Establish a written supervisory system

Understanding the obligation

Rule 3904 requires a Dealer Member to establish a supervisory system through its policies and procedures. The system must cover the activities of employees and Approved Persons and be designed to provide reasonable assurance that they comply with CIRO requirements and securities laws. The rule describes a supervisory framework, not simply the existence of a policy manual.

The supervisory policies and procedures must address supervision explicitly, support compliance with CIRO requirements, securities laws and other applicable laws, and be in writing. What is appropriate will depend on the firm's business and the activities it supervises; this provision does not prescribe one universal organizational chart or technology platform.

Requirements

• Establish a supervisory system addressing the activities of employees and Approved Persons.
• Design the system to provide reasonable assurance of compliance with CIRO requirements and securities laws.
• Maintain policies and procedures specifically addressing supervision and applicable compliance obligations.
• Ensure supervisory policies and procedures are written.

Practical considerations Illustrative

Implementation examples, rather than additional express requirements.

• Identify the business activities, locations, personnel and products that the supervisory system must cover.
• Map significant supervisory responsibilities to written procedures and accountable roles.
• Review whether procedures describe actual operations, including escalation paths, rather than only high-level policy intentions.

Potential evidence Illustrative

Examples of evidence; the cited provisions may not mandate these records.

• Current written supervisory policies and procedures
• Supervisory responsibility or coverage matrix
• Documented supervisory workflows and escalation procedures
• Internal reviews of supervisory-system coverage