Proposed Amendment of Approved Person Fees Component within the Annual Fee of Dealer Member Fee Model

1. Background and Current State

CIRO had previously been delegated authority to register firms and individuals who act on behalf of IDs in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, and Saskatchewan. Ontario and Québec had delegated authority for ID individuals only. CIRO, and one of the predecessor organizations (The Mutual Fund Dealers Association), did not conduct any registration activity for MFD firms or individuals.

On November 20, 2024, the CSA announced that its members are exploring delegating and assigning certain registration functions and powers to CIRO.

On April 1, 2025, nine CSA jurisdictions delegated to CIRO registration functions for ID and MFD firms and individuals.3 The Autorité des marchés financiers (AMF) delegated registration functions for ID, MFD and Derivatives Dealers and individuals who act on behalf of MFD on July 1, 2025. On October 1, 2025, the Manitoba Securities Commission assigned to CIRO registration functions for ID and MFD firms and individuals, and the Financial and Consumer Affairs Authority of Saskatchewan assigned to CIRO additional registration function for MFD firms and individuals.

With the additional delegation and assignment of powers taking effect on April 1, 2025, July 1, and October 1, 2025 delegation of registration functions across the country for ID and MFD is largely harmonized.4

Prior to the additional delegation and assignment, CIRO recovered the costs of performing registration-related regulatory activities in three ways:

• Activity-based NRD fees;
• Cost recovery arrangement with certain provincial securities regulatory authorities to recover the direct costs relating to previously delegated ID registration activities; and
• Annual Dealer Member Fees.

For the fiscal year ending March 31, 2025, CIRO collected approximately $1.9 million in NRD fees and recovery from provincial securities regulatory authorities. For FY26, CIRO has undertaken transitory measures to help fund its expanded registration activities (refer to Section 4).

2. Cost Recovery

Starting April 1, 2026, CIRO will cease collecting CIRO NRD fees5, as well as cost recovery arrangements with certain provincial securities regulatory authorities. Instead, full costs are proposed to be recovered through the Annual Dealer Member Fee. The additional delegation and assignment results in incremental costs for CIRO, including costs of performing Canadian and international criminal, bankruptcy and insolvency checks, staffing requirements, and related IT support. The incremental costs are mostly driven by the delegated and assigned MFD registration functions as CIRO had not previously performed any of these activities. CIRO estimates annual incremental costs to be approximately $4.6 million.

In totality, the Annual Dealer Member Fee must recover $6.5 million (consisting of the incremental costs plus fees previously collected) to offset the additional registration functions delegated and assigned to CIRO.

3. Dealer Member Fee Model and Proposed Amendment

Under the Dealer Member Fee Model, a CIRO Dealer Member pays, among other fees, Annual Fees for each fiscal year. The Annual Dealer Member Fee is the primary method of recovering operating costs from Dealer Members.

The Annual Fee for each Dealer Member is determined with reference to the following components:

1. Revenue Component;
2. AP Fees Component; and
3. Minimum Dealer Regulation Fee Component.

To recover the $6.5 million in the Dealer Member Fee Model, the proposal would amend only the AP Fees Component of the Annual Fee, increasing the annual rate from $250 to $300.

Under the CIRO Fee Model, the AP Fee Component of the Annual Dealer Member Fee is calculated by taking the number of APs of the Dealer Member based on the 12-month average of the previous calendar year and multiply by the AP rate ($300 in the Proposed Fee Amendment). Each AP is only counted once for each Dealer Member, regardless of how many categories or provincial jurisdictions that person is registered in.

4. Transitionary Measures

Fiscal Year ending March 31, 2026

CIRO started to incur incremental costs commensurate with additional delegation activities in FY26. As part of CIRO’s FY26 Budget, the Board of Directors approved $2 million of the reserves to be used to fund the net deficit related to these activities during this transition year. To ensure continuing alignment with CIRO’s Guiding Principle, CIRO is required to recover the full costs starting FY27.

Fiscal Year ending March 31, 2027

In FY27, we propose to cease collecting CIRO NRD fees.

In Québec, until CIRO begins conducting all oversight activities related to MFDs and the individuals acting on their behalf, and receives approval from the AMF, the applicable CIRO NRD fees will continue to apply, along with the transitionary measures in Section 2.2 under the Integrated Fee Model will remain in effect.

In Ontario, we will continue to receive the OSC’s NRD fees related to ID and MFD registration activities until March 31, 2027.

5. Analysis and Work Done

CIRO conducted a comprehensive analysis of the impact upon Dealer Members under the Proposed Fee Amendment with the Annual Dealer Member Fee. Important considerations of this analysis includes:

• Registration activities (and costs) are driven by the AP count. MFD firms have a higher average AP count than ID firms, with MFD firms making up 67% of the total. Therefore, changes in AP rate have a more significant impact upon MFD firms as they have a higher average AP count. Changes in revenue rate have more significant impact on ID firms as they have larger revenue base.
• Cost recovery must be aligned with the Guiding Principles. CIRO operates on a cost recovery basis. Without the Proposed Fee Amendment of the AP rate, the additional fees will flow through the Revenue Component and unfairly allocate a greater proportion of Registration costs to ID firms. We recommend that the review of the Proposed Fee Amendment be guided by whether the methodology meets the Guiding Principles.
• Proposed fees are estimates based on historical AP data. The analysis is based on historical data from 2024 which was used for the FY26 annual fee calculation. The analysis should be viewed as an estimation of the isolated impact of the Proposed Fee Amendment only and is not intended to be an indication of FY27 Annual Dealer Member Fees. Only existing Dealer Members are included in the analysis.
• This analysis assumes full transition of MFD Members with Québec-based revenues and dealing representatives. Based on CIRO’s Integrated Fee Model, Dealer Members do not pay fees associated with their Québec-based MFD activities and dealing representatives until CIRO starts to provide full regulatory services to these Dealer Members and individuals. When CIRO starts to provide such regulatory services and is fully transitioned, the following Québec-based MFD activities are included:
  • MFD Members who are registered only in Québec (“deemed members”);
  • The Revenue Component of the Annual Dealer Member Fee calculation includes 100% of Québec-based revenue for MFD Members registered in Québec and other provinces; and
  • The AP Fees Component includes MFD dealing representatives who are only registered in Québec

Until CIRO begins delivering full regulatory services to MFD Members in Québec and obtain the AMF’s approval, the transitionary measures in Section 2.2 under the Integrated Fee Model will remain in effect.

5.1 Overall CIRO Fee Impact

• Total CIRO fees to Dealer Members will increase by 5%. This increase reflects solely the cost recovery for registration delegation, comprising $6.5 million to be recovered through Annual Dealer Member Fees, net of the $1.3 million NRD fees that are no longer collected6, totaling to $5.2 million. This does not include other fee increases we can expect in FY27 (ie: Québec delegation of other regulatory functions, indexing for inflation, etc.)
• The majority of the fee increase will be absorbed by large MFD firms that have the highest average AP count.
• Small ID and MFD firms will not be materially impacted. Small ID firms that pay the minimum annual fee may see an overall fee reduction, benefiting from removal of NRD fees.
• Below table summarizes total CIRO fee impact by member division and size7:

• Most Dealer Members will not experience a material impact on their total CIRO fees. Below table summarizes CIRO fee impact at member firm level:

5.2 Alternatives Considered

In determining the methodology for cost recovery of the additional costs associated with the additional registration delegation and assignment, we considered several alternatives:

• Recovering through NRD fees: We considered recovering a portion of the additional costs through NRD fees based on activity type. However, this methodology does not align with the Guiding Principles. It would be dependent on harmonizing the NRD activity fee schedule across multiple jurisdictions, resulting in additional costs and an inconsistent cost recovery due to variable activity-based fees depending upon the number of applicable jurisdictions.
• No change to current Fee Model: Without any amendments to the existing fee model, the $6.5 million additional fees will be recovered by increasing the Revenue Rate in the Revenue Component of the Annual Dealer Member Fees. This will result in 88% of the additional fees being borne by ID members. As one of the key considerations mentioned, registration activities are driven by changes in AP base, with no direct relationship with member’s revenue. Therefore, it would run counter to the Guiding Principles to recover the additional costs related to registration functions through the Revenue Component and from ID members that have lower average AP count compared to MFD members.
• Lower AP rate increase: We also considered a moderate AP rate increase of $25 (from $250 to $275). However, similar to the previous alternative with no change to the AP rate, the majority (64%) of the additional fees will be borne by ID members, which also does not align with the Guiding Principle of proportionality.

5.3 Benchmarking

We compared our Proposed Fee Amendment of the AP Fees Component to those of other comparable regulators with similar principles and methodologies, like the Financial Industry Regulatory Authority (FINRA), the Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), the British Columbia Securities Commission (BCSC), the Alberta Securities Commission (ASC), and the Ontario Securities Commission (OSC).

6. Alignment with Guiding Principles

Overall, the Proposed Fee Amendment meets the Guiding Principles:

1. Proportionality:
   • Registration activities are driven by changes in the AP count. Therefore, it is most proportionate and fair to recover the additional costs through the AP Fee Component of the Annual Dealer Member Fee.
   • MFD firms have a higher average AP count than ID firms. MFD members make up 67% and ID members make up 33% of the total AP count. Therefore, it is most proportionate and fair to recover the additional costs from MFD firms that have a higher AP count.
2. Practicality:
   • Instead of NRD fees, it is most practical to recover the additional costs through the Annual Dealer Member Fee. Recovering through NRD fees will be dependent on harmonizing of NRD activity fee schedule across multiple jurisdictions, and will drive additional costs for CIRO to administer such fees.
3. Consistency:
   • The Proposed Fee Amendment will have the same AP rate ($300) for all members.
4. Transparency:
   • With the set AP rate, Members will be able to recalculate the AP Fees Component of their Annual Dealer Member Fee.
5. Serving the Public Interest:
   • Small firms with a low AP count will not be materially impacted.
6. Sustainability:
   • Full cost recovery of the additional costs incurred by CIRO. Recovering through the Annual Dealer Member Fee instead of activity-based NRD fees ensures consistent recovery and aligns with the fixed nature of registration function costs.

Appendices

Appendix A – Integrated Fee Model – blacklined

Appendix B – Integrated Fee Model – clean

Appendix C – Frequently Asked Questions (FAQs)

• 3In Ontario, CIRO was also delegated registration functions for Futures Commission Merchants and associated individuals.
• 4British Columbia is subject to approval as of the date of this bulletin. It is anticipated that CIRO will have full delegation and assignment by Spring 2026.
• 5See footnote 3 for further details.
• 6$1.3 million reflects the NRD fees collected by CIRO in FY25. Removal of this reflects the point at which all NRD fees cease to be collected. However, as part of OSC’s transitional provisions outlined in Section 4, NRD fees will continue to be collected within the province in FY27.
• 7

  The criteria for categorization of firms by size is noted below:

  Firm Size	Number of firms	ID Members	MFD Members
  Small	123	Revenues < $10 million	AUA < $1 billion
  Medium	106	Revenues >= $10 million and < $1 billion	AUA >= $1 billion and < $10 billion
  Large	27	Revenues >= $1 billion	AUA >= $10 billion