CIRO’s proposed changes to client delivery obligations
The proposal could introduce new responsibilities for investment dealers to identify and address client failures to deliver securities, particularly in connection with short sales, affecting compliance, operations, and market practices.
Submission – CIRO – Proposed Amendments Respecting Client Delivery Obligations
Recipients
- Canadian Investment Regulatory Organization (CIRO)
Industry segments this resource supports
- Capital markets
Summary
SIMA responded to CIRO’s proposed amendments respecting client delivery obligations. The consultation concerns new requirements that would require applicable investment dealers to establish policies and procedures to identify and address client failures to deliver securities following certain listed-security transactions and to begin remedial action within specified timeframes when a failure to deliver relates to a short sale.
Why this matters: The proposal could introduce new responsibilities for investment dealers to identify and address client failures to deliver securities, particularly in connection with short sales, affecting compliance, operations, and market practices.
Key takeaways
- CIRO has proposed amendments that would require applicable investment dealers to maintain policies and procedures designed to detect and address client failures to deliver securities.
- The proposal would require action to begin no later than five business days after settlement where a failure to deliver is related to a short sale of a listed security.
- The proposed framework takes a conduct-based and principles-based approach to addressing delivery failures.
- The consultation considers how obligations should be assigned to the investment dealer that maintains the client relationship.
- The proposal also includes consideration of a “deemed to own” exception and the operational impacts of the amendments.
