Investment dealers can go ahead and implement the first tranche of the investment cost and performance reporting reforms, known as CRM2, as regulators have given their final blessing to proposals that were initially published late last year.

The Investment Industry Regulatory Organization of Canada (IIROC) said Thursday it has received approval from the Canadian Securities Administrators (CSA) to implement the Client Relationship Model amendments that are due to take effect July 15.
These represent some of easier, more straightforward changes. The full slate of CRM2 amendments are being implemented over the next couple of years, with the most significant reforms not due for implementation until July 2016.

The measures announced Thursday by IIROC, which are set out in separate rule notices, include: new pre-trade disclosure requirements for the fees and charges associated with a trade; enhanced disclosure of debt security compensation taken by the dealer on trade confirmations; and, a new upfront disclosure requirement to identify an appropriate investment performance benchmark, and other benchmark options.

The industry has been eager to get final approval for these provisions from the CSA so that dealers can move ahead and take the necessary steps to implement the new rules. There was some fear that implementation spending could be wasted if the CSA demanded major changes to the IIROC proposals.

As for the more significant amendments that will be implemented over the next couple of years, IIROC notes that the comment period for these changes recently ended (they were subject to a longer comment period than the amendments due to take effect this July), and that the comments it received are still being considered. Those proposals still have to be finalized and approved by the CSA.

Along with their approval of the first tranche of IIROC’s CRM2 rules, the various members of the CSA have also issued parallel orders that provide IIROC firms with relief from these provisions in the CSA’s version of the CRM2 rules — so that firms don’t have to comply with two sets of rules.

Similarly, the CSA also issued parallel orders exempting firms that belong to the Mutual Fund Dealers Association of Canada (MFDA) from the same CRM2 provisions.