For Schedule B (click here)
Ontario Securities Commission
Chapter 2 - Decisions, Orders and Rulings
RECOGNITION:-- WHEREAS on December 14, 1994 the Commission recognized the IDA as a self-regulatory organization pursuant to section 21.1 of the Act subject to the condition that such recognition, unless theretofore extended by the Commission, would terminate on August 31, 1995;
AND WHEREAS on August 18, 1995 the Commission recognized the IDA as a self-regulatory organization pursuant to section 21.1 of the Act in respect of the period on and after August 31, 1995 subject to the condition that such recognition, unless theretofore extended by the Commission, would terminate on October 31, 1995;
AND WHEREAS the IDA has formally applied for recognition as a self-regulatory organization in respect of the period on and after October 31, 1995;
AND WHEREAS Commission staff has conducted a review of the IDA's compliance and enforcement operations and of its rules;
AND WHEREAS the IDA has agreed to the undertakings attached hereto as Schedule "B";
AND UPON considering the recommendation of staff and the submissions of the IDA;
AND UPON the Commission being satisfied that the recognition of the IDA in respect of the period on and after October 31, 1995 would be in the public interest;
The Commission hereby recognizes the IDA as a self-regulatory organization pursuant to section 21.1 of the Act in respect of the period on and after October 31, 1995 subject to the terms and conditions attached hereto as Schedule "A".
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1. The IDA shall enforce as a matter of contract compliance by its members and their Approved Persons with the rules of the IDA, without prejudice to any discipline by the Commission under Ontario securities law.
2. The IDA must provide the Commission and CIPF with prompt notice of material or critical cases and reportable conditions, and the IDA shall promptly advise the Commission when any member has failed to file on a timely basis any required financial or operational report. For greater certainty, the Commission shall be notified forthwith of the triggering of all early warning thresholds which would reasonably be expected to raise concerns about a member's liquidity, risk-adjusted capital or profitability, and on a quarterly basis of the triggering of all early warning thresholds which did not raise such concerns, and in each case the Commission shall be advised of the circumstances and the IDA's response thereto, together with the identity of the member in the former case.
3. The IDA shall promptly report to the Commission misconduct or apparent misconduct by members and their Approved Persons and others where investors, clients, creditors, members, CIPF or the IDA may reasonably be expected to suffer serious damage as a consequence thereof, including where the solvency of a member is at risk, serious fraud is present or there exist serious deficiencies in supervision or internal controls. In addition, the IDA must advise the Commission promptly following the taking of any action by it with respect to any member in financial difficulty.
6. The IDA shall maintain its ability to perform its self-regulatory functions, including those specified in paragraph 16 of the Recognition Criteria [(1995) 18 OSCB 2671 at 2675], and shall advise the Commission at least annually of its self-regulatory staff complement, by function, and of any material changes or reductions in self-regulatory staff, by function.
7. The IDA shall advise the Commission in advance of any proposed material changes or reductions in its financial audit or operational and sales compliance review programmes, including as to procedures or scope, of any proposed changes in its external audit instructions and of any proposed material changes or reductions in the operation of its investigation or enforcement programmes.
8. The IDA shall cooperate and assist with any surprise, regular or other reviews of its self-regulatory functions by CIPF and/or the Commission. In addition, in the event that the Commission is of the view that there has been a serious apparent failure in the IDA's fulfilment of its self-regulatory functions, the IDA shall upon the request of the Commission be required to undergo an independent third party review on terms and by a person or persons satisfactory to or determined by the Commission, which review shall be at the expense of the IDA, provided that where appropriate such reviews shall be conducted by or on behalf of CIPF.
9. The IDA shall provide the Commission with, an annual report and with such information regarding its affairs, financial and other, as may be requested from time to time. The annual report shall be in such form as may be specified by the Commission from time to time.
10. Management of the IDA shall at least annually self-assess the IDA's performance of its self-regulatory responsibilities and report thereon to the executive committee, together with any recommendations for improvements. The executive committee shall be responsible for reporting to the Board as to the IDA's performance of its self-regulatory responsibilities, and the executive committee shall include at least one public director. The IDA shall provide the Commission with copies or summaries of such reports and advise the Commission of any proposed actions arising therefrom.
11. The IDA shall provide its budget and audited financial statements to the Commission on an annual basis following adoption thereof.
12. The IDA shall comply with paragraphs 14 and 15 of the Recognition Criteria [(1995) 18 OSCB 2671 at 2674-75] with respect to making, amending and revoking rules.
13. The IDA shall not make fundamental changes to its organizational structure which would affect its self-regulatory functions without prior Commission approval, and shall give the Commission notice of new directors, officers and committee chairpersons, including a 5 year employment history and information as to prior involvement in criminal (other than highway traffic), administrative or insolvency proceedings and civil proceedings involving business conduct or alleging fraudulent conduct or deceit in respect of each such person.
14. The IDA shall cooperate, by the sharing of information and otherwise, with CIPF, the Commission and its staff, and other Canadian federal, provincial and territorial recognized self-regulatory organizations and regulatory authorities, including without limitation those responsible for the supervision or regulation of securities firms, financial institutions and competition matters.
15. A copy of all written notices to members shall be provided to the Commission.
16. The IDA shall wherever practicable document its interpretations of its rules and distribute them to its members and the Commission.
17. The IDA shall immediately advise each other self-regulatory organization to which a member is subject of any breach or apparent breach of the rules thereof of which the IDA becomes aware.
18. From and after the date hereof, activities which are identified by the IDA as being primarily of a trade association or lobbying character shall be appropriately structurally separated from the self-regulatory operations of the IDA and involve separate persons within the IDA. Such activities would include, for example, representations to governments concerning industry commission or fee structures, industry ownership and foreign participation in the Canadian securities industry. In addition, the IDA shall in its annual report include a statement as to its aggregate expenditures and the proportion of its total expenditures in the area of member regulation.
19. The IDA shall ensure that it is accessible to the public and shall designate and make public the names and telephone numbers of persons to be contacted for various purposes, including complaints and enquiries.
In connection with the recognition of the IDA as a self-regulatory organization pursuant to section 21.1(1) of the Securities Act (Ontario) in respect of the period on and after October 31, 1995: