1. Meeting the standards
Dealers, advisers and investment fund managers must demonstrate fitness for registration at the time they apply for registration, and they must continue to do so throughout the period that they are registered.
For a firm, fitness for registration is assessed in terms of the firm's ability to carry out its obligations under securities legislation, including the maintenance of:
adequate working capital and insurance, books and records
robust compliance systems
procedures for dealing with clients, such as at account opening and in ongoing reporting.
Fitness for registration is assessed through proficiency, integrity and solvency criteria. For individual representatives, registration means that they have met the minimum standards for education and experience required for their category of registration.
2. Setting the bar
Together with the self-regulatory organizations (SROs), securities regulators administer, develop, update and enforce the rules for all firms and individuals that operate in Canada’s markets, including public companies, investment funds, intermediaries, investors, dealers, advisers and investment fund managers.
3. Checking in
Securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) regularly monitor firms, public companies and dealers, investment fund managers or advisers to make sure they’re meeting standards and following the rules. IIROC sets out the Universal Market Integrity Rules (UMIR) which govern all trading practices in Canada.
4. Fair markets
Securities regulators and IIROC oversee all securities marketplaces in Canada, including the Toronto Stock Exchange (TSX) and TSX Venture Exchange. They watch markets closely and monitor compliance with securities law and rules. Public companies must disclose information on a timely basis and in accordance with securities laws.
5. Taking action
If an individual or firm breaks rules of conduct, regulators take action, such as imposing appropriate sanctions or other disciplinary measures to prevent future harm. This could include placing terms and conditions on an individual or firm’s registration or suspending or revoking registration if the firm or individual becomes unfit for registration.
Clean sweep: Regular compliance reviews are one way the OSC checks whether firms are following securities regulations. Some reviews are targeted inspections, or sweeps, where the regulator focuses on one particular issue or theme, across a sample of registered firms. The OSC recently performed a sweep of 87 portfolio managers and exempt market dealers to assess their compliance with know-your-client, know-your-product and suitability obligations to check whether firms are investing appropriately for their clients. As part of this sweep, the OSC called clients of portfolio managers and exempt market dealers to ask questions about their experiences with the firm. The OSC issued its findings and is also planning to publish best practices and guidance to firms on these issues.
Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca
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