO staff during the course of the review.
      2.2 Incomplete Business Plan or Financial Projections
      • The firm's Business Plan is missing key information or supporting materials. For example:
        • key components of the firm's business model have not yet been decided or finalized by the firm
        • key components of the firm's systems, controls, and other required infrastructure, have not been fully developed
        • the financial projections lack sufficient detail to show how they affect Risk Adjusted Capital and Early Warning Reserve and/or do not clearly explain the underlying assumptions
      • For existing Dealer Members, where the proposed business change is reasonably expected to have a material impact on the firm’s RAC and/or Early Warning Reserve, the firm has not provided financial projections for a 12-month period, including the underlying assumptions and details sufficient to demonstrate the impact on the Dealer Member’s capital adequacy.
      2.3 Early Warning Test
      • The firm's Audited Form 1 or financial projections indicate that the firm is reasonably expected to trigger an early warning during the first year of membership or following the proposed business change.
      • “Early warning” is an ongoing test and may be triggered during the course of CIRO’s review, which would be considered a material deficiency.
      2.4 Lack of Qualified CFO, Supervisor, or Dealing Representative
      • The firm has not filled one or more of these key positions with individuals who have met all regulatory obligations, or there are concerns identified regarding their fitness for registration or approval.
      2.5 Books and Records Auditor’s Report
      • For new firm applicants, a complete CIRO-prescribed Report on Accountants’ Procedures & Finding for Minimum Books and Records (the “Books and Records Auditor’s Report”) for the firm’s system of books and records:
      • A panel auditor must perform and report on all procedures listed in the Books and Records Auditor’s Report for the report to be considered complete (except where the procedure is not relevant to the firm’s business model, such as a procedure relating to an Introducing Broker if the firm is self-clearing).
      • The Books and Records Auditor’s Report must be prepared and signed by a panel auditor within 90 days prior to the date the Application is submitted.
      2.6 Missing Dealer Agreements
      • The firm has not provided draft versions of Agreements with its intended Service Providers (e.g., outsourcing, carrying broker, custodian, shared service, etc.).
      2.7 Inadequate Policies & Procedures
      • Material deficiencies have been identified in the firm's written policies & procedures.
      2.8 Missing or Inadequate Client Reporting or Client Disclosure Documents
      • The firm has not provided samples of its intended client reporting or client disclosure documents, or the samples provided are wholly non-compliant with CIRO requirements.
      2.9 Inadequate Supervision Framework
      • The firm has not provided sufficient information about its intended supervisory framework, or material deficiencies have been identified.
      2.10 Inadequate processes for collecting Know-Your-Client Information
      • The firm has not provided sufficient information about its processes for collecting Know-Your-Client information, or material deficiencies have been identified.

      3. “Non-Routine” Applications

      An Application is considered “non-routine” if it involves any of the following:

        3.1 Novel or Significant Issues
        • A "novel or significant issue" as defined in the CSA’s relevant registration delegation order(s) or assignment order(s).
        3.2 High-Risk or Complex Applications
        • Applications that are generally assessed as higher-risk or complex due to nature of the proposed business model, activities, products, services, business or operational structure, organizational structure, or impact on multiple entities or business lines.
        • Applications that require material review or approval by another regulator (e.g., CSA, CIPF, FINRA).
        • Applications that raise new policy issues or require policy interpretation, consideration or consultation.
        3.3 Exemptive Relief
        • New or existing exemptive relief from CIRO rules or securities legislation.
        3.4 New Technology Platform or Process Automation
        • A new technology platform or back-office system, or one that has not been used by a Dealer Member in the same or substantially similar capacity or for the same purpose that is being proposed.
        • Applications that propose new/novel uses of technology as a replacement for Approved Persons (including Supervisors) under CIRO rules.
        3.5 New or Significantly Revised Supervisory Infrastructure
        • A new supervisory infrastructure for the Dealer Member, or a material change to the existing manner by which the Dealer Member currently supervises its activity

         

        Note: “Application” refers to a new firm application (i.e. application for CIRO Membership and Firm Registration) or notice of a material change in business activities.

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