Several dozen firms have received exemptions from the requirement to include off-book positions in their annual performance reporting to clients, according to an Investment Industry Regulatory Organization of Canada (IIROC) notice published on Friday.
The IIROC report details the exemptions from IIROC rules that were granted in 2015. Most of them involve granting relief from specific proficiency requirements, or from certain aspects of the trading rules.
However, the report also indicates that 46 firms received exemptions from the requirement that certain client assets that are held off-book be reported to clients, and included in the calculation of annual client portfolio performance information. These exemptions allow the dealers to omit off-book client assets from this reporting, subject to certain conditions.
Previously, IIROC said it would entertain exemption requests from this aspect of the Client Relationship Model (CRM2) requirements in cases where firms have tried to convert the off-book assets into on-book positions; dealers are not receiving ongoing compensation from those positions; and, they are not encouraging clients to hold the assets off-book.
In total, there were 634 exemptions granted in 2015, which included more than 500 relating to proficiency requirements, 64 that involved specific aspects of the trading rules, and 14 to facilitate bulk transfers, among other issues.