IIROC sets new fee models to reflect drivers of regulatory costs

TORONTO, March 29, 2012 /CNW/ - The Investment Industry Regulatory Organization of Canada (IIROC) is implementing new fee models for market and dealer regulation to better reflect the evolution of trading activity and the drivers of IIROC's regulatory costs.

Effective April 1, the changes are the direct result of extensive stakeholder consultations, guided by an industry committee representing a cross-section of firms and marketplaces that IIROC regulates.

"We developed the new fee models based on the principles of fairness, transparency and industry competitiveness," said Susan Wolburgh Jenah, IIROC's President and Chief Executive Officer.

"We recognize that these are challenging economic times and we are committed to prudent fiscal management while ensuring that we have the appropriate tools to fulfill our regulatory mandate in an effective manner."

The new fee structure replaces two fee models that were in place at IIROC's predecessor organizations, the Investment Dealers Association of Canada (IDA) and Market Regulation Services Inc. (RS).  IIROC has been working with the industry to help prepare members by providing fee model guidelines, pro forma invoices and supplementary information in advance of the implementation.

IIROC operates on a cost-recovery basis and has returned almost $12 million to the industry since 2008 in operational surpluses. Being a cost-effective organization is one of IIROC's five priorities identified in its Strategic Plan. Read more here.

Highlights of IIROC's new fee models:

• Under both models, each member's share of fees paid will take into account its usage of IIROC's regulatory resources.
• Both fee models are designed not to inhibit new entrants or to favour one marketplace or dealer over another.
• For the Dealer Regulation model, dealer fees are determined by a firm's revenue tier and number of IIROC-registered staff.  They include a modest risk premium for higher-risk firms to reflect IIROC's costs of compliance oversight.   As a result, 25% of firms will see a decrease and 37 % will see an increase in fees under the new model.   Some firms will be affected by a higher minimum fee, which will see its first increase in more than 10 years, from $25,000 to $27,500.
• Under the Market Regulation model, the fees a dealer pays are now based on two components:
1. its share on each marketplace of the total number of messages processed by IIROC's surveillance system for technology costs; and
2. its share on each marketplace of the total number of trades for all other costs.

IIROC is one of the first financial regulators globally to propose and implement recovering technology costs based on messages. Approximately 85% of firms will see a decrease based on the new market regulation model, while 15% of firms will experience a fee increase.

For full details on the integrated fee model and its various components, please see IIROC's February 3^rd, 2012 Administrative Notice, "Approval of Integrated Fee Model" and "IIROC Fee Model Guidelines" from March 5^th, 2012.

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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. 

Lucy Becker
Vice President, Public Affairs
416.943-5870
[email protected]

David Thomas
Director, Public Affairs
416.943-6921
[email protected]