What’s new with advocacy at CFA Societies Canada?

Advancing investor protection, industry professionalism and market integrity across Canada, CFA Societies Canada focuses attention on pressing advocacy files dominating the regulatory agenda. Ensuring fair, equitable and sustainable outcomes for stakeholders is more important than ever. Through our growing relationships with policymakers and regulators, we are working on several important initiatives. Below is a summary of three areas where we have recently provided comment letters. To see the comprehensive catalogue of our commentary letters, visit us online at cfacanada.org/advocacy.

Published CFA Societies Canada comment letters

CIRO – Proposed new guidance on order execution only account services and activities

The Canadian Advocacy Council (CAC) responded to the Canadian Investment Regulatory Organization’s (CIRO) proposed new guidance on Order Execution Only account services and activities, expressing overall support for the shift toward a principles-based regulatory framework. The CAC welcomed CIRO’s responsiveness to prior recommendations, particularly regarding platform configuration oversight, enhanced model-portfolio functionality and caution around finfluencers and copy-trading tools. The CAC encouraged ongoing agile updates to the guidance in response to industry developments.

Key highlights from the CAC’s submission include:

Additional safeguards: The CAC recommended multiple enhancements to bolster investor protection, including outcome-based justifications for dealer defaults, formal governance and documentation for configurations, conflict-of-interest controls, audit trails, monitoring frameworks, oversight for third-party content and opt-in/opt-out mechanics for defaults.

Sample portfolios and asset allocation tools: While supportive of CIRO’s approach, the CAC urged added safeguards, such as neutral-shelf requirements, restrictions on promotional mechanics, monitoring for excessive trading tied to model updates and a preference for registrant-sourced models.

Examples of decision-making supports: The CAC supported the idea of a living guidance document with illustrative analyses. It recommended decisiontree examples for tools such as model portfolios, self-assessments, filters, gamification and copy-trading, to help clarify what constitutes a prohibited recommendation.

Product shelf limitations and proprietary product conflicts: The CAC agreed that restricting product offerings to proprietary or affiliated products effectively constitutes a recommendation and is inconsistent with the Order Execution Only model. Such business models should be reconsidered for a non-Order Execution Only dealer category. The CAC was critical of the idea that tools could remain compliant if offering only a few product options, reiterating the importance of product neutrality in the Order Execution Only space.

CSA – Venture issuer semi-annual reporting pilot

The CAC responded to the Canadian Standards Association’s (CSA) Semi-Annual Reporting Pilot proposal by reiterating its strong reservations about reducing financial reporting frequency. It emphasized that quarterly reporting is crucial for market transparency and investor protection, especially for smaller issuers. The CAC urged the CSA to set clear success metrics, consider sector-specific exclusions and modernize reporting using technologies such as eXtensible Business Reporting Language (XBRL). The CAC recommended rethinking the Semi-Annual Reporting Pilot within a broader reform strategy focused on strengthening Canada’s investment ecosystem.

CFA Institute – Exposure draft guide for best practices in return attribution reporting

The Canadian Investment Performance Council (CIPC) responded to CFA Institute’s Exposure Draft Guide for Best Practices in Return Attribution Reporting. The CIPC expressed strong support for the principles of fair presentation and full disclosure in return attribution practices. It acknowledged the challenges presented by differing attribution methodologies and offered targeted recommendations to enhance clarity, transparency and consistency across the industry.

Key highlights from the CIPC’s submission include that the CIPC:

• Mostly supported disclosing representative portfolio selection policies upon request, citing transparency and accountability benefits, while noting concerns about administrative burden and possible misinterpretation.

• Observed that multi-year attribution is not standard practice but can offer valuable insights when aligned with investment cycles. It recommended clearer guidance on when and how to present such data, including documenting smoothing methods and supplementing with annual results to improve client understanding.

• Recognized that firms use both cumulative and annualized attribution methods and advised that firms clearly disclose and consistently apply their chosen method, considering client preferences, interpretability and system capabilities.

• Recommended disclosing how cash is treated in attribution, especially when using transaction-based methods, to address its off-benchmark nature and ensure transparent reporting.

• Endorsed firm disclosure and documentation of their methods if currency effects are material. For actively managed currency exposures, models like Karnosky-Singer should be used; otherwise, simpler methods may suffice, provided the effects are explained if omitted.

• Emphasized documenting treatment in policies and distinguishing between long and short positions to aid interpretation. Disclosure regarding leverage and derivatives should be provided when material.

Other letters filed:

• CSA – Proposed amendments to non- GAAP and other financial measures disclosure requirements

Who is CFA Societies Canada?

CFA Societies Canada represents the 12 Canadian CFA Institute Member Societies and, ultimately, Canadian CFA charterholders. CFA Societies Canada’s Canadian Advocacy Council includes investment professionals from across the country who review regulatory, legislative, and standard-setting developments affecting investors, investment professionals, and Canadian capital markets. CFA Societies Canada through its advocacy efforts strives to advance market integrity, transparency, and investor protection, and actively engages Canada’s securities regulators, self-regulatory organizations, industry associations, legislators, and other stakeholders through thoughtful leadership, direct engagement, and the publication of comment letters.