CIRO’s Proposed Amendments Regarding Client Delivery Expectations

Regulators should show, at a minimum, that any conduct of concern exists at a meaningful scale, that it causes identifiable harm, that current rules are inadequate and that their regulatory resources and intervention is proportionate to a clearly identified problem of scale and does not burden benign activity.

For settlement failures, CIRO has substantially revised its initial proposal and removed proposed mandatory close out and pre-borrow requirements. While this represents progress, further consideration is needed.

CIRO’s  Impact Assessment states that most investment dealers already maintain escalation processes to identify and resolve client delivery failures, whether or not those failures result in a Clearing and Depository Services Inc (CDS) settlement fail.

CIRO has not demonstrated that existing dealer practices are deficient or that the Revised Proposal addresses a meaningful market harm.

Where the Revised Proposal largely codifies current dealer practice, regulatory resources would be better directed to higher-priority initiatives.

Alternatively, where the Revised Proposal imposes additional obligations, these require a clear evidence-based need and should reflect a reasonable system of supervision based on market realities

The disclosure of missing data and the application of a commercially reasonable efforts standards is needed. See details ici.