On March 28, 2024, the Canadian Securities Administrators (“CSA”) published two reports (the “Reports”) relating to their oversight of the Canadian Investment Regulatory Organization (“CIRO”) and the Canadian Investor Protection Fund (“CIPF”). The Reports are intended to improve transparency, foster public confidence in the regulatory framework and describe the CSA’s role in overseeing CIRO’s and CIPF’s compliance with securities rules.

Activities Report

CSA Staff Notice 25-311 2023 Annual Activities Report on the Oversight of Canadian Investment Regulatory Organization and Canadian Investment Protection Fund summarizes the key oversight activities that were conducted in 2023. Oversight of CIRO and CIPF is governed by memorandums of understanding among the Canadian securities regulators. Two regulators are designated as coordinators, with the British Columbia Securities Commission and the Ontario Securities Commission designated as the inaugural coordinators, who serve for four years on a staggered rotation. Oversight activities include reviewing amendments to CIRO’s rules, CIPF’s policies and by-laws and CIRO and CIPF filings. In 2023, there was a focus on various transition initiatives following the amalgamations that formed each of CIRO and CIPF on January 1, 2023.

Oversight Review Report

The Oversight Review Report of the Canadian Investment Regulatory Organization evaluates whether CIRO complied with the terms and conditions of its recognition orders during the reporting period. The CSA’s annual oversight review targeted the following areas: (i) corporate governance; (ii) trading review and analysis; and (iii) financial and operations compliance (“FinOps”) and financial compliance. Review staff (“Staff”) identified two medium-priority findings that were not addressed in CIRO’s policies and procedures:

• the written procedures in the FinOps department did not require that notification be provided to all relevant Canadian securities regulators when an early warning or capital deficiency letter is issued to a dealer member; and
• the written policies and procedures in the financial compliance department did not require the designation of a dealer member into early warning when certain issues are identified during a compliance examination.

Following the review, both departments updated their relevant policies and procedures to resolve these issues. Other than the findings noted above, Staff did not identify concerns with CIRO meeting the terms and conditions of the recognition orders.

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