In a continuing effort to address suitability concerns, Canada's investment industry regulator has issued new guidelines targeting investment strategies that involve borrowed money, also known as leveraging. An increasing number of Canadian retail investors have been using inappropriate leveraging strategies, the Investment Industry Regulatory Organisation of Canada (IIROC) said in a recent guidance note (PDF). IIROC also noted several situations where dealers had failed to provide enough information on risks associated with leveraging. Some dealers had also failed to provide clients with details about the debt servicing obligations they had taken on. Suitability The notice reminded broker dealers that clients' use of borrowed money, whether recommended by registered representatives or not, was always subject to IIROC's supervision and suitability rules. A previous guidance (PDF) on know-your-client (KYC) and suitability obligations, issued in conjunction with the implementation
↧