Introduction arrangements
This presentation is the property of its rightful owner.
Sponsored Links
1 / 8

Introduction Arrangements PowerPoint PPT Presentation


  • 78 Views
  • Uploaded on
  • Presentation posted in: General

Introduction Arrangements. Louis P. Piergeti VP, IIROC March 29, 2011. NI 31-103 Requirements. NI 31-103 Requirements. NI31-103 requirements (cont’d). NI31-103 requirements (cont’d).

Download Presentation

Introduction Arrangements

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Introduction arrangements

Introduction Arrangements

Louis P. Piergeti

VP, IIROC

March 29, 2011


Ni 31 103 requirements

NI 31-103 Requirements


Ni 31 103 requirements1

NI 31-103 Requirements


Ni31 103 requirements cont d

NI31-103 requirements (cont’d)


Ni31 103 requirements cont d1

NI31-103 requirements (cont’d)


Considerations in the event of a ew cd or insolvency event of an introducer

Type 1 and 2 carrying broker lien on an introducer’s comfort deposit is limited to customer credit risk exposure resulting from margin requirements, including unsecured debits. In the event of an insolvency of an introducer, the credit loss to the carrying broker may exceed the introducer’s comfort deposit.

Type 3 and 4 introduction arrangements should include a clause in the supplementary schedules to the prescribed agreement requiring the introducer to promptly notify the carrying broker of material changes in the financial status of the firm such as early warning and capital deficiency occurrences.

IIROC will notify all type 1 and 2 carrying brokers of early warning and capital deficiency occurrences and provide details of sanctions and business restrictions imposed on the introducer.

IIROC will promptly notify all carrying brokers of membership suspensions and appointment of trustee for insolvency.

The termination of all introduction agreements is subject to IIROC approval. All carrying brokers must co-operate with suspension or court orders that require continued service to introduced customer accounts. This may include instructions to close inventory and customer open contract positions, assign investment advisor to process customer orders to liquidate positions or cover short positions, carrying out customer instructions to transfer out.

Customer protection priority for IIROC and CIPF is to work towards a successful bulk transfer of all customer accounts to another dealer as expeditiously as possible in the event of an insolvency or permanent suspension of an introducer.

Considerations in the event of a EW, CD or insolvency event of an introducer


Common deficiencies introducers

Failure to reclassify comfort deposit as non-allowable asset for amounts representing margin lien by carrying broker to cover customer margin requirements.

Failure to reclassify comfort deposit as non-allowable asset for amounts unsecured customer debit balances.

Failure to provide inventory margin on securities processed through average price inventory accounts assigned by carrying broker for “all or none” customer trade orders.

Inadequate credit risk management policies and procedures and/or failure to apply policies of the carrying broker to its customers.

Failure to perform independent price verification on inventory holdings.

Lack of procedures in place to monitor performance of certain outsourced functions such as monitoring of segregation of customer fully paid and excess margin securities.

Failure to margin, report and/or reconcile trades jitnied with other brokers.

Failure to report customer complaints on Comset.

Common deficiencies - Introducers


Common deficiencies carriers

Differing standards of due diligence work and risk assessment of prospective introducing clients.

Inadequate policies and procedures to monitor and/or restrict introducer (type 1-3) customer and inventory funding requirements.

Inadequate credit risk policies and procedures applied to type 1 and introducing customers.

Failure to promptly notify introducer - in writing - of lien on comfort deposit taken to offset introducer customer margin requirements (including unsecured balances).

Failure to provide appropriate customer margin for guaranteed fill customer trade orders processed though inventory accounts assigned to introducer for average price accumulation and client trade ticketing.

Failure to provide annual section 5970 report to introducer and its auditors.

Failure by auditors of carrying broker to include type 1 and 2 customer accounts in year-end confirmation process.

Common deficiencies - Carriers


  • Login