Intensified Authorities' Reach: Is the CIRO Now Acting Under 'Legal' Powers?
Following the passage of Bill 24 in 2025, the Canadian Investment Regulatory Organization (CIRO) has received expanded enforcement powers in several key areas.
The new powers allow CIRO greater ability to obtain necessary information for compliance oversight, as it now has the authority to compel evidence in enforcement investigations [1]. This expansion of authority will help CIRO address potential issues more effectively and protect market integrity and investors.
CIRO employees engaged in enforcement activities have also been granted statutory immunity, protecting them when acting in good faith in their public interest mandate [1]. This immunity is designed to encourage employees to take bold action when necessary, knowing they are protected from potential legal repercussions.
The maximum administrative penalties and fines that CIRO can impose have been increased, enhancing the organization's deterrence and sanctioning capabilities [1]. The maximum administrative penalty for non-compliance with securities legislation and commodity futures law has been increased from $1 million to $5 million, while the maximum fine that may be imposed for a quasi-criminal offence under commodity futures law and Ontario securities law has been increased from $5 million to $10 million [2].
Bill 24 also gives CIRO the ability to exercise certain statutory powers more formally through amendments to the Commodity Futures Act and the Ontario Securities Act [1]. This allows for a more streamlined and efficient regulatory framework.
CIRO was formed through the merger of the Investment Industry Regulatory Organization of Canada (IIROC) and Mutual Fund Dealers Association (MFDA) on January 1, 2023 [7]. The amendments to Ontario's short selling regulatory regime are a response to recommendations from a taskforce to modernize the regime [8].
The Capital Markets Modernization Taskforce identified key challenges and made over 70 recommendations to amplify growth and competitiveness in Ontario's capital markets [6]. One of the taskforce's findings was that Ontario's short selling regime falls short compared to other jurisdictions, such as the U.S., where mandatory close-out provisions are in place [6]. CIRO's new powers of compulsion are not accompanied by corresponding confidentiality provisions, unlike the OSC's powers of compulsion [3]. This may raise questions about respondents' protections against self-incrimination under the Ontario Evidence Act and the Charter [4].
The amendments to Ontario's short selling regulatory regime are significant and may have implications for registrants and investors in Ontario's capital markets [9]. The increase in monetary penalties for non-compliance with securities legislation and commodity futures law may raise the stakes for those found in breach [5]. The authors of the article are Lawrence E. Ritchie, Lipi Mishra, Madeleine Worndl, and Adriana Ishak [10].
References:
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- CIRO: About Us
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
- Ontario Government News Release: Ontario Strengthens Capital Markets Regulation
Businesses operating in Canada's capital markets need to be aware of increased enforcement powers by the Canadian Investment Regulatory Organization (CIRO), particularly in relation to finance. The new authority allows CIRO to compel evidence in enforcement investigations and impose higher administrative penalties and fines for non-compliance with securities legislation and commodity futures law.
