On June 25, the Canadian Securities Administrators (CSA) published a consultation paper (the Consultation Paper) requesting input from stakeholders on the current regulatory framework for investment dealers and mutual fund dealers in Canada. The Consultation Paper follows a news release from December 2019 in which the CSA announced a plan to revisit the current regulatory structure concerning the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). The CSA's review is intended to gauge the existing regulatory framework's benefits and challenges in light of the increased innovation and evolution within the financial services industry.
The Consultation Paper reviews the history and development of IIROC and the MFDA, and compares the domestic framework of regulation with those of the United States and the United Kingdom. The Consultation Paper also examines a number of issues identified by stakeholders in response to the December 2019 news release, specifically regarding (i) structural inefficiencies resulting from the current framework; (ii) investor confusion caused by the existing structure and public confidence in the regulatory framework; and (iii) issues resulting from market surveillance being separated from the CSA. The Consultation Paper invites stakeholders submitting comments to respond to a number of specific questions related to these issues.
IIROC and the MFDA have also recently released position papers outlining their views on the current regulatory framework. In its paper, IIROC states that the existing model “denies many Canadians robust access to the advice, products and services they deserve” and suggests consolidating IIROC and the MFDA. The MFDA, meanwhile, proposes establishing a new self-regulatory organization responsible for business conduct and prudential regulation. Under the MFDA's proposed model, marketplace regulation and surveillance would be consolidated and assumed by CSA regulators.
The CSA are accepting responses to the Consultation Paper, and the questions posed within, until October 23, 2020. For more information, see CSA Consultation Paper 25-402 Consultation on the Self-Regulatory Organization Framework.
Originally published by Stikeman Elliott, July 2020
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