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On August 22, the Canadian Investment Regulatory Organization (CIRO) proposed updated guidance for order execution only (OEO) dealers that is intended to broaden the types of decision-making supports (e.g. alerts, notifications, self-assessment tools) that such dealers can provide to their clients without crossing the line into providing prohibited investment recommendations. The CIRO guidance outlines safeguards that OEO dealers should consider when offering these supports to clients. The key safeguards include managing or avoiding conflicts of interest, and providing clear disclosures and supplementary information that the OEO Dealer cannot recommend any specific investment decision.
The proposed guidance would consider a statement a (prohibited) recommendation "if it endorses a specific investment decision for the client". As a result, informational resources and other decision-making supports that do not endorse a specific investment decision and are provided with adequate safeguards would not be caught. Dealers must avoid the sum output of decision-making supports resulting in a prohibited recommendation to a client. The guidance goes into some detail with respect to the permitted use of sample portfolios that set out asset allocations along with filtering tools to ensure that the sample portfolio is not a prohibited recommendation.
For more in-depth information about the proposed updated guidance, please see BLG's article below. Comments on the proposed guidance are due by November 10.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.