4116. Dealer Member capital adequacy reporting system — adequate policies and procedures

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    1. A Dealer Member must:

      1. have policies and procedures that specifically address timely, complete and accurate records,

      2. maintain a capital adequacy reporting system:

        1. based on timely, complete and accurate accounting records,

        2. that reflects projected capital requirements resulting from current and planned business activities in each of its major functional areas (for instance, capital markets, principal trading, borrowing/lending),

        3. that includes senior management approved capital usage limits for each of these functional areas that provides for reasonable assurance its combined operations maintain adequate intra-day and end of day risk adjusted capital amounts, and

        4. that identifies and informs senior management of breaches of approved capital usage limits. The Chief Financial Officer is responsible for identifying any breaches and reporting them to the Dealer Member’s appropriate Executives,

      3. monitor and act on information produced by its capital adequacy reporting system so that it maintains at all times a positive risk adjusted capital amount as prescribed by IIROC requirements,
      4. identify and implement changes, on an ongoing basis, to its capital adequacy reporting system required to reflect developments in its business or in regulatory requirements, and
      5. perform and document, at least annually, a supervisory review of its capital adequacy reporting system.
    2. Dealer Member’s Chief Financial Officer must continuously monitor the Dealer Member’s risk adjusted capital amount to ensure that the Dealer Member maintains at all times a positive risk adjusted capital amount as prescribed by IIROC requirements.

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