The IIROC operates under Recognition Orders from the provincial and territorial securities commissions that make up the Canadian Securities Administrators (CSA). It has quasi-judicial powers to set and enforce laws in the Canadian securities and trading markets—and can levy fines, suspensions, and other disciplinary action against delinquent firms, brokers, and advisors.
IIROC regulated firms also participate in the Canadian Investor Protection Fund (CIPF), which protects individual investors in the event that an investment firm should go bankrupt. As provided for in the Industry Agreement between CIPF and IIROC, IIROC recommends an Industry Director for nomination to the CIPF Board.
What the Investment Industry Regulatory Organization of Canada Does
The Investment Industry Regulatory Organization of Canada has several functions, including:
- Writing rules that set high regulatory and investment industry standards, and enforcing those rules.
- Screening all investment advisors employed by IIROC-regulated firms to ensure they are of good character, are properly trained, and have successfully completed all the required educational courses, background checks, and programs.
- Conducting financial compliance reviews and setting the minimum capital requirements to ensure that firms have sufficient capital.
- Conducting conduct compliance reviews to check trading firms’ trade-desk procedures. The reviews assess whether trade-desk procedures comply with the Universal Market Integrity Rules (UMIR) and applicable provincial securities laws.
- Doing market surveillance and trading review analysis to ensure trading is carried out in accordance with UMIR and applicable provincial securities law.
- Investigating possible dealer or marketplace misconduct by its dealer firms, approved persons, and other market participants.
- Bringing disciplinary proceedings that may result in penalties including fines, suspensions, and permanent bans or terminations for individuals and firms.