The IIAC supports the expansion of options available to investors across CIRO regulated firms. The IIAC recognizes the continuing value of advisory channels and their knowledgeable financial professionals and the continuing growth of technological tools that are profoundly impacting the securities industry, challenging our thinking and presenting new, different regulatory considerations.
We thank CIRO for considering and accepting our prior recommendations. that:
- Significant changes to some of the terminology in the OEO Guidance are warranted, particularly concerning the meaning of “recommendation” within the context of the recommendation prohibition.
- The current emphasis on whether information provided by an OEO Dealer could reasonably be expected to “influence” an investor or might be “relevant” to their decision-making and whether information is “pushed” or “pulled” to a client or group of clients, requires reconsideration.
- The key distinction should be whether the advice is non-tailored and intended to assist clients in making better decisions for themselves.
- It is beneficial to revisit the lists of examples of permitted tools to provide OEO Dealers with a reasonable degree of certainty regarding the regulatory intent of the revised guidance.
On an OEO platform, the investor has chosen to drive all investment decisions. The investor is provided with a series of tools. These tools are non-tailored and do not comprise a recommendation to purchase, sell, hold or exchange any security, including any class of security or security of a class of issuer. The investor may choose to use these tools (or not) to tailor investments decisions for themselves.
Canadian regulators should be mindful of specific tool and services broadly available to investors outside of OEO platforms in Canada and on OEO platforms in other jurisdictions, particularly the US. Canadian regulators should ensure investors on Canadian OEO platforms have the same benefits.
The current prevalence of investment tools, including copy trading, and finfluencers, is likely to grow rather than dissipate.
Copy trading meets the definition of non-tailored advice. Firms offering copy trading services must register.
Referral arrangements with finfluencers are widespread, the subject of global regulatory review and not specific to OEO platforms. Due diligence and ongoing monitoring of referral arrangements of finfluencers can be addressed by applying current CIRO IDPC Rules and Guidance.
Investor alerts and warnings should be issued by the Canadian Securities Administrators who may choose to delegate the function to CIRO.
The IIAC’s full responses to CIRO’s consultation questions are here.
