Alert:
A nationwide postal strike or lockout may occur as early as November 3, 2004. Dealer Members must take steps to ensure that document delivery requirements prescribed under CIRO Rules continue to be met.
Overview of Integration Costs
The costs and expenses incurred relating to the Amalgamation and start-up of the New Self-Regulatory Organization of Canada (New SRO) will be borne by the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) and ultimately, New SRO. These integration costs will include costs incurred until March 31, 2024 related to integration activities, at which point the majority of integration costs are expected to have been incurred. Costs will include but are not limited to:
Given that the creation of New SRO is in the public interest, the MFDA and IIROC sought approval from the CSA to access the MFDA Discretionary Fund and the IIROC Externally Restricted Fund for an amount up to $4,290,000 each to pay for a portion of the consulting and advisory expenses associated with the creation of New SRO. The MFDA request was approved on July 28, 2022, and the IIROC request was approved on October 27, 2022.
The balance of integration costs after application of approved MFDA Discretionary Fund and IIROC Externally Restricted Funds will be recovered through the Integration Cost Recovery Model.
Application to Dealer Member Firms
This Integration Cost Recovery Fee Model is applicable to existing MFDA and IIROC Members who are affiliated with the same controlling ownership interest, and any New SRO Member that becomes dually registered before the cost recovery period ends. Single platform firms operating as an investment dealer member or mutual fund dealer member that are not affiliated will not be charged for the costs of integration.
Annual Integration Cost Recovery Fees
Fees will be charged quarterly as a percentage of the applicable Dealer Member firm’s annual membership fees under the Interim Fee Model, subject to a 10% annual cap. The percentage will be set annually starting with fiscal 2024.
The Integration Cost Recovery Fees for fiscal 2024 will be set at an amount not to exceed 8% of annual membership fees.
Duration of the Integration Cost Recovery Fees
Integration Cost Recovery Fees will be charged over 3 to 5 years until the balance of integration costs are recovered. The final timeframe will be determined after all integration costs incurred by March 31, 2024 are known, to ensure that fees will remain under the 10% of annual membership fees cap.
Fees for New Members
If an applicant for membership to New SRO with registration as both an investment dealer and mutual fund dealer (dual-registration) is approved by the Board during the fiscal year, the annual percentage will apply to the annual membership fees charged for the new dual-registered member.
Billing and Payment
Integration Cost Recovery Fees will be communicated with the annual membership fees and follow the same quarterly payment timelines.
Reference to the Interim Fee Model
This Integration Cost Recovery Fee Model should be read in conjunction with the Interim Fee Model published November 24, 2022 which can be found in the Interim Fee Model Guidelines applicable to Investment Dealer Members and Marketplace Members, IIROC Notice 22-0181, and Rule 8 on Membership Matters of the Mutual Fund Dealer Interim Rules, MFDA Bulletin #0921-M.
For more information on the fee models, please contact:
Laura McNeil
Chief Financial Officer
121 King Street West, Suite 2000
Toronto, ON M5H 3T9
[email protected]