The Canadian Investment Regulatory Organization (“CIRO”) recently published for comment proposals relating to Phase 2 of its rule consolidation project (the “Rule Consolidation Project”), which is designed to bring together the rules currently applicable to investment dealers and mutual fund dealers. Phase 2 involves the adoption of rules to be retained that are unique to the Investment Dealer and Partially Consolidated (“IDPC”) or Mutual Fund Dealer (“MFD”) rules and have been assessed as not having a material impact on stakeholders.

The primary objectives of the Rule Consolidation Project are to:

• achieve greater harmonization to: (i) ensure that similar dealer activities are regulated in a comparable manner; and (ii) minimize regulatory arbitrage between investment dealers and mutual fund dealers;
• where practical and appropriate, adopt less prescriptive and more principles-based requirements to facilitate rules that are scalable and proportionate to different types and sizes of dealers and their respective business models; and
• improve access to and clarity of rules applicable to all CIRO dealer members.

CIRO has determined that the consolidated rules will follow the organizational structure of the IDPC rules and that the rules will be developed and implemented in five phases.

Under Phase 1 of the Rule Consolidation Project, published on October 20, 2023, CIRO proposed a structure for the consolidated rules, including provisions respecting rule interpretation, definitions of common application, rule exemption provisions and general standards of conduct applicable to all activities of dealers and their employees.

The Phase 2 proposals relate to margin, debt markets and inter-dealer bond brokers and trading and generally involve the adoption of provisions from the existing IDPC rules.

CIRO is accepting comments on the proposed rules until March 11, 2024. For more information, see CIRO Bulletin 24-0007 Rule Consolidation Project – Phase 2.

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