The Investment Industry Regulatory Organization of Canada (IIROC) today proposed the introduction of a "Restricted Dealer Member" class of IIROC member. According to IIROC, the proposed new category is intended to respond to policy concerns regarding exempt market dealers, typically based in the U.S., that are conducting brokerage activities in Canada. As we discussed in a September 2011 post, the CSA considered the issue last year.
To that end, the proposed Restricted Dealer Member category would be limited to U.S. FINRA-members, whose business activity would be limited to the scope of business activity approved by FINRA in the firm's membership agreement with the U.S. regulator. Further, more than 50% of the firm's securities would have to be owned by foreign entities or residents. As such, the RDM category would be unavailable to Canadian investment dealers.
Under the proposal, and among other things, a Restricted Dealer Member would be subject to a prescribed de minimis threshold of business activity, restricted to dealing with prescribed “retail” and “institutional” investors and would not be permitted to rely on the international dealer or international adviser exemption from registration in NI 31-103.
IIROC is accepting comments for 90 days from today.