MFDA and IIROC green light creation of new SRO

More than the required two-thirds approve special resolution to launch new SRO on January 1

MFDA and IIROC green light creation of new SRO

Members of both the Mutual Fund Dealers Association of Canada (MFDA) and Investment Industry Regulatory Organization of Canada (IIROC) have approved the creation of a single self-regulatory organization (SRO), which will amalgamate both of their organizations on January 1.

The members of both regulators passed a special resolution by more than the required two-thirds of members who were entitled to vote, signalling strong support for the SRO reform initiative that the Canadian Securities Administrators (CSA) proposed and then consulted over. IIROC and MFDA jointly released the results after the MFDA members voted on the morning of September 29, while IIROC members voted at 5pm ET the same day.

Steven Glover, Chair of the MFDA Board of Directors, said: “The decision by both organizations to amalgamate the SROs was done after careful consideration of the benefits and impacts to investors and the industry, and we are very pleased that our collective members agree.”

Paul Allison, Chair of IIROC Board of Directors, said: “The vote to create a new single enhanced SRO is a ringing endorsement of the work done by the CSA and is the right decision for investors and the investment industry.”

Read more: New SRO must ‘provide a better investor experience’

Andrew J. Kriegler (pictured above), President and CEO of IIROC, who will be the new SRO’s CEO as of January 1, added: “The successful vote demonstrates the industry’s trust in the self-regulatory framework and in the ability of the new SRO to address existing regulatory fragmentation and provide more opportunities to firms to evolve their business model.”

Regulatory approval is still required, but is expected since the CSA developed the proposal. The new entity will temporarily be known as the New Self-Regulatory Organization of Canada (New SRO). The two regulators said in a joint statement: "The amalgamation represents significant and positive change which will benefit both investors and the investment industry”. 

Investors are expected to have easier access to different products, so they won’t have to change advisors and firms as their investing needs evolved.  The New SRO will aim to create a level regulatory playing field for investment firms across Canada. It will also create a separate investor office dedicated to investor education and support for rule development, which is expected to enhance investor protection. There will also be a dedicated investor advisory panel to advise the New SRO on investors’ issues.

Read more: This is perfect opportunity to build the best SRO, says PMAC

Stan Magidson, the CSA Chair and Chair and CEO of the Alberta Securities Commission, was satisfied with the results.

“I am pleased that the members of IIROC and the MFDA voted to proceed with the amalgamation of the two SROs,” he said. “Their decision to move in this direction will provide Canada with a single enhanced SRO that will have a clear public interest mandate, will increase efficiencies, and will advance the fostering of fair and efficient capital markets.”  

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