Agreement Between Brokers Template for Canada

An Agreement Between Brokers is a specialized contract that formalizes business relationships between licensed securities brokers in Canada. This document establishes the terms under which brokers collaborate, whether for client servicing, commission sharing, referral arrangements, or introducing/carrying broker relationships. You need this agreement to ensure regulatory compliance while protecting your firm's interests in inter-broker partnerships.

When do you need this document?

You require an Agreement Between Brokers when establishing formal business relationships with other licensed securities dealers. This includes situations where you're setting up introducing broker arrangements with carrying brokers who handle trade execution and custody, creating referral partnerships for client acquisition, or establishing commission-sharing agreements for collaborative client servicing. The document is also essential when entering joint ventures for institutional client coverage, cross-border trading arrangements, or when online trading platforms partner with full-service brokers for expanded service offerings.

Key legal considerations

Your agreement must clearly define each party's regulatory responsibilities, particularly regarding client identification, suitability assessments, and trade supervision. Include detailed provisions for commission structures, payment terms, and revenue sharing to avoid disputes. Address liability allocation for regulatory violations, client complaints, and trading errors, ensuring each broker's insurance coverage adequately protects both parties. The agreement should specify data sharing protocols, confidentiality requirements, and client information protection measures. Include termination clauses that address client account transfers, pending transaction handling, and record retention obligations. Consider dispute resolution mechanisms and specify governing law for contract interpretation.

Legal requirements in Canada

Under provincial Securities Acts, both parties must maintain valid registration as investment dealers or exempt market dealers depending on their activities. IIROC rules require detailed written agreements between member firms, with specific provisions for supervision, compliance monitoring, and client relationship management. Your agreement must comply with Proceeds of Crime (Money Laundering) and Terrorist Financing Act requirements, including provisions for suspicious transaction reporting and client identification procedures. Under PIPEDA, include comprehensive privacy protection clauses governing personal information collection, use, and disclosure between brokers. Ensure the agreement addresses cross-jurisdictional regulatory requirements if operating across provincial boundaries, and maintain records as required by securities legislation in each relevant province.