CIRO proposes amendments to fully paid securities lending rules
16 February 2024 Canada
Image: Mohamad_Zaki/stock.adobe.com
The Canadian Investment Regulatory Organization (CIRO) has proposed amendments to rules relating to fully paid securities lending and financing arrangements.
Fully paid securities lending refers to the dealer member practice of borrowing a client’s fully paid or excess margin securities. The practice is not new in Canada and forms part of securities lending in general.
It will impact the Investment Dealer and Partially Consolidated (IDPC) Rules and IDPC Form 1.
These amendments aim to enhance the rule framework regarding retail fully paid securities lending, as well as to address inconsistencies in the existing financing arrangements rules.
In terms of full paid lending, the organisation proposes to introduce a new Part B.2. in Rule 4600 of the IDPC, entitled Borrowing Retail Client Fully Paid and Excess Margin Securities.
It also intends to make corresponding amendments to the Notes and Instructions of impacted Statements and Schedules in IDPC Form 1.
CIRO will update its rules to address lessons learnt from dealer members offering fully paid lending programmes.
The self-regulatory organisation says the amendments will have a “positive impact” on investors, institutional and retail, and dealer members as it will “codify and clarify measures that are intended to protect retail investors”.
Further, the move aims to enhance procedural efficiency, as well as flexibility with regard to different lending models and client types.
Fully paid securities lending refers to the dealer member practice of borrowing a client’s fully paid or excess margin securities. The practice is not new in Canada and forms part of securities lending in general.
It will impact the Investment Dealer and Partially Consolidated (IDPC) Rules and IDPC Form 1.
These amendments aim to enhance the rule framework regarding retail fully paid securities lending, as well as to address inconsistencies in the existing financing arrangements rules.
In terms of full paid lending, the organisation proposes to introduce a new Part B.2. in Rule 4600 of the IDPC, entitled Borrowing Retail Client Fully Paid and Excess Margin Securities.
It also intends to make corresponding amendments to the Notes and Instructions of impacted Statements and Schedules in IDPC Form 1.
CIRO will update its rules to address lessons learnt from dealer members offering fully paid lending programmes.
The self-regulatory organisation says the amendments will have a “positive impact” on investors, institutional and retail, and dealer members as it will “codify and clarify measures that are intended to protect retail investors”.
Further, the move aims to enhance procedural efficiency, as well as flexibility with regard to different lending models and client types.
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