To support transparency and help IIROC Dealer Members with compliance and the protection of their clients, this document answers questions we have received relating to issues associated with the coronavirus (COVID-19) pandemic. Through these FAQs, IIROC is providing guidance and information regarding situations where temporary relief from the rules identified below may be available. (For further information on temporary relief, and the process to be followed in requesting such relief, please refer to IIROC Rules Notice 20-0063, COVID-19 Related Exemptions from IIROC Rules, March 31, 2020)This relief does not extend beyond the identified requirements noted below. IIROC is closely monitoring the situation and will determine if additional relief or guidance is necessary and these FAQs will be updated accordingly. As coronavirus-related risks decrease, IIROC Dealer Members should expect to return to meeting any regulatory obligations for which relief has been provided. When appropriate, IIROC will publish a Notice announcing a termination date for the temporary relief.
1.Based on current circumstances, is there an alternate to the requirement to get a client’s wet signature?
Yes, IIROC is prepared to consider and accept alternatives to wet signatures. The Dealer will need to apply for an exemption to use an alternative method in accordance with IIROC Notice 20-0063.
2.What are IIROC’s requirements regarding advisors having virtual meetings (Skype, Zoom etc.) with clients?
IIROC does not have specific rules or guidance on virtual client meetings as advisors already currently hold meetings in a variety of forums – be it in person, via phone or video – in order to accommodate geographic distances and other client requirements. It remains prudent for all IIROC-regulated individuals to deal fairly and openly with their clients, and to keep all their records and books updated to properly account for business activities, regardless of how they meet with clients. Advisors must also ensure their methods of communication are acceptable to their firms. Dealers must also ensure information security and privacy risks are addressed.
3.Is it a concern that individuals from the Contact Center are unable to record voice conversations with clients when accepting trades, while working remotely?
Voice recordings of client orders is not an IIROC regulatory requirement. However, Dealers should ensure that regardless of the method used to document client instructions, an adequate audit trail is maintained. Dealers should also be cognizant that there may be other regulatory requirements, beyond IIROC rules, with which Dealers may need to comply.
4.Various Canadian jurisdictions have identified capital markets as essential services. What does this mean for IIROC Dealer Members?
IIROC has confirmed that the Governments of Ontario, Quebec and British Columbia that capital marketsparticipants including dealers and advisors are considered essential services. This information is accessible on our COVID-19 web section. The designation gives firms the ability to access their facilities, etc., to ensure continued service to their clients. To be clear, it does not require personnel to be onsite. As an example, IIROC will continue to perform its functions using a work from home model. However, we will have access to our facilities if required. It is our understanding that Dealers and their staff are able to continue to carry out similar services in other jurisdictions. Dealers should refer to the provincial/territorial government and/or CSA member website in their jurisdiction, on a regular basis as such classifications are subject to change given the fluidity of the situation. Links to all CSA members are also accessible through our COVID-19 section.
5.In the current environment it is not possible to meet upcoming post licensing due dates. Are extensions being considered?
Extensions to post-licensing due dates are granted by IIROC District Councils. IIROC will recommend that 120-day extensions be approved. Any requests for an extension should be filed via the National Registration Database.
6.In the current situation most Dealer Member staff are working from home. In normal circumstances many of these locations would have to be registered as business locations. Is relief available?
IIROC will be flexible due to the COVID-19 situation. We are treating these situations as we would do for normal work from home arrangements as per IIROC Notice 17-0036, February 10, 2017 – Business Locations-Registration and Compliance approach to work-from-home arrangements.
7.Mutual Funds held in client name – where assets are held at the mutual fund company in the name of the client, normally the client would have to sign all trade instructions before a mutual fund company would be able to complete a transaction. Some Dealers may have a Limited Trading Authorization (“LTA”) or similar document on file where the client authorizes the Dealer to execute trades without the need to provide his or her signed written instructions to the mutual fund company.
Given the current circumstances, where Dealers do not have a signed LTA on file, they may temporarily permit Approved Persons to act on client instructions without obtaining a client signature for mutual funds registered in client name (i.e. to act as if an LTA is on file). Dealers may allow Approved Persons to “act” as if an LTA is on file provided they follow the same policies and procedures for where an actual LTA is on file or for nominee name trades.
Policies and procedures for LTA or nominee name trades would include adequate steps to authenticate the client before acting on instructions. For example, Dealers should not rely on e-mail instructions alone without additional steps such as telephone confirmation with the client to verify the authenticity of the instructions. Procedures would also include the requirement to maintain detailed notes and books and records of all client instructions and transactions.
8.Dealer Member Rule 2500 Part II requires that firms rely on “accurate and current” documentation as a fundamental input for “Know-Your-Client” processes. On March 25, 2020 FINTRAC issued a notice stating that, until further notice, government issued photo identification that has expired after March 1st 2020, can be considered as “valid and current pursuant to its issuing authority”. https://www.fintrac-canafe.gc.ca/1-eng Will IIROC also consider such identification documents to be “current” as required under Rule 2500?
Yes, to the extent that expired identification documents are considered to be still valid and current by FINTRAC, IIROC will also accept such documentation as “accurate and current”.
