IIROC Carrying Broker Agreement: A Comprehensive Guide
If you are involved in the Canadian securities industry, then you may be familiar with the term IIROC (Investment Industry Regulatory Organization of Canada). IIROC is a self-regulatory organization that oversees the activity of firms that operate in the Canadian securities market. As a carrying broker, you may be required to enter into an agreement with IIROC, known as the IIROC Carrying Broker Agreement. In this article, we will take a closer look at this agreement and what it means for carrying brokers.
What is an IIROC Carrying Broker?
Before we delve into the details of the agreement, let us first define what an IIROC carrying broker is. A carrying broker is a firm that maintains custody of client assets and executes trades on behalf of another firm (known as the introducing broker). The introducing broker maintains the client relationship and is responsible for compliance with applicable regulations. The carrying broker provides operational support, such as trade processing, settlement, and custody services.
The IIROC Carrying Broker Agreement
The IIROC carrying broker agreement is a legally binding contract that outlines the terms and conditions under which the carrying broker will provide services to the introducing broker. The agreement is required by IIROC as a condition of registration. It is designed to ensure that client assets are adequately protected and that both the introducing broker and the carrying broker comply with applicable regulations.
The agreement covers a range of topics, including:
1. Client accounts and assets
The agreement requires the carrying broker to maintain separate client accounts and to hold client assets in trust. The carrying broker must ensure that client assets are protected from loss or misuse and that they are clearly identifiable as belonging to each client.
2. Trade execution and settlement
The carrying broker is responsible for executing trades on behalf of the introducing broker and ensuring that they are settled in a timely and efficient manner. The agreement sets out the procedures for trade execution and settlement and requires the carrying broker to maintain adequate systems and controls to ensure compliance.
3. Reporting and record-keeping
The carrying broker is required to provide regular reports to the introducing broker on the status of client accounts and transactions. The agreement also sets out the record-keeping requirements for both the introducing broker and the carrying broker, including the retention of all relevant documents and records.
4. Compliance and risk management
The carrying broker must comply with all applicable laws, regulations, and IIROC rules. The agreement requires the carrying broker to maintain robust compliance and risk management policies and procedures and to provide regular reports to IIROC on its compliance activities.
Conclusion
The IIROC carrying broker agreement is an important document for carrying brokers in Canada. It is designed to ensure that client assets are adequately protected and that both the introducing broker and the carrying broker comply with applicable regulations. By entering into this agreement, carrying brokers can demonstrate their commitment to the highest standards of client protection and regulatory compliance.