IIROC – Proposed Amendments to Form 1 and corollary amendments to the IIROC Rules

June 10, 2021 – To improve consistency of IIROC requirements by providing greater clarity, conciseness of defined terms, and incorporating plain language writing conventions in Form 1.

Background
In February 2018, introduced new terms “applicable exchange” and “acceptable exchange” to replace “recognized exchange”. CSAs use the same terms with different meanings in rules. New defined terms inadvertently created inconsistencies with IIROC rules for securities listings eligible (and not eligible) for margin or preferred margin treatment.

Proposed Amendments
To facilitate greater consistency in margin treatment of listed securities, proposed to eliminate the use of the terms “applicable exchange” and “applicable association”. Given criteria listed in terms are best suited within the definition of the regulated entity. The revised definition of “acceptable exchange”, focuses on margin eligibility, preferred margin treatment, like adequate initial and ongoing listing requirements and trading rules.

Remove any requirement for exchange to regulate the activities of dealer participants, as this is not relevant to determining margin eligibility / preferred margin treatment. Revised references to “applicable exchange” and “applicable association” in Form 1.

Amendment in Form 1
Currently, term valuation in Form 1 does not explicitly describe a departure from IFRS. Instead, reference to the implementation of Phase 2 of the Client Relationship Model project. Re-written to differentiate IIROC market value from IFRS fair value definition. Affect Form 1 general notes and definitions, notes, and instructions to Schedule 11 and 11A.

Corollary Amendments to IIROC Rules
Made corollary amendments to IIROC Rules reflecting the changes described. Used term acceptable exchange exclusively when determining margin eligibility/treatment, and generic exchange where the requirement to include stock exchanges generally. Where relate to exchange that futures contract or futures contract option listed, harmonized commodity futures exchange, applicable exchange, and acceptable exchange by replacing them with the more general term futures exchange.

Effectiveness
Comments on the proposed amendments should be in writing by July 12, 2021. Expect to be implemented on December 31, 2021, the same implementation date as IIROC Rules.

For more information, visit www.iiroc.ca.

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