The traditional advisory and brokerage business is replete with extensive conflicts of interest, notably the conflicts between buyers and sellers, from proprietary dealings though dealers in over-the-counter debt securities, new securities offerings, and the fees and charges to clients for services. These inherent conflicts have been the driving force behind the reforms for greater transparency in client dealings and for a higher standard of obligations for advisors.
In 2012, IIROC implemented Rule 42, a principles-based rule requiring firms to identify and manage conflicts of interest in the business.
In my June 2017 Letter from the President, I discuss compensation-related conflicts and IIROC’s review of Rule 42. The industry views IIROC’s review of this rule as a positive initial step, and anticipates more detailed guidance on compensation-related conflicts and an assessment of the rule’s overall effectiveness.
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