Proposed Integrated Fee Model

Part I: Annual Dealer Member Fee

Executive Summary

The Annual Dealer Member Fee is the primary method of recovering operating costs from Dealer Members. CIRO is proposing that the Annual Dealer Member Fee for all Dealer Members be based on a combination of Revenue and Approved Persons, as outlined in section 2.

This methodology being proposed is not substantially different from the current Investment Dealer fee model. It does, however, represent a material change in methodology for Mutual Fund Dealer Members.

We conducted a comprehensive impact analysis of the proposed integrated fee model on the industry and on each individual Dealer Member. We also considered a number of different alternatives to determine if there were other better ways to meet the guiding principles. The analysis is described in section 3.

Our aim was to propose a model that adheres to the guiding principles as closely as possible and can continue to be applied regardless of industry changes and evolution. Given the diverse business models and sizes of CIRO Dealer Members, we believe that the methodology we are proposing for the Annual Dealer Member Fee would substantially meet the guiding principles while minimizing the impact of the change – refer to section 4.

It is important to note that the proposed integrated fee model for the Annual Dealer Member Fee is separate from the “Integration Cost Recovery Fee Model” which seeks to recover the costs of integration1. The Integration Cost Recovery Fee Model is not discussed in this Notice, other than minor amendments to update references to this integrated Fee Model noted in Appendix C.

1. Current / Interim fee model

Currently, CIRO operates two separate fee models to recover costs from both Investment Dealer Members (ID Members) and Mutual Fund Dealer Members (MFD Members) which are based on the fee models that were in place at IIROC and the MFDA, respectively, at the time of the merger. The legacy fee structures (the “Interim Fee Model”) were to be maintained and administered with necessary modifications until such time as an integrated fee model is developed2. Dealer Members who are registered as both an investment dealer and a mutual fund dealer (“Dual-Registered Dealer Member”) pay fees under both models.

1.1 Investment Dealer fee model3

The Annual Fee for each ID Member under the Interim Fee Model is comprised of three components: Revenues, Approved Persons, and Minimum Fee, and calculated as the greater of

• The Minimum Fee component, and
• the sum of the Revenue component and the Approved Person fee component.

1. Revenue component 

   The Revenue component is an amount equal to the product of the Total Revenue of the Dealer Member for the previous calendar year as reported to CIRO and the revenue rate prescribed by CIRO’s Board of Directors (in its discretion) for the applicable revenue component tier.

2. Approved Person Fees component 

   The Approved Person Fees component is the product of $250 and the number of Approved Persons of the Dealer Member as at the last day of the previous fiscal year.

3. Minimum Fee component

   The Minimum fee for ID Members shall be no less than $16,000.

4. Annual Fee for new Dealer Members

   The Annual Fee for new Dealer Members approved during a fiscal year is based on the timing of the CIRO Board of Directors’ approval, after contemplating the non-refundable application review deposit of $10,000, as follows:

   • $15,000 if approved between April 1 and September 29
   • $7,500 if approved between September 30 and December 31
   • $3,750 if approved between January 1 and March 31

1.2 Mutual fund dealer fee model4

The Annual Fee for each MFD Member under the Interim Fee Model is calculated as the greater of

• The Minimum Fee component, and
• the fee based on Assets Under Administration

1. Assets under Administration (AUA)5

   The Annual membership fees are equal to the fee rates multiplied by the two-year average of the Dealer Member’s AUA in all of the provinces and territories of Canada except Québec. Fee rates are established annually by CIRO’s Board of Directors.

2. Minimum Fees

   The Minimum fee for MFD Members shall be no less than

   • $1,500 for Level 1, 2 or 3 MFD Members, and
   • $10,000 for Level 4 MFD Members.

3. Annual Fee for new Dealer Members

   The Annual Fee for new Dealer Members approved during a fiscal year is based on the timing of the CIRO Board of Directors’ approval, calculated on a prorated basis of the minimum fee. The amount payable would be the calculation less the non-refundable application review deposit, or nil in the case where the deposit was greater than the calculated Annual Dealer Member Fee.

2. Proposed Integrated Fee Model

2.1 Key Elements of the proposed Integrated Fee Model

The Annual Dealer Member Fee for each Dealer Member under the proposed integrated fee model will be comprised of three components: Revenues, Approved Persons, and the Minimum Fee.

The proposed Annual Dealer Member fee shall be the greater of

• the Minimum Fee component, and
• the sum of the Revenue component and the Approved Person fee component.

1. Revenue component

   The Revenue component of the proposed Annual Fee shall be an amount equal to the product of the total revenue of the Dealer Member for the previous calendar year (“total revenue for fee purposes”) and the annually set prescribed rate for the applicable tier.

   1. The total revenue for fee purposes will be based on “Total revenue” as reported by CIRO Dealer Members for the year ending December 31 on Statement E, Line 21 of the IDPC Form 1, and on Statement D, Line 13 of the MFD Form 1 (“Form 1 revenues”).
   2. There will be seven (7) revenue tiers. The stacked rate per tier will be determined based on the overall revenue distribution through the tiers and on CIRO’s budgeted costs for the year. Upon implementation, one consistent rate will be applied to all the tiers. The tier structure is being maintained should the need arise to differentiate the rates.
   3. The total revenue for fee purposes will be subject to a minimum threshold amount for MFD Members with AUA over $1 billion6. The total revenue for fee purposes for such Dealer Members will be based on the median of the proportion of Form 1 revenues over AUA for all MFD Members. AUA is calculated as two-year average of balances reported to CIRO at the end of the two most recent calendar years. Accordingly, for those MFD Members whose proportion of Form 1 revenues over their AUA is less than this median amount by more than 10 basis points, the total revenue for fee purposes will be adjusted upwards to 10 basis points below the median (“normalization factor”)7.

2. Approved Person fee component

   The Approved Person fee component of the proposed Annual Dealer Member Fee will be an amount equal to the product of $250 and the number of Approved Persons8 of the Dealer Member based on the 12-month average for the previous calendar year.

3. Minimum fee component

   The Minimum Fee payable is the amount prescribed below, if the sum of the Revenue component and the Approved Person Fees component is less than the minimum fee amount.

   Type of Dealer Member	Proposed Fee
   MFD Member - Level 1-3	$5,000
   MFD Member - Level 4	$15,000
   ID Member or Dual Registered Dealer Member	$25,000

4. Annual Fee for new Dealer Members

   For new Dealer Members approved during the fiscal year, the Annual Dealer Member Fee is an adjusted amount of the Minimum Fee based on the timing of the CIRO Board of Directors’ approval. CIRO’s fiscal year starts on April 1.

   The amount payable upon approval is prescribed below (calculated as the difference between the adjusted minimum fee9, and the portion of the application deposit applied towards the minimum fee component10):

   Type of Dealer Member	Q1 approval (April 1 – June 30)	Q2 approval (July 1 – September 30)	Q3 & Q4 approval (October 1 – March 31)
   MFD Member - Level 1-3	$2,500	$1,250	$0
   MFD Member - Level 4	$7,500	$3,750	$0
   ID Member or Dual Registered Dealer Member	$12,500	$6,250	$0

2.2 Transitionary measures for MFD Members with Québec-based revenues

• As required by the Québec Recognition Order, Mutual Fund Dealers operating in Québec must benefit from an adequate transition period. Members registered only in Québec and dealing representatives of MFD Members registered only in Québec are not regulated by CIRO as of yet11. Transitionary measures will be implemented to ensure that such Dealer Members do not pay fees associated with their Québec-based MFD activities and dealing representatives until CIRO starts to provide regulatory services to these Dealer Members and individuals. Accordingly,

  • The proposed fee model will apply to all CIRO Dealer Members except MFD Members who are registered only in Québec (“deemed members”). The proposed integrated fee model will apply to deemed members after the end of the transition period, the duration of which is agreed with the AMF.
  • For MFD Members registered in Québec and other provinces, fees will be reduced on an estimated basis of the proportionality of services offered to them. Total revenue for fee purposes will include Québec-based revenues as follows:
    • Year 1 – reduce Form 1 revenues for 100% of Québec-based revenue
    • Year 2 and/or until the end of the transition period – reduce Form 1 revenues for 50% of Québec-based revenue. After the transition period is complete, 100% of Québec-based revenue will be included12.

  To reduce the burden associated with additional reporting from MFD Members, CIRO will compute the value of Québec-based revenues for MFD Members based on the Québec-based AUA relative to the total AUA of the MFD Member13.

• The Approved Person fee component will exclude MFD dealing representatives who are only registered in Québec until the transition period is complete14. The Approved Person fee component includes representatives under CIRO regulation.

3. Analysis and work done

3.1 Impact assessment

CIRO conducted a comprehensive analysis of the impact of the methodology to determine the Annual Dealer Member Fee under the proposed integrated fee model. Here are some important points to keep in mind when reviewing the analysis:

• This is an estimate based on historical data. The analysis is based on historical data from 2021-2022. The analysis should be viewed as a high-level estimation of the likely directional impact of the proposed Annual Dealer Member Fee. The analysis assumes revenues remain consistent over the period of analysis, and that the transition period is complete for Québec MFD Members. Only existing members are included in the analysis.
• Revenue is the biggest driver of fees. The most significant driver of a Dealer Member’s fee will be its total revenues relative to the rest of the industry. As a result, those Dealer Members with the largest revenues will pay proportionately more in fees than those Dealer Members reporting lower revenues.
• There will be an unavoidable redistribution impact. All CIRO costs are now combined in a single “pool” (i.e. costs of regulation for ID Members and MFD Members are combined) and there will be a change in the annual fee model methodology particularly for MFD Members. A redistribution of fees is mathematically unavoidable.
• Cost recovery is a zero-sum game – primary focus should be on alignment with the guiding principles: Any adjustment made to reduce the fee for one Dealer Member will have to be offset by a corresponding increase at another Dealer Member. Therefore, while information on the potential redistribution impact has been provided, we recommend that the review of the proposed Annual Dealer Member Fee be ultimately guided by whether the methodology meets the guiding principles outlined in section 4.
• CIRO has not identified any regional-specific effects or impacts other than those identified in section 2.2 for MFD Members in Québec.

3.1.1 Overall impact

1. The median fee for all Dealer Members as a percentage of revenues is 0.3%.

2. Cost recovery by size of Dealer Member15 will remain substantially the same under the proposed integrated fee model relative to the Interim Fee Model. 75% of costs will be recovered from large Dealer Members and only 3% of costs will be recovered from small Dealer Members.

   Dealer Members by Size	Cost recovery under the proposed integrated fee model	Cost recovery under the Interim Fee Model
   Large firms	75%	77%
   Medium-sized firms	22%	21%
   Small firms	3%	2%

3. The proposed integrated fee model shifts about 9% of cost recovery from MFD Members to ID Members once the transitionary measures have ended. This is because ID Members currently account for about 80% of the total revenues for the membership. The impact on the ID Members’ fees is, however, reduced somewhat by the Approved Person fee because MFD Members have twice as many Approved Persons, in aggregate, as ID Members.

   Dealer Members by registration	Cost recovery under the proposed integrated fee model	Cost recovery under the Interim Fee Model
   ID Members and Dual-Registered Dealer Members	71%	61%
   MFD Members	29%	39%

3.1.2 Potential re-distribution impact

1. There will be a re-distribution of fees because of the change in the methodology of the proposed integrated fee model from the Interim Fee Model.
2. Under the proposed integrated fee model relative to the Interim Fee Model:
   • 36% of Dealer Members will likely see a fee decrease. The number of Dealer Members likely to experience a fee decrease is fairly evenly split between ID Members and MFD Members.
   • 40% of Dealer Members will likely see an increase in fees because of the increase in the minimum fee component.
   • 24% of Dealer Members will likely see an increase in fees that is unrelated to the minimum fee component.

3. For those Dealer Members seeing a fee increase, when grouped by size, the fee increase is no greater than 0.25% of Form 1 revenues:

   ID Members	Proposed Annual Dealer Member Fee As a % of Revenue	Current Annual Dealer Member fees As a % of Revenue	Change
   Large firms	0.16%	0.13%	0.03%
   Medium-sized firms	0.17%	0.16%	0.01%
   Small firms	0.68%	0.44%	0.23%
   TOTAL	0.16%	0.14%	0.02%
   MFD Members	Proposed Annual Dealer Member Fee As a % of Revenue	Current Annual Dealer Member fees As a % of Revenue	Change
   Large	0.51%	0.41%	0.10%
   Medium-sized firms	0.21%	0.07%	0.14%
   Small firms	0.38%	0.13%	0.25%
   TOTAL	0.36%	0.23%	0.13%

4. In relation to the table depicted in section 3.1.2(c), for those Dealer Members seeing a fee increase that is unrelated to the minimum fee, the proposed Annual Dealer Member Fee is no greater than 5% of Form 1 revenues at any individual Dealer Member.

5. For those Dealer Members seeing a fee decrease, as noted above, the largest decreases will be experienced by the MFD Members:

   ID Members	Proposed Annual Dealer Member Fee As a % of Revenue	Current Annual Dealer Member fees As a % of Revenue	Change
   Large firms	-	-	-
   Medium-sized firms	0.18%	0.19%	(0.01%)
   Small firms	-	-	-
   TOTAL	0.18%	0.19%	(0.01%)
   MFD Members	Proposed Annual Dealer Member Fee As a % of Revenue	Current Annual Dealer Member fees As a % of Revenue	Change
   Large	0.29%	0.48%	(0.19%)
   Medium-sized firms	0.29%	0.67%	(0.39%)
   Small firms	0.33%	0.47%	(0.14%)
   TOTAL	0.29%	0.49%	(0.20%)

6. MFD Members with Quebec presence represent roughly 26% of fees in Year 1, and an estimated 29% of fees after the transition period is complete.

3.2 Alternatives considered

In determining the methodology for the proposed Annual Dealer Member Fee, we considered a number of alternatives:

• Maintaining two separate models: We considered keeping the methodology for ID Members and MFD Members substantially the same as the Interim Fee Model with modifications to harmonize the tiers and standardize the revenue for MFD Members with proprietary product shelves. We found however that this methodology would not be sustainable particularly as the industry and CIRO’s operations relating to ID Members and MFD Members become increasingly harmonized.
• Fee based on Revenue only: We considered relying on a Revenue component alone, and not incorporating an Approved Person component. We found, however, that this would result in a shift of costs towards Dealer Members with larger revenues and fewer Approved Persons which would be disproportionate because CIRO regulates not just firms but individuals as well.
• Reduced rate for Approved Persons: We considered reducing the rate for Approved Persons and also setting two different rates for ID Members and MFD Members to minimize the impact for MFD Members that typically have many more Approved Persons than ID Members. We found, however, that the reduction in the Approved Person rate resulted in a much larger weighting of the fee on the Revenue component, which further increased the inequity in the cost allocation.
• Minimum fee criteria based on Revenue and Approved Persons thresholds: We considered stipulating minimum thresholds for Revenue and Approved Persons such that any and all Dealer Members below these prescribed amounts would be subject to the minimum fee. We found, however, that this did not always result in a proportionate allocation of costs particularly at those Dealer Members with fewer Approved Persons but larger revenues. This would also not be a sustainable model to the extent that business models of Dealer Members are likely to evolve to rely more on third parties, technology and automation.
• Varying revenue tier rates: We considered different options to set the revenue tier rates (i.e. using declining rates, increasing rates and fluctuating rates). We found however that these options led to a disproportionate allocation of costs between ID Members and MFD Members. Adjustments would have had to be made to address the resulting inequity which would add further complexity to the proposed integrated fee model.
• Eliminating underwriting levies: Separate from the Annual Dealer Member Fee, ID Members are also subject to underwriting levies for their participation in certain distributions of securities in Canada16. We considered eliminating these levies because they are not predictable and can create volatility in the determination of fee amounts. We found however that the elimination of underwriting levies caused a disproportionate reallocation of costs towards other Dealer Members not involved in such activity, and further adjustments would have to be made to address this inequity which would add complexity to the model.

3.3 Industry consultation

In order to ensure that Dealer Member input was considered in the development of an integrated new fee model, we established an ad-hoc industry working group in October 2023. We invited all Dealer Members to participate. The working group represented a good diversity of Dealer Members with participants from both ID Members and MFD Members, and included a cross-section of large, small, independent, retail, institutional, and bank-owned firms. We also provided a confidential draft of the proposal to a select group of MFD Members in the last week of March 2024. We made a number of changes to the proposed integrated fee model based on their feedback.

3.4 Benchmarking

The proposed integrated fee model applies similar principles and methodologies to those of other comparable regulators. We compared our proposed integrated fee model to those of similar regulatory organizations like the Financial Industry Regulatory Authority (FINRA), the Ontario Securities Commission (OSC), the Financial Conduct Authority (FCA), and the Australian Securities and Investments Commission (ASIC).

4. Alignment with guiding principles

Overall, the proposed fee model meets the guiding principles:

1. Proportionality: The methodology to determine the Annual Dealer Member Fee under the proposed integrated fee model represents a proportionate allocation of fees.
   • Revenues are used as the main driver of the fee. Revenues are the most consistent and simple indicator of size and impact. It ensures that larger Dealer Members pay the larger proportion of the fees as they receive the greatest benefit of being regulated. Similarly, stacked or progressive tier rates also ensure that larger Dealer Members pay the larger portion of the fees.
   • The normalization factor for MFD Members with AUA greater than $1 billion ensures that transfer pricing considerations do not unfairly benefit one Dealer Member over the other.
   • The number of Approved Persons at each Dealer Member is considered in the determination of fees which reflects the fact that CIRO regulates individuals as well and not just firms.
   • The Minimum Fee amounts represent more closely costs associated with providing certain minimum regulatory functions to a Dealer Member regardless of its size. There are separate fees prescribed for small MFD Members, Level 4 MFD Members and ID Members to ensure a proportionate consideration of regulatory usage relative to their business models.
2. Practicality: The proposed Annual Dealer Member Fee will be relatively easy and efficient to administer.
   • All Dealer Members currently report Form 1 revenues and Approved Persons, so there is no additional reporting burden on the Dealer Members.
   • The minimum fees are fixed and standardized and are not variable or subject to other adjustments.
3. Consistency: The methodology to determine the Annual Dealer Member Fee under the proposed integrated fee model will be consistently applied to Dealer Members.
   • The same factors, i.e. Revenue and Approved Persons, is applied across the membership.
   • Revenue rates are consistently applied across the membership. The total revenue for fee purposes is charged the same revenue rate across Dealer Members, regardless of its size.
   • All Dealer Members within the stipulated category have the same minimum fees.
4. Transparency: The methodology to determine the Annual Dealer Member Fee under the proposed integrated fee model outlines three components with clear criteria. Dealer Members will be able to easily recalculate their fee payable, if we provide them with the normalization factor (which is applicable only to large and medium-sized MFD Members) and the tier rates.
5. Serving the Public Interest: The methodology to determine the Annual Dealer Member Fee under the proposed integrated fee model will continue to serve the public interest and not present barriers to access or advice while ensuring that there is still a high enough standard to preserve investor protection and market integrity.
   • The median rate for the proposed fee is 0.3% of Form 1 revenues which does not represent an unreasonably high barrier to enter and stay for small firms.
   • The minimum fee amounts are not materially different from the amounts prescribed by IIROC17 and the MFDA18 prior to the amalgamation.
   • A charge per Approved Person of $250 a year, or approximately $21 a month, is not an unreasonably high barrier for individuals to enter and stay in a well-regulated environment.
6. Sustainability: The methodology to determine the Annual Dealer Member Fee under the proposed integrated fee model uses criteria that will continue to be relevant and result in a fair allocation of costs even as the industry and Dealer Members’ business models evolve and transform. Revenues and Approved Persons remains agnostic of the ways in which Dealer Members conduct business or wish to evolve or transform their business model to better serve investors.

Part II. Membership Application Fees and Fees for Dealer Member Business Changes

Executive Summary

As part of the integrated fee model for Dealer Members, we are proposing:

1. revised entrance fees for new membership applications – see section 5,
2. introducing fees for Dealer Member reorganizations or other material changes to the business, structure or affairs of a Dealer Member – see section 6, and
3. the reimbursement of costs attributed to CIRO’s review of Dealer Member applications and transactions referenced in (i) and (ii) that require excessive attention, time and resources – see section 7.

5. Revised Fees – Applications for Membership as a Dealer Member

5.1 Current Entrance Fees

CIRO’s current entrance fees for membership are:

• For MFD Member applicants, the following fees are payable on acceptance of an application, and subsequently credited toward annual membership fees upon Board approval of the application:
  • $1,500 for Level 1
  • $3,000 for Level 2 and Level 3
  • $5,000 for Level 4
• For ID Member applicants:
  • $10,000 payable on acceptance of an application and credited toward annual membership fees upon Board approval of the application,
  • $15,000 plus a payment to the Restricted Fund equal to 0.5% of an ID Member applicant’s expected initial capital calculated according to CIRO’s Form 1, payable upon Board approval of the application.

5.2 Proposed Entrance Fees

We are proposing an overall increase in the entrance fees and a specific entrance fee for ID Members that operate a crypto asset trading platform that facilitates the buying, selling and holding of crypto assets, to align more closely with the cost of reviewing membership applications:

The entrance fee is non-refundable and payable in full upon CIRO’s acceptance of the Dealer Member application. A portion of this fee equal to 25% of the minimum dealer regulation fee is to be credited towards the annual fee upon Board approval of the application.

A payment to the Restricted Fund equal to 0.5% of a Dealer Member applicant’s expected initial capital calculated according to CIRO’s Form 1, is also payable upon Board approval of the application.

5.2.1 MFD Members applying to become ID Members

If an existing MFD Member applies to become an ID Member, the transaction would be reviewed as a new ID Member application. However, since the MFD Member is already a CIRO Dealer Member, the MFD Member would only be charged the difference in the entrance fees for an MFD Member and an ID Member. For example, if a Level 4 MFD Member applies to become an ID Member, then the MFD Member will be charged a fee of $20,000, which is the difference in the entrance fee for an ID Member ($40,000) and a Level 4 MFD Member ($20,000).

5.3 Analysis and work done

5.3.1 Impact assessment

Since these fees are only for firms applying for membership, existing Dealer Members will not be negatively impacted by the proposed increase in fees. Instead, the increased application fees will reduce the costs that would otherwise be absorbed by existing Dealer Members.

The payment to the Restricted Fund upon approval for MFD Member applicants is an insignificant one-time impact estimated to be $250 to $1,000 based on minimal capital requirements. There is no change for ID Member applicants approved.

5.3.2 Alternatives considered

In determining the proposed entrance fees, we considered lower fees for applicants; however, the fees proposed represent more closely CIRO’s estimated costs associated with reviewing new Dealer Member applications without becoming unreasonable barriers to entry. Even with the higher entrance fees, these amounts still only represent a portion of CIRO’s estimated costs, considering the resources required for the review and assessment of a firm’s application for membership.

We also considered expanding the number of categories of ID Members (e.g., retail ID Members, non-retail ID Members). However, the costs associated with reviewing membership applications will vary even for the same type of business model, depending on the firm’s back-office arrangements, product and service offering, general level of preparedness, and other factors. The one exception was for ID Members operating a crypto asset trading platform. For these types of ID Member applications, CIRO’s estimated costs consistently exceeded the estimated costs of other types of ID Member applications.

In driving consistency for the additional payment to the Restricted Fund (upon Board approval of the membership application), we considered eliminating the contribution for ID Members. Given the insignificant impact of applying it to MFD Members, and because those funds are used directly or indirectly in the public interest, it was decided to keep the payment requirement and apply it to all applicants.

5.3.3 Industry consultation

In order to ensure that Dealer Member input was considered in the development of an integrated new fee model, we established an ad-hoc industry working group in October 2023. We invited all Dealer Members to participate. The working group represented a good diversity of Members with participants from both ID Members and MFD Members, and included a cross-section of large, small, independent, retail, institutional, and bank-owned firms.

5.3.4 Benchmarking

We compared our proposed application fees to those of the OSC and FINRA. The proposed integrated fee model applies similar principles and methodologies to those of FINRA and our proposed fee amounts are comparable to FINRA’s application fees, which range from $5,000 to $55,000 USD.

5.4 Alignment with guiding principles

Overall, the proposed application fees meet the guiding principles:

1. Proportionality: The applicant should pay fees proportionate to its usage or consumption of regulatory services provided.
   • The fee amounts are more reflective of the costs associated with performing the regulatory review of membership applications.
   • We are proposing a tiered fee schedule, with fees that increase with the complexity of each type of Dealer Member application.
2. Practicality: The proposed entrance fee structure is simple and easy to administer. The different categories of applicants are clear and simple, making it easy to determine the correct fee for any application.
3. Consistency: The rules and principles that determine the fees are consistently applied to all Dealer Members. The method of determining the cost of reviewing applications has been applied consistently to all Dealer Member categories.
4. Transparency: Applicants can easily determine their category and applicable fee.
5. Serving the Public Interest
   • The entrance fees do not present barriers to entry and also ensure a level of commitment by applicants to becoming a CIRO Dealer Member.
   • The payment to the Restricted Fund by Dealer Member applicants fund initiatives in the public interest.
6. Sustainability: The improved cost recovery supports CIRO in maintaining our robust reviews of membership applications.

6. New Fees – Dealer Member Reorganizations or Other Material Changes in Dealer Member Business

6.1 Current State

Currently, CIRO does not require Dealer Members to pay a fee for the review of business changes, even for material business changes that can result in significant costs to CIRO for the review of these requests. Instead, these costs are absorbed by CIRO’s broader membership, including those Dealer Members that may not have directly benefitted from these regulatory services.

6.2 Proposed Fees for Material Business Changes

We are proposing fees for the following types of business changes:

• an MFD Member applying to become an ID Member;
• the reorganization, transfer, amalgamation or other combination of a Dealer Member, as described in CIRO By-law No. 1, section 3.10; and
• ID Member material changes to business activities that require prior written notice to CIRO under IDPC Rules, subsection 2246(2)20.

Each type of material business change and their associated fees are described below. If a Dealer Member’s submission entails more than one type of material business change, the Dealer Member will only be charged the highest applicable fee (as summarized in the tables below), rather than being charged multiple fees.

The proposed fees are non-refundable and payable in full upon CIRO’s acceptance of the Dealer Member’s submission for review.

1. MFD Members applying to become ID Members

   If an existing MFD Member applies to become an ID Member, the transaction would be reviewed as a new ID Member application. However, since the MFD is already a CIRO Dealer Member, the MFD would only be charged the difference in the entrance fees for an MFD Member and an ID Member. For example, if a Level 4 MFD Member applies to become an ID Member, the MFD Member will be charged a fee of $20,000, which is the difference in the entrance fee for an ID Member ($40,000) and a Level 4 MFD Member ($20,000), as outlined in the table below.

   MFD Member applying to become an ID Member	MFD Member Entrance Fee	ID Member Entrance Fee	Proposed Fee for Change from MFD to ID
   MFD Member Level 1-3 applying to become an ID Member or Dual-Registered Dealer Member	$10,000	$40,000	$30,000
   MFD Member Level 4 applying to become an ID Member or Dual-Registered Dealer Member	$20,000	$40,000	$20,000

2. Dealer Member Reorganizations, Transfers and Amalgamations

   We are proposing fees for Dealer Member reorganizations, transfers, amalgamations and other similar business combinations captured under By-law No. 1, section 3.10, which requires that,

   “If the business or ownership of a Member is proposed to be reorganized or transferred, amalgamated or otherwise combined in whole or in part with another person (including another Member) in a manner which the Member or its business will cease to exist in, or will be substantially changed from, its then current form, or a change of control of the Member may occur, the Member (not less than 30 days prior to the proposed effective date of such event) shall give written notice to the Corporation.”

   The proposed fees for Dealer Member reorganizations, as described above, are as follows:

   Dealer Member Reorganization 21	Proposed Fee
   MFD Member Level 1-3	$5,000
   MFD Member Level 4	$10,000
   ID Member or Dual Registered Dealer Member	$15,000

3. ID Member Material Changes to Business Activities

   We are proposing fees for ID Members that submit “any material change to business activities,” under IDPC Rules, subsection 2246(2) and described further in published guidance. While IDPC Rules, subsection 2246(2) is applicable only to ID Members, CIRO plans to propose corresponding fees for MFD Members if the harmonized Rulebook expands this requirement to MFD Members.

   The proposed fees for ID Member material changes to business activities are listed below:

   ID Member Material Change to Business Activities 22	Proposed Fee
   ID Member or Dual-Registered Dealer Member Material Change to Business Activities	$15,000
   ID Member or Dual-Registered Dealer Member adding a Crypto Asset Trading Platform	$20,000

   CIRO is proposing a specific fee for ID Members adding a new crypto asset trading platform, since CIRO’s costs for reviewing this type of change are significantly higher than the costs associated with CIRO’s review of other types of business changes.

   If an ID Member has an existing crypto asset trading platform and proposes a material change in business, the applicable fee would be the same as for any other ID Member material change in business (i.e., $15,000).

4. ID Member Changes not considered a Material Business Change

   For the purpose of the integrated fee model, a “material business change” does not include the transactions listed below:

   • a change in ownership of a Dealer Member or its holding company that does not result in the Dealer Member or its business ceasing to exist in, or being substantially changed from, its then current form, or a change in control of the Dealer Member
   • a Dealer Member setting up or acquiring interest in a related company or associate, as described in IDPC Rules, subsection 2206(1)
   • a change described in IDPC Rules, subsection 2246(1) (e.g., a change in name)
   • use or transfer of a trade name, as described in IDPC Rule 2282

Dealer Members proposing the types of changes listed above would not be charged fees for those changes.

6.3 Analysis and work done

6.3.1 Impact assessment

Since 2020, CIRO (or its predecessor organizations) has received approximately 30 to 60 material business changes each year. Most have been for ID Members since the Mutual Fund Dealer Rules do not have the same requirement in the IDPC Rules to notify CIRO of a material change in business. Based on the historical information, less than half of ID Members send in a material change in business in a year and only a small handful of ID Members submit more than one material business change per year. Although the impact on the Dealer Members in general is somewhat limited, CIRO’s costs for providing this regulatory function are considerable, as each request can take several months to review.

The proposed fee model is intended to improve the proportion of cost recovery from those Dealer Members that utilize the regulatory services provided by CIRO, thereby reducing the amounts that must be subsidized by Dealer Members that do not utilize or directly benefit these regulatory services.

CIRO has not identified any regional-specific effects or impacts.

6.3.2 Alternatives considered

In determining the fees for material business changes, CIRO considered specific fees for other types of Dealer Member transactions, such as ownership.

The costs associated with CIRO’s review of ownership changes are significantly lower than the costs associated with material business changes and would not warrant the administrative resources required to collect and process such minimal dollar amounts.

6.3.3 Industry consultation

To ensure Dealer Member input was considered in the development of an integrated new fee model, we established an ad-hoc industry working group in October 2023. We invited all Dealer Members to participate. The working group represented a good diversity of Members with participants from both ID Members and MFD Members, and included a cross-section of large, small, independent, retail, institutional, and bank-owned firms.

6.3.4 Benchmarking

We compared our proposed material change in business fees to those of FINRA. The proposed integrated fee model applies similar principles and methodologies to those of FINRA and our proposed fee amounts are comparable to FINRA’s fees for mergers and material changes, which range from $7,500 to $100,000 USD.

6.4 Alignment with guiding principles

Overall, the proposed material business change fees meet the guiding principles:

1. Proportionality: The applicant should pay fees proportionate to its usage or consumption of regulatory services provided.
   • The fees are reflective of the costs associated with performing the regulatory review of material business changes.
   • We are proposing a tiered fee schedule, with fees that increase with the potential complexity of each type of material business change.
2. Practicality: The proposed fee structure is simple and easy to administer. The different types of material business change are simple and tied to a specific By-law section or IDPC Rule, making it easy to determine the correct fee for any application.
3. Consistency: The rules and principles that determine the fees are consistently applied to all Dealer Members. The method of determining the cost of reviewing business changes has been applied consistently to all Dealer Member categories.
4. Transparency: Dealer Members can easily determine their category and applicable fee.
5. Serving the Public Interest: The proposed fees do not present barriers to maintaining membership within a well-regulated environment.
6. Sustainability: The proposed fees provide cost recovery to support CIRO maintaining our robust reviews of material business changes.

7. Reimbursement of Extraordinary Costs and Expenses

7.1 Background

CIRO operates on a cost recovery basis and there are several references in our By-laws, Rules and Fee Models that speak to CIRO’s ability to require reimbursement for costs and expenses incurred in connection with the review and approval of an application, reorganization or substantial change in business of a Dealer Member23.

7.2 Proposed Reimbursement Framework

CIRO staff generally complete their compliance review of membership applications and material business changes within six (6) months, and the proposed fees for these transactions only consider our costs for performing these compliance reviews within this 6-month timeframe. For clarity, the “compliance review” is considered complete when CIRO staff have finished assessing the applicant's proposed business model and control infrastructure, and are prepared to make a recommendation to the relevant decision-maker regarding approval (or refusal) of the membership application or material business change.

Compliance reviews that cannot be completed within six (6) months are generally because:

1. the applicant or Dealer Member has not sufficiently prepared for membership or for the proposed business change; and/or
2. the proposed business model or business change is novel or complex, requiring significant CIRO staff efforts to ensure there are appropriate controls to protect investors and marketplaces.

In both scenarios, the prolonged compliance review (i.e., more than six (6) months) requires excessive attention, time and resources, resulting in extraordinary costs and expenses for CIRO.

Under the proposed extraordinary costs reimbursement framework, if a firm’s membership application or proposed material business change remains under compliance review for any period longer than six (6) months, the applicant (or Dealer Member) will be required to reimburse CIRO for the additional costs and expenses. Firms will be required to reimburse one-sixth (1/6) of the application or business change fee for each month (or partial month) that the application remains under review longer than six (6) months. This reimbursement model ensures that amounts collected from applicants do not exceed CIRO’s costs for completing the compliance review as the application fees recover only a portion of CIRO’s costs.

Once the extraordinary costs reimbursement is triggered, the applicant will continue to be charged for each month (or partial month) until the compliance review is complete, the firm withdraws its application, or CIRO staff have suspended their review of the application.

Having a simplified framework of this nature enables the organization to communicate to applicants the potential and basis of assessing reimbursement for extraordinary costs associated with applications that take longer than six (6) months to complete the review process.

The tables below list the monthly reimbursement rate for each type of Dealer Member application or material business change.

1. New Dealer Member Applications

   Type of Dealer Member Application	Proposed Fee	Monthly Extraordinary Cost Rate (triggered after 6 months)
   MFD Member – Level 1-3	$10,000	$1,666.67
   MFD Member – Level 4	$20,000	$3,333.33
   ID Member or Dual-Registered Dealer Member	$40,000	$6,666.67
   ID Member – Crypto Asset Trading Platform	$60,000	$10,000.00

2. MFD Member applying to become an ID Member

   MFD Member applying to become an ID Member	Proposed Fee	Monthly Extraordinary Cost Rate (triggered after 6 months)
   MFD Member Level 1-3 applying to become an ID Member or Dual-Registered Dealer Member	$30,000	$5,000.00
   MFD Member Level 4 applying to become an ID Member or Dual-Registered Dealer Member	$20,000	$3,333.33

3. Dealer Member Reorganization

   Dealer Member Reorganization24	Proposed Fee	Monthly Reimbursement Rate (triggered after 6 months)
   MFD Member Level 1-3 - Reorganization	$5,000	$833
   MFD Member Level 4 - Reorganization	$10,000	$1,667
   ID Member or Dual Registered Dealer Member - Reorganization	$15,000	$2,500

4. ID Member Material Change to Business Activities

   ID Member Material Change to Business Activities25	Application Fee	Monthly Reimbursement Rate (triggered after 6 months)
   ID Member or Dual-Registered Dealer Member Material Change to Business Activities	$15,000	$2,500
   ID Member or Dual-Registered Dealer Member adding a Crypto Asset Trading Platform	$20,000	$3,333

7.3 Forfeit of Application Review Deposit vs. Reimbursement for Extraordinary Costs

The proposed extraordinary costs reimbursement framework will be applicable to new Dealer Member applications and material business changes that remain under review by CIRO staff after six (6) months. This differs from forfeit of the nonrefundable deposit for membership applications referenced in CIRO’s by-laws26. Forfeit of the nonrefundable deposit per the by-law is triggered when:

1. the membership application has been withdrawn or abandoned,
2. CIRO staff have suspended their review, or
3. CIRO staff have closed the application.

Applicants or Dealer Members may choose to withdraw their membership application or business change. In addition, CIRO staff may consider an application or material business change request to be abandoned if the applicant or Dealer Member does not take appropriate action to advance their application. This includes significant delays in the application or Dealer Member responding to requests for information and materials from CIRO staff.

The proposed extraordinary costs reimbursement framework is intended to address applications or material business changes that remain under compliance review after the six-month mark.

7.4 Alignment with guiding principles

For the description on the alignment of reimbursement of extraordinary costs and expenses with the guiding principles refer to sub-section 6.4.

Part III. Qualified Market Maker Discount

Executive Summary

As part of the integrated fee model for Dealer Members, CIRO is proposing to amend its Equity Market Regulation Fee Model27 to eliminate the per trade fee discount currently provided to Qualified Market Makers28 trading in furtherance of Marketplace Trading Obligations29 on a listing exchange. This proposed change will result in a corresponding reduction in the per trade regulatory fee applied to all other equity security trades executed on a Marketplace30 by ID Members that are participating organizations, members or subscribers of a Marketplace (Participants).

In considering the proposed removal of the Trade Fee Discount, CIRO evaluated the discount primarily from the perspective of fairness. Currently, the Trade Fee Discount results in an increased per trade fee for all other trades across all Participants but CIRO does not receive the intended regulatory benefit.

While the Trade Fee Discount may have been justifiable when implemented in 2004, for the reasons described in this Rules Bulletin, CIRO has not identified any substantial basis on which it can continue to be justified.

While there may be some negative impacts on certain Dealer Members who have been benefitting from the Trade Fee Discount, and potentially on some listing exchanges, in our view these potential negative impacts do not outweigh the associated fairness concerns.

In the absence of sufficient evidence that the regulatory function associated with the Trade Fee Discount is being performed, we propose that it be eliminated.

8. Background to Current Equity Market Regulation Fee Model

CIRO’s current Equity Market Regulation Fee Model operates as a cost-recovery model and is applicable to trades on Marketplaces that trade equity securities. It allocates fees based on:

• A message processing fee based on the total number of messages processed by CIRO’s surveillance system during a particular month (the Message Processing Fee); and
• A fee based on the total number of trades executed on a Marketplace during a particular month (the Trade Fee).

Qualified Market Makers have responsibilities related to Marketplace Trading Obligations on a listing exchange, as well as regulatory obligations to report suspicious order and/or trade activity. In return for performing this dual role, the number of trades they execute on the listing exchange in securities for which the role is applicable is discounted by 70% for the purposes of calculating the total Trade Fee paid by all Participants (the “Trade Fee Discount”). The Trade Fee Discount received by Qualified Market Makers results in a higher Trade Fee for all other trades by all Participants.

The Trade Fee Discount has existed for many years (in the same or similar form) in the fee models of various predecessor organizations to CIRO. An exemption from the payment of regulation fees for trades pursuant to market maker obligations was proposed by Market Regulation Services Inc. (RS) and approved by the OSC in June 200331, subject to certain terms and conditions, including that the exemption be reviewed by RS within 12 months. In October 2004, the exemption was revised and limited to a 70% reduction of the regulation fee that would otherwise be payable by market makers for trades made pursuant to their market maker obligations. The 70% reduction has been in place since that time in the same or similar form.

9. Proposed Changes to the Equity Market Regulation Fee Model

The proposed changes to the Equity Market Regulation Fee Model would remove both the definition of Qualified Market Maker and the Trade Fee Discount applicable to trades by Qualified Market Makers.

As set out in the current Equity Market Regulation Fee Model, the number of trades executed by Qualified Market Makers is limited to market makers who have an obligation with a listing exchange to:

1. Maintain a two-sided market for a particular security listed on the listing exchange on a continuous or reasonably continuous basis, and
2. Report suspicious order and/or trade activity to CIRO.

The above elements must also be demonstrated through adequate policies and procedures of the listing exchange that can reasonably assure continued satisfactory performance of these requirements.

The obligation to provide a two-sided market assists in maintaining a fair and orderly market, while the obligation to report suspicious order and/or trade activity to CIRO is a regulatory “gatekeeper” function that assists CIRO in identifying and reviewing potential trading violations more effectively and expeditiously. CIRO is not questioning the important role that market makers play in relation to market quality. Further, CIRO is not disputing that Qualified Market Makers are required to maintain a two-sided market for their assigned securities, a responsibility for which their performance is monitored by the listing exchange.

However, it is the gatekeeper function noted above that represents the regulatory role associated with the Trade Fee Discount received by Qualified Market Makers, and it is this regulatory role that is being considered in relation to the proposal to eliminate the Trade Fee Discount. CIRO has very little demonstrable evidence to indicate that Qualified Market Makers continue to perform this role, therefore we are of the view that the cost imposed on other Participants associated with the Trade Fee Discount is not commensurate with the benefit received.

The regulatory role of market makers has historically been described as an expectation that Qualified Market Makers would notify CIRO (then RS or IIROC) in the event of:

• Any unusual situation, rumour, activity, price change or transaction; and
• Any “anomalous” orders.32

Since 2004, equity markets have evolved considerably, including with respect to the traditional activity and role of market makers. Many Participants acting in the capacity of Qualified Market Makers now employ automated market making strategies that involve significantly less human (meaning, non-automated) interaction in the process of order entry and execution. While this evolution in market structure and market making has likely resulted in market quality benefits, another expected result from less human interaction is the reduced ability to act in a gatekeeping capacity as described above.

10. Analysis

For the period of April 2022 to March 2023, 15 Participants acted in the capacity of a Qualified Market Maker. Collectively, the trades executed by these firms pursuant to Marketplace Trading Obligations (i.e., trades executed on the listing exchange in securities for which the firm has a market making responsibility (Qualifying Trades) represented approximately 4% of the total number of trades executed by all Participants in all equity securities across all Canadian marketplaces.

The number of Qualifying Trades executed by market making firms is also highly concentrated, with a very small number of Qualified Market Makers benefitting from the vast majority of the total Trade Fee Discount provided.

The application of the Trade Fee Discount increased the Trade Fee for all other trades executed by all other Participants by over $0.001 per trade. Depending on the Participant firm, the significance of this increased Trade Fee will vary.

Pursuant to the definition of Qualified Market Maker in the current Equity Market Regulation Fee Model, we have very little demonstrable evidence that Qualified Market Makers are reporting suspicious order and/or trade activity to CIRO that would support the Trade Fee Discount.

While the Trade Fee Discount imposes higher fees that may be considered negligible for some Dealer Members, from a fairness perspective it is difficult to justify any increase in fees without receiving sufficient regulatory benefits.

An assessment of the impact of the proposed removal of the Trade Fee Discount has been included below, and we have identified potential impacts to Participants and Marketplaces. The proposed removal of the Trade Fee Discount is not expected to impact investors and CIRO has not identified any regional-specific effects or impacts.

10.1 Impact on Participants

The proposed removal of the Trade Fee Discount is expected to have a net positive impact for Participants, as most would be subject to a reduced Trade Fee. Some, but not all Participants that act in the capacity of a Qualified Market Maker would be subject to an increased Trade Fee.

April 2022 to March 2023

10.2 Impact on Marketplaces

We expect a neutral to potentially negative impact to Marketplaces. Where a Marketplace is not a listing exchange that imposes obligations on a Participant to act in the capacity of a Qualified Market Maker, we do not expect any impact.

For some securities on some listing exchanges with Qualified Market Makers, the proposed removal of the Trade Fee Discount may impact decisions of Qualified Market Makers to continue acting in that capacity. If certain Qualified Market Makers determine to exit the role, the listing exchange will need to re-assign the responsibilities to another Participant.

We note however, that most Qualified Market Makers would see a Trade Fee decrease under the proposed changes, as set out in the table above. We also note again that a very small number of the 15 Participants that acted as Qualified Market Makers received the vast majority of the total dollar value of the Trade Fee Discount from April 2022 to March 2023.

10.3 Implementation considerations

CIRO does not expect Participants and Access Persons to undertake any implementation efforts with respect to the amendments being proposed that would eliminate the Trade Fee Discount.

Where a listing exchange determines that it is necessary to adjust the benefits/obligations of existing market making programs to account for the elimination of the Trade Fee Discount, it would be expected that this would require implementation efforts, including any required regulatory approvals.

10.4 Industry Consultation

We consulted with the following on the proposed removal of the Trade Fee Discount:

• Market Rules Advisory Committee (MRAC)
• Certain Listing exchanges
• Certain Dealer Members with responsibilities as Qualified Market Makers.

11. Alignment with guiding principles

Overall, the proposed changes to the Equity Market Regulation Fee Model meets the guiding principles.

1. Proportionality: the proposed changes to the Equity Market Regulation Fee Model will allocate Trade Fees equally among all Participants, by removing a regulatory discount for which a corresponding regulatory benefit is no longer being received by CIRO.
2. Practicality: the Equity Market Regulation Fee Model will be efficient and easy to administer, with Trade Fees being applied equally.
3. Consistency: the Equity Market Regulation Fee Model will apply a consistent Trade Fee across all Participants.
4. Transparency: Participants will be able to recalculate their Trade Fee based on their number of trades and the rate provided.
5. Serving the Public Interest: the Equity Market Regulation Fee Model will ensure a fair application of Trade Fees that reflects current market practices.
6. Sustainability: the proposed changes to the Equity Market Regulation Fee Model will ensure fair allocation of costs while continuing to provide for cost recovery. It remains scalable to any future changes in trading activity and requisite levels of trading oversight.

Appendices

Appendix A – Blackline version of Interim Fee Model Guidelines applicable to Investment Dealer Members and Marketplace Members

Appendix B – Clean version of the Integrated Fee Model

Appendix C - Text of MFD Rules to Reflect MFD Rules Amendments Respecting the Integrated Fee Model

Appendix D - Text of Integration Cost Recovery Fee Model Guideline to Reflect Integration Cost Recovery Fee Model Guideline Amendments Respecting the integrated Fee Model

Appendix E – Frequently Asked Questions (FAQs)

• 1The Integration Cost Recovery Fee model applies to Investment Dealer Members and Mutual Fund Dealer Members who are affiliated with each other by virtue of the same controlling interest, and to Members that are registered as both an investment dealer and a mutual fund dealer.
• 2This was communicated to all Members prior to the amalgamation in the Information Circular dated August 29, 2022.
• 3Refer to the IIROC Fee Model Guideline for details of the Interim Fee Model as it pertains to ID Members
• 4Refer to Mutual Fund Dealer Rule 8.5 and MFDA Interim Fee Model Guideline
• 5Defined as the market value of all mutual funds reflected in client accounts (nominee and client name) of a Member.
• 6Some MFD Members report lower Form 1 revenues as a proportion of average AUA, typically because of transfer pricing arrangements for mutual funds that are issued by affiliates. Applying a normalization factor improves the fair and equitable distribution of fees calculated based on revenue.
• 7The normalization factor does not apply to dual-registered Members or ID Members. See question #13 in the FAQs for an example of the calculation.
• 8Approved Person count would be based on data reported on the National Registration Database (NRD).
• 9The adjusted minimum fee for new Dealer Members is:
  

  Type of Member	Q1 approval (April 1 – June 30)	Q2 approval (July 1 – September 30)	Q3/Q4 approval (October 1 – March 31)
  MFD Member – Level 1-3	$3,750	$2,500	$1,250
  MFD Member – Level 4	$11,250	$7,500	$3,750
  ID and dual-registered Member	$18,750	$12,500	$6,250

• 10The portion of the application deposit applied towards the minimum fee for new Dealer Members is:
  

  Type of Member	Amount
  MFD Member – Level 1-3	$1,250
  MFD Member – Level 4	$3,750
  ID Member and dual-registered Dealer Member	$6,250

• 11Activities carried out in Québec by Québec MFD firms are subject to oversight by the AMF and to Québec legislation, including Regulation 31-103 regarding Registration Requirements, Exemptions and Ongoing Registrant Obligations. In addition, Québec MFD registered individuals are subject to the oversight of the Chambre de la sécurité financière (CSF). For more information on the regulation of MFD activities and individuals in Québec, refer to CIRO’s website.
• 12The transition period will end on agreement with the AMF.
• 13See question #15 in the FAQs for an example of the calculation.
• 14MFD dealing representatives registered only in Québec are under the purview of the CSF and are not currently considered “Approved Persons” as defined by the MFD Rules.
• 15The criteria for categorization of firms by size is noted below:
  

  Size	Number of firms	ID Members	MFD Members
  Large firms	24	Revenues >= $1 billion	AUA >= $10 billion
  Medium-sized firms	101	Revenues >= $10 million and < $1 billion	AUA >= $1 billion and < $10 billion
  Small firms	128	Revenues < $10 million	AUA < $1 billion

• 16Refer to Underwriting Levies
• 17Minimum fee amount was $22,500 until fiscal 2024 as noted in the last IIROC fee model guideline.
• 18Minimum fee amount was $3,000 until fiscal 2024 as noted in the MFDA Member Fee guideline and MFDA Interim fee model guideline.
• 19A Dual-Registered Dealer refers to a firm that is registered as both an Investment Dealer and a Mutual Fund Dealer within the single legal entity.
• 20If the harmonized rulebook requires MFD Members to provide similar prior written notice to CIRO for material changes to business activities, we will propose corresponding fees.
• 21This refers to the reorganization, transfer, amalgamation or other combination of a Dealer Member as described in CIRO By-law No. 1, section 3.10.
• 22This refers to a material change to an ID Member's business activities under IDPC Rules, subsection 2246(2).
• 23Refer to By-law No. 1, section 3.5(4) regarding the reimbursement of costs and expenses attributable to an application that is expected to require excessive attention, time and resources. Further, in the Interim Fee Model Guidelines applicable to ID Member Members and Marketplace Members, section 16 permits the Board to assess Dealer Members for the extraordinary costs and expenses incurred in connection with the review and/or approval of a novel or unusual application for membership as a Dealer Member. Mutual Fund Dealer Rules section 8.6 similarly permits the Board to assess fees in connection with applications for membership, and for extraordinary costs and expenses of the Corporation incurred in connection with the review and/or approval of any reorganization, takeover or substantial change in business, structure or affairs of a Member.
• 24This refers to the reorganization, transfer, amalgamation or other combination of a Dealer Member as described in By-law No. 1, section 3.10
• 25This refers to a material change to an ID Member's business activities under IDPC Rules, subsection 2246(2).
• 26By-law No. 1, section 3.5(3): An application for membership shall be accompanied by a non-refundable application review deposit in an amount to be determined by the Board, to be credited towards the annual fee paid by the Member in the event that the application is approved by the Board. Where, for any reason that cannot reasonably be attributed to the Corporation or its staff, the application process (other than an application of an alternative trading system) has not been completed within six months from the date the application was accepted for review by the Corporation, the deposit shall be forfeited to the Corporation and the application shall be required to be resubmitted with a new nonrefundable application review deposit. For purposes of this Section, the application process shall be considered to be completed when Corporation staff recommends to the Board the approval or rejection thereof.
• 27The Equity Market Regulation Fee Model is part of the Interim Fee Model Guidelines that apply only to ID Members that are participating organizations, members or subscribers of a Marketplace.
• 28In the current fee model, Qualified Market Maker means a person or company that has an obligation with a listing exchange to:
  • - Maintain a two-sided market for a particular security listed on the listing exchange on a continuous or reasonably continuous basis, and
  • - Report suspicious order and/or trade activity to CIRO.
  provided the listing exchange has adequate policies and procedures to reasonably ensure continued satisfactory performance of these requirements.
• 29Marketplace Trading Obligations is defined in the Universal Market Integrity Rules to mean “obligations imposed by:
  1. Marketplace Rules on a member or user or a person employed by a member or user to guarantee:
     1. a two-sided market for a particular listed security or a listed derivative on a continuous or reasonably continuous basis, or
     2. the execution of orders for the purchase or sale of a particular security which are less than a minimum number of units of the security as designated by the marketplace; or
  2. contract between a marketplace and a member, user or subscriber to guarantee the execution of orders for the purchase or sale of a particular security which are less than a minimum number of units of the security as stipulated by the terms of the contract provided such number is less than one standard trading unit and the orders for the member, user or subscriber are automatically generated by the trading system of the marketplace.
• 30A list of Marketplaces regulated by CIRO can be found on the website.
• 31Refer to the OSC website for the approval notice.
• 32(2003) 26 OSCB 1971.