You have a diverse background in the financial sector, with the federal banking regulator and at a rating agency. How has this prepared you for securities regulation?

The value of confidence in the markets has been important to me in virtually every one of the financial services roles I’ve held since I started in 1987—as a banker and the country manager for Moody’s—and more recently as deputy superintendent at the Office of the Superintendent of Financial Institutions. For markets to function well, market participants need to be confident that the market has quality and integrity. The Investment Industry Regulatory Organization of Canada (IIROC) is an important component in assuring all market participants, investors, and intermediaries alike have integrity and quality. I’ve also found that IIROC has a similar culture to a couple of the previous organizations I’ve worked with, particularly with respect to the desire to get to “the right answer” and to act only in pursuit of the public interest.

What are IIROC’s key strategic priorities over the next 12 to 18 months?

Earlier this year, we issued our Statement of Priorities for 2015–2016, which lists our key initiatives for the current year. They include ongoing reviews of firms’ compliance with our business conduct rules, monitoring trading activity, and ensuring firm solvency. At the same time, we’re also reviewing how we can best fulfill our public interest regulatory mandate in a climate where significant changes are happening from a policy perspective in securities legislation across the country, both at the provincial and the federal levels.

Over the summer, we sought public input to assist with our strategic planning process. We asked investors and other stakeholders to comment on questions related to industry trends and how IIROC’s role should evolve over time, which will help guide how we see ourselves and how we see our role evolving over the next several years. We want to see how we can best support the public interest, given the changes we expect to be finalized. One example of this is the new co-operative regulator. There are ways in which IIROC can support both participating and nonparticipating jurisdictions in carrying out their regulatory responsibilities. As a national organization, we can help effectively deliver securities regulation consistently across the country, both in our right and with our statutory regulator partners.

Another example is the Ontario government’s commissioning of an expert panel to look at whether or not regulation in financial planning is appropriate and, if so, what that should look like. Many financial planners are also registrants on the IIROC platform, so we can add value by sharing our perspectives and experiences on proficiency, on disciplinary structure, and on registration requirements to help inform the government.

IIROC’s market surveillance program, which monitors all Canadian equity markets, requires significant resources. What infrastructure does IIROC have to assist with this?

IIROC plays a unique role in that we conduct surveillance of all Canadian equity markets, including exchanges and alternative trading systems, whether lit or dark. We use a system called STEP (Surveillance Technology Enhancement Platform), which helps us monitor trading activity to maintain fair and orderly equity markets. STEP is complemented by our Equity Data Warehouse, which enables us to analyze historical trade data. With these technologies, we can identify patterns and trends of inappropriate trading to inform enforcement actions and policy development at IIROC and at the provincial authorities. Last year, we monitored more than 33 billion messages (orders, quotes, trades, etc.) in real time from four stock exchanges and nine alternative trading systems. (That’s about the equivalent of 10 billion single-spaced typewritten pages!) Having access to this volume of information helps support intelligent and productive policy decisions and also allows us to look back at policy decisions we’ve made to validate them or change them if necessary.

IIROC has faced criticism over its ability to collect penalties imposed on individual registrants. What recent momentum has there been to remedy this?

We make every reasonable effort to collect the penalties imposed on those who breach the rules of good conduct. While we collected 100 percent of fines and other penalties levied against firms across the country in 2014, we have had challenges in collecting fines against individuals, collecting only 17 percent of the penalties levied against individuals nationally last year.

But we’ve made progress on this front. Alberta led the way in 2002, granting us the statutory power to register our disciplinary decisions. In June 2013, the Government of Quebec followed suit and changed legislation to give IIROC clear authority to seek court certification of our disciplinary decisions. This enables us to pursue payments as if the fines were decisions of Quebec’s courts and sends a strong message of deterrence. Last year, we had the highest fine collection rate for individuals in Quebec—59 percent, versus 17 percent nationally. In Alberta, the collection rate has been approximately double the national average since IIROC’s creation.

Unfortunately, in much of the country, individuals can evade payment by simply leaving the securities industry or by operating in an unregistered capacity. This is wrong. If an advisor breaks the rules and abuses the trust their clients have placed in them, they should pay the penalty. We continue to pursue similar legislative powers in the provinces where they don’t currently exist. Legislation in other provinces will not only allow us to collect more but also show that the system has integrity and that investors’ rights will continue to be protected.

What else would you like CFA community to know?

As a regulator, IIROC is focused on conduct and prudential issues in the investment industry. While CFA has a different role, we both have similar objectives. For example, if you are an IIROC registrant advising individual investors, you have to meet high proficiency and ethical standards. You have a duty of care to those investors to understand their needs and goals and to recommend investments that are suitable for them, given their circumstances. Likewise, if you want to be a CFA, you’ve got to meet a high proficiency standard and follow a high ethical standard. It sends a positive message to the industry that there are organizations out there that seek to set the bar as high as we do, and CFA Institute is one of them.