IIROC raises regulatory fees for risky firms

The Globe and Mail

Canada’s brokerage industry regulator is raising some of the fees paid by the firms it oversees, and says higher-risk investment dealers will have to pay “a modest risk premium” to reflect the higher costs of monitoring their operations.

The Investment Industry Regulatory Organization of Canada announced Thursday it will implement new fees on April 1 after extensive industry consultation.

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“We recognize that these are challenging economic times and we are committed to prudent fiscal management while ensuring that we have the appropriate tools to fulfill our regulatory mandate in an effective manner,” IIROC chief executive officer Susan Wolburgh Jenah said in a statement.

IIROC said about 85 per cent of firms will pay less to IIROC based on the new fee model, while 15 per cent will see their total fees increase. The regulator collected $80-million in various fees from members last year.

The basic annual fee paid by investment dealers will climb from $25,000 to $27,500 under the new model, which IIROC said is the first increase in its minimum fee in 10 years. Dealers also pay additional fees on top of the basic amount, based on the number of IIROC-registered staff members they employ and the company’s revenue tier. The new fee model will include fees of $250 per registered staff member.

IIROC said it will also levy an “average standard charge” for high-risk firms based on a historical analysis of the hours IIROC has spent on compliance activities for various firms ranked as high risk by the regulator.

IIROC said the new fee model will also take into account that some high-risk firms are already paying more in the form of fines levied by IIROC for various violations.

“To reflect the fact that high risk firms may currently pay some fines connected with incremental monitoring effort ... to avoid double charges only the excess of costs over these fines will be charged.”