IIROC Best Execution Amendments and Guidance

Darin Renton

On July 6, 2017, the Investment Industry Regulatory Organization of Canada (IIROC) published final amendments to the Universal Market Integrity Rules (UMIR) and the Dealer Member Rules (DMR) related to best execution requirements which will come into effect on January 2, 2018. Associated guidance was published concurrently.

The amendments, which are set out in IIROC Notice 17-0137 -- Amendments Affecting Best Execution (Amendments), consolidate the existing UMIR best execution requirements and the DMR for fair pricing of over-the-counter securities into Rule 3300 Best Execution of Client Orders. Among other things, the Amendments will require a Dealer Member to adopt written policies and procedures reasonably designed to ensure best execution when acting for a client and a Dealer Member must provide training to ensure its employees know and understand the requirements. Under Rule 3300, Dealer Members will be required to review their best execution policies and procedures at least annually and provide clients with written best execution disclosures prescribed in the Rule, including a description of the Dealer Member's best execution obligation under the Rule and the factors considered for the purpose of achieving best execution.

Final guidance published concurrently with the Amendments can be found in IIROC Notice 17-0138 -- Guidance Respecting Best Execution. The Guidance clarifies various requirements in Rule 3300 and provides further detail as to how Dealer Members can comply with these requirements in a series of 25 "frequently asked questions and responses".

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