In the event of a significant business disruption, the clients of introducing firms should be able to deal with the firms’ carrying broker, says the Investment Dealers Association of Canada.

“Following consultation with IDA members, the association has agreed with the major IDA carrying members that should introduced clients be unable to contact their introducer, the clients should be permitted to contact the carrier’s staff for limited purposes and for a limited time, directly following a Significant Business Disruption, to facilitate access to their assets,” says the IDA in a recent notice to members.

“We consider this procedure as a second line of defence for introduced clients in dealing with a SBD,” it says, adding that introducing firms must continue to comply with the IDA by-law, which requires all members to have adequate business continuity plans in place to enable prompt client access to their assets.

Among the conditions that apply to such an arrangement, the notice adds that these emergency procedures must be documented and added to the introducing broker agreements until the agreements are renewed and such provisions become part of the introducing agreements; the carrier can only execute liquidation orders in addition to facilitating client requests for delivery or transfer of assets; introducers must notify their clients who to contact at the carrier should they not be able to reach the introducer’s staff following a disruption, and they must also make their clients aware of the limitations placed on trading (directly) through the carrier; additionally, any loss arising out of these procedures will be the liability of the introducer and the introducer will indemnify the carrier for any associated losses.

If a carrier decides to provide an introducer with operations space (desks and communication facilities) following a SBD, there would be no need to invoke these emergency procedures, the IDA notes.