TORONTO, Jan. 13, 2014 /CNW/ - The Investment Industry Regulatory
Organization of Canada (IIROC) today issued two final Guidance Notes,
one to clarify the requirements of Member-Dealer firms who engage in
outsourcing arrangements, and another with specific focus on one form
of outsourcing--clearing arrangements.
Guidance on outsourcing helps IIROC Member Dealers to understand their obligations so that they
may manage the associated risks, and also ensures consistency among
firms and with guidelines from other regulators.
In addition to summarizing requirements for entering into and
maintaining outsourcing arrangements, the Guidance identifies the
business activities that may be outsourced and the functions that may
not be outsourced, and sets IIROC expectations for appropriate due
Interest by firms in contracting business functions, activities and
processes to third-party service providers is growing amid increasing
competitive pressures. "We want to ensure we strike the right balance
between requiring the appropriate protections while reflecting the
business realities that prompt firms to outsource functions," said
Rosemary Chan, IIROC Senior Vice-President, Member Compliance, General
Counsel and Corporate Secretary.
Clearing arrangements, in which back-office services are outsourced from dealers to other
dealers, primarily for the purpose of clearing and settling trades, are
specifically addressed by IIROC in a separate Guidance Note also issued
Draft Guidance on clearing arrangements was issued for public comment in
October 2012 and the final notice takes into account responses from
stakeholders. The Final Guidance defines a clearing arrangement,
explains the services provided by a clearing dealer under a clearing
arrangement, and outlines the specific, practical issues and
outsourcing due diligence obligations that should be addressed when
considering whether to enter into a clearing arrangement.
IIROC is the national self-regulatory organization which oversees all
investment dealers and trading activity on debt and equity marketplaces
in Canada. Created in 2008 through the consolidation of the Investment
Dealers Association of Canada and Market Regulation Services Inc.,
IIROC sets high quality regulatory and investment industry standards,
protects investors and strengthens market integrity while maintaining
efficient and competitive capital markets.
IIROC carries out its regulatory responsibilities through setting and
enforcing rules regarding the proficiency, business and financial
conduct of dealer firms and their registered employees and through
setting and enforcing market integrity rules regarding trading activity
on Canadian equity marketplaces.
SOURCE: Investment Industry Regulatory Organization of Canada (IIROC) - General News
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