The IIAC has reviewed the Proposed Rule Amendments: Fully Paid Lending and Financing Arrangements . A summary of the views expressed is as follows:

1. Public Consultation Is Key: The proposed Rules grant CIRO discretion to make material changes to Dealer Member’s FPL programs which should be subject to public comment.

2. Risk Disclosures Should be Helpful and Meaningful to Investors: To be helpful and meaningful to investors, risk disclosures should be balanced, accurate and reflect the materiality and remoteness of the risk.

3. Investor Opportunities and Benefits should be Expanded : The securities eligible to be lent should be expanded to include all securities that meet the definition of a qualified security pursuant to the Income Tax Act (RS. C,1 (5th Supp).

4. Collateral that Meets Investor Protection Concerns is Maintained: The full market value (100%) of the securities borrowed has provided sufficient protection of investor assets. Rule 4624(3), and corresponding guidance, should continue to require 100% of the market value of the securities borrowed as collateral.

5.Investors Serviced by a Portfolio Manager Should Be Provided with the Full Benefit of that Expertise: Retail investors serviced by a portfolio manager, licensed through CIRO or directly by a member of the Canadian Securities Administrators, should fully benefit from the discretionary services they provide.

6. Investors Serviced by an Introducing Broker or Portfolio Manager Subject to Dealer Member Service Agreements Should have Ease of Access to Fully Paid Securities Lending Opportunities: A new and expedited process is needed, whereby registrants with leverage accounts and not subject to any early warning, are able to proceed to offer FPL, in accordance with rules and without notification requirements.

7. Retail Investor Risk Tolerances Should be Addressed in accordance with suitability obligations: Participation in fully paid securities lending is more properly considered in an overall risk assessment of an investor’s accounts and risk tolerance in accordance with suitability obligations. Suitability requirements at Rule 3402(1)(ii) and 3402(3) require that the action put the retail client’s interest first, which were not in effect at the onset of the securities paid lending program.

8. Recording Keeping and Client Communications Should Reflect Investor and Dealer Needs: These include amendments for marked-to-market cash value and inter-listed securities.

9. Reasonable Transition Periods are Needed.

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