A new fee model for investment dealers and markets has received regulatory approval, and is slated to take effect April 1.

The Investment Industry Regulatory Organization of Canada announced Friday that its proposed new integrated fee model for dealers and markets that belong to the self-regulatory organization has received approval.

The new fee model, which was required in the wake of the consolidation of the investment dealer and marketplace SROs to form IIROC, has been developed with the help of industry committees and have been subject to public comment.

Under the new integrated fee model, IIROC’s annual operating cost will be divided into two pools, comprising unique costs for dealer regulation and market regulation. The cost of the two pools are the to be recovered from dealers and marketplaces on the basis of each function’s cost drivers. Shared costs will be apportioned using a cost allocation model.

The proposed dealer regulation fee model will charge a $250 fee for each registered individual; a rate based on dealer revenues that will be determined annually based on IIROC’s net dealer regulation budget; and a risk premium for high risk firms. It will charge minimum fees of $15,000 (for dealers whose allocated costs are less than or equal to $20,000) and $27,500 (for dealers whose allocated costs are greater than $20,000).

The proposed market regulation fee model will levy a minimum monthly fee of $4,800; a fee calculated for each marketplace based on its share of the total number of messages processed by IIROC’s surveillance system during the month; and, a fee based on each marketplace’s share of the total number of trades during the month.

The number of trades by a market maker in stocks it’s responsible for will be discounted by 70% for the purpose of calculating the fee based on that exchange’s share of the total number of trades. The number of trades on the other side of any trade involving a market maker will be included in the calculation of the overall total number of trades for an exchange. IIROC will bill dealers directly for all market regulation fees due from their trading activity on each marketplace, and will charge a new administrative fee of $500 per month for each marketplace. It will continue to recover marketplace-specific costs directly from the markets.

The SRO plans to implement the new integrated fee model on April 1, and says it will publish additional information concerning the implementation of the model in the coming months, including internal guidelines for its administration of the fee model. It will also provide additional information to dealers and markets, including pro forma information illustrating the impact of the new model on their specific circumstances.