Dealers should be expected to consider data on dependants and clients’ potential vulnerabilities, CAC said in its submission, and called for additional guidance around account-type suitability and the requirement to consider a “reasonable range” of alternatives.
“We believe that the proposed guidance would benefit from additional specificity regarding the KYC information to be collected as it relates to the suitability determination, as it currently may have the unintended result of encouraging the gathering of client information simply as a compliance exercise,” the CAC said.
Seniors advocacy group CARP also called on IIROC to go further than the minimum standards imposed by the CFRs, saying that it “fully supports any initiative that would move IIROC KYC and investment suitability standards closer to the creation of making financial advice-giving a true profession.”
Among other things, CARP called for heightened guidance around risk, the use of leverage and complaint processes.
The RIA’s stance was echoed in a submission from Morningstar Research Inc., which also said that investors’ ESG preferences should be captured as part of the basic KYC process.
“If the intent of the client-focused reforms is indeed to put the client’s interests first, then a complete investor profile would include their desire to invest in line with their values and beliefs and intention to invest sustainably,” it said in its submission.
Additionally, the firm noted that ESG risks “can often be financially material,” and so taking them into account would be prudent, particularly for clients with sustainable investing preferences, Morningstar said.
Finally, it noted that research shows that retail investors who align their portfolios with their personal values are more likely to stay invested in rough markets, leading to better outcomes in the long term.
“This was observed in Canada during the Covid-19 pandemic sell-off in March,” it said. “We believe that capturing a client’s preference toward responsible or sustainable investments would be of no detriment to the investor, would allow for a more meaningful relationship between the client and the advisor, and would further encourage capital flow into sustainable projects in the future.”
Industry trade group the Investment Industry Association of Canada outlined its own set of concerns with the proposed guidance, including sections where it worried that additional requirements are being imposed thorough guidance, and areas where IIROC’s expectations may deviate from the Canadian Securities Administrators’.
IIAC detailed several areas where it believes the proposed guidance needs “additional clarification” or where differences from the CSA’s approach “should be harmonized.”
For instance the IIAC said that guidance on keeping KYC information current “appears to be imposing new KYC requirements for [discount brokerage] accounts and carrying brokers” as it doesn’t differentiate between these sorts of dealers and full-service firms.
It also said that IIROC appears to be taking a different approach from the CSA when it comes to assessing suitability on a combined basis for multiple accounts.
While the CSA allows dealers to conduct suitability assessments for multiple accounts on a household basis, the IIROC guidance takes a more limiting approach, the IIAC said.
“The IIAC is of the view that it is overly restrictive to require a client to be the same individual for all accounts in order to conduct suitability on a combined basis,” it said in its submission.
The KYC and suitability provisions of the CFRs take effect at the end of the year. The consultation on IIROC’s proposed guidance closed on Aug. 20.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
