Securities regulators to launch single self-regulatory organization for investment industry

New organization to combine existing investor protection funds, streamline complaint processes

Securities regulators to launch single self-regulatory organization for investment industry

The Canadian Securities Administrators (CSA) has announced its intention to consolidate the functions of the Investment Industry Regulatory Organization of Canada (IIROC) and of the Mutual Fund Dealers Association of Canada (MFDA) into a single self-regulatory organization.

The new self-regulatory organization aims to improve regulation of the investment industry, to harmonize rules where appropriate, to streamline complaint processes and to enable easier and cheaper access to more investment products and services for the public and lower costs for dealers. The Canadian Investor Protection Fund and the MFDA Investor Protection Corporation will be combined into an integrated fund independent of the self-regulatory organization.

“The CSA recognizes the high level of skill, dedication and experience that staff from IIROC, MFDA and the existing investor protection funds have consistently brought to their work,” said Louis Morisset, chair and president of the Canadian Securities Administrators and chief executive officer of the Autorité des marchés financiers, in the new release. The combined efforts of these staff will be key, Morisset added.

The CSA is establishing an Integrated Working Committee, which seeks to decide on the new self-regulatory organization’s corporate structure and to oversee the incorporation of a new governance structure, the integration of functions and the existing investor protection funds. The CSA may also include registration categories that it is currently regulating in the new organization, depending on its findings during further consultations.

Certain governance enhancements will be implemented in the self-regulatory organization to ensure that it serves the public interest, including:

  • Most of the new organization’s board members and its chair will be independent
  • The approval of all board members will be overseen
  • An investor advisory panel will be established
  • The new organization will be required to seek input from the CSA on its annual priorities, business plan and budget
  • The new organization should also ask for approval for significant publications

“The new self-regulatory framework is the result of extensive research, consultation and analysis that informed the creation of a framework designed to protect Canadian investors and enhance public confidence, accommodate innovation, ensure fair and efficient market operations and navigate continually evolving industry conditions,” said Morisset.

The CSA first announced that it would review the existing self-regulatory organization framework and made a working group back in December 2019. This working group finished its informal consultations with numerous stakeholders by early 2020, and sought feedback on a consultation paper in June 2020, for which it accepted 67 comment letters.

Interested individuals may learn more about the new organization by reading the CSA Position Paper 25-404 New Self-Regulatory Organization Framework, published on Aug. 3.

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