Proposed Amendments to the IIROC Rules and Form 1 relating to the futures segregation and portability customer protection regime

IIROC is proposing amendments to the IIROC Rules and Form 1 (collectively, the Proposed Amendments) relating to the futures segregation and portability customer protection regime. The Proposed Amendments are required to align our requirements with expected rule changes at the Canadian Derivatives Clearing Corporation (CDCC), intended to meet international standards for the protection of clients in the event of a default of a clearing participant. CDCC is proposing a new customer protection segregation and portability (Seg and Port) regime to comply with the international standards.

CDCC’s proposed Seg and Port regime is based on the use of a gross customer margin (GCM) model, and empowers CDCC to more rapidly port (transfer) client positions and related collateral from a clearing member that is in default to a different clearing member.

The customer protection model created by the Seg and Port regime is separate from the IIROC-CIPF customer protection model, and therefore requires corresponding operational and reporting separation to address the two models. The primary objective of the Proposed Amendments is to reduce funding drain and restrict linkages between a Dealer Member’s (Dealer) futures business and its other business lines (e.g. securities business).