The Investment Industry Regulatory Organization of Canada (IIROC) has issued guidance for dealers to help them comply with rules taking effect next year that would require them to notify IIROC about their dealings with direct electronic access (DEA) clients.
A notice issued Tuesday indicates that changes to the trading rules, which take effect on March 1, 2014, will require market participants to notify IIROC when they enter into a written agreement for DEA, or a routing arrangement; and, expand gatekeeper reporting obligations to include details related to DEA and routing arrangements.
In addition to requiring dealers to enter into written agreements with DEA clients, firms will also have to adopt standards to manage the associated risks of DEA access; and, develop procedures for reporting any non-compliance with the standards, or the written agreement, to IIROC. In the past, firms have only been required to notify IIROC of their clients’ names and unique direct market access (DMA) identifiers.
“Participants are expected to notify IIROC of all DEA and routing arrangement agreements they have entered into by March 1, 2014,” it says; and, the notice goes on to provide on the proper procedures for providing notice and gatekeeper reporting in line with the new requirements.
Firms have until Sept. 1, 2014 to replace or amend existing DMA agreements to bring them into compliance with the new rules, but the notice requirement is independent of the transition period for revising existing access agreements. And, firms will have to report immediately when they believe that there may have been a breach of a material provision of their standards, or their agreements, through IIROC’s existing gatekeeper reporting facility.