Given the move to more permanent work from home (WFH) arrangements by some dealer firms, the Investment Industry Regulatory Organization of Canada (IIROC) recently published Guidance on WFH arrangements.
The Guidance clarifies IIROC’s expectations relating to the registration of a “business location” under IIROC rules and the supervision of approved persons by their dealer firms.
IIROC rules define a “business location” as a physical location where, on a regular and ongoing basis, at least one of a dealer member’s employees or agents conducts business that requires IIROC approval or registration under securities legislation. Business locations may include a residence.
Key IIROC WFH guidance includes the following:
- IIROC continues to support taking a flexible approach to WFH arrangements for IIROC approved persons, but reminds dealer firms that they are required to notify IIROC of the opening, closing, change of address or change of supervision of a “business location”.
- In determining whether a residence needs to be reported as a “business location”, dealer firms should look to whether:
- there is a regular and ongoing WFH arrangement; and
- any one of the following factors are present:
- more than one approved person conducts registerable activities on behalf of the dealer at the residence, unless multiple approved persons reside in the same residence
- the residence is held out to the public as a business location by the individual or the dealer firm (for example, by way of signage or business cards)
- the individual meets with clients at the residence
- the individual maintains records at the residence relating to an activity that requires registration that are not duplicated at the dealer member’s offices.
- IIROC expects dealer firms to maintain an up-to-date record of all approved persons who have a regular and on-going WFH arrangement, whether or not the dealer has notified IIROC of the location as a “business location”. The record must include the following information:
- the date on which the regular and on-going WFH arrangement started
- a description of the activities that occur at the individual’s residence
- the enhanced supervision assessed and/or introduced in order to address any oversight gaps that may be arising from the WFH arrangement
- potential conflicts of interest arising from the WFH arrangement, and how they have been addressed, and
- the end date of the WFH arrangement, if applicable.
- Dealer firms need to assess whether a WFH arrangement requires new or modified supervision procedures and practices in light of the firm’s specific business model, the approved person’s role and activities, and the firm’s existing supervisory structure.
- IIROC may review a firm’s remote supervision structure as part of its Business Conduct Compliance (BCC) examination program. Dealers should be prepared to provide the information outlined above to BCC examination staff. BCC will continue to use the list of business locations on the National Registration Database to plan examinations. BCC may also review the list maintained by a dealer firm to determine which, if any, WFH arrangements should be examined to asses whether they constitute “business locations”.
Dealer firms who employ WFH arrangements are encouraged to review their policies and procedures in light of the IIROC Guidance and provide training to applicable staff to ensure adherence to such policies and procedures.
Original title of blog post: IIROC guidance clarifies expectations regarding supervision of work from home arrangements and registration of business locations
By Cristian O. Blidariu, Sean D. Sadler and Rene Sorell
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