What’s new with the CAC?

Advancing investor protection, industry professionalism, and market integrity across Canada, the CAC works to focus attention on pressing advocacy files dominating the regulatory agenda. Ensuring fair, equitable, and sustainable outcomes for stakeholders is more important than ever, and through our growing relationships with policymakers and regulators, we are working on several important initiatives. Below is a summary of two areas where we have recently provided comment letters to the consultation processes. To see the comprehensive catalogue of our commentary letters, visit us online.

Published Canadian Advocacy Council of CFA Societies Canada (the “CAC”) comment letters

IIROC Request for Comments – IIROC Expert Investor Issues Panel

The CAC is supportive of the Investment Industry Regulatory Organization of Canada’s (IIROC) intent to further expand the inputs it receives from an investor perspective.

Our key comments are summarized below:

• The Terms of Reference should be modified such that the composition of the Panel membership more directly reflects and promotes diverse perspectives
• Members should be selected by a nominating committee comprised solely of members of the IIROC Board’s Corporate Governance Committee
• If a member resigns or their term has expired, the Panel should have a mechanism to appoint a new Panel member on its own authority, without having to turn back to the nominating committee
• Panel members should be explicitly provided with an ability to convene special or project-based meetings in addition to their prior-scheduled quarterly meetings
• Consideration should be given to the funding and governance of Panel-directed research, surveys, and projects
• Accountability should refer to the process for discussion and dispute resolution (if any is needed) between IIROC executives, the panel, and the IIROC Board

IIROC Proposed Guidance on Know-Your-Client and Suitability Determination

The CAC recommends that several additional items be added to the proposed know-your-client (KYC) and suitability processes.

Our key comments are summarized below:

• We support efforts to allow dealers to tailor their own policies for the Client Focused Reforms (CFR) requirements in consideration of their business models and the types of services they provide to clients
• The Proposed Guidance would benefit from additional specificity regarding the KYC information to be collected as it relates to the suitability determination, as it may otherwise have the unintended result of encouraging the gathering of client information simply as a compliance exercise
• There should be additional guidance around account-type suitability and the requirement to consider a “reasonable range” of alternatives. For example, as part of the KYC information that dealers must collect, the Proposed Guidance outlines details about a client’s personal circumstances that should be obtained. While an individual client’s date of birth and family situation are mentioned as examples, the Proposed Guidance does not specifically refer to the number of dependents (other than with respect to a determination of risk capacity) and potential vulnerabilities (other than with respect to ensuring extra care is taken to explain the KYC process). These items should be considered “essential facts” to be obtained for each client.

Have your say

If you would like to participate in advocacy activity related to these letters or future policy and regulatory initiatives, provide comments on ongoing initiatives, or learn more about volunteer opportunities in advocacy or as a part of the CAC, please contact cac@cfacanada.org.

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Who is the Canadian Advocacy Council?

The Canadian Advocacy Council (CAC) is a volunteer advocacy council for CFA Societies Canada, representing the twelve Canadian CFA Institute Member Societies and, ultimately, Canadian CFA charterholders. The council includes investment professionals from across the country who review regulatory, legislative, and standard-setting developments affecting investors, investment professionals, and Canadian capital markets. The CAC 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.