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 three 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

Financial Professionals Title Protection Rule and Guidance – Second Consultation (collectively, the “Proposed Rule”)

We support the Financial Services Regulatory Authority of Ontario’s (FSRA) intent to create minimum standards that entities will have to meet to obtain approval as a credentialing body, as well as to obtain approval of an acceptable financial planner (FP) or financial advisor (FA) credential. 

We are strongly supportive of FSRA’s proposal to create a central registry of credential holders on its website. We believe that FSRA should be responsible for any consumer education campaign to ensure consumers of financial advice and financial planning services understand the purpose of the credentialing regulation and process, recognized credentials, and permitted use of titles.

We encourage efforts to regulate the use of the FP and FA titles in Ontario as an investor protection measure and believe that the Proposed Rule could be strengthened by removing the list of “not confusing” titles from the approach guidance, by specifically requiring credential curriculums to address asset allocation, and by further shortening the transition timelines. 

The Canadian Securities Administrators (CSA) Consultation Paper 25-403 Activist Short Selling

As stakeholders who function professionally in capital markets, we appreciate the analytical rigour, context, explanation, and specialist dataset presented in the research and content of this consultation paper. Any incremental regulatory response to the problematic activities of activist short selling must target the problematic activities in isolation and not serve as any sort of general deterrent to short sellers or to short selling generally. To do otherwise could have wide-ranging and systemic negative consequences for Canadian capital markets.

Key Points

1. The systemic benefit to capital markets of a robust environment for short selling is well-established
2. Activist short sellers often contribute to market efficiency
3. Policy and regulatory solutions must be grounded in robust analysis
4. Securities regulators already possess remedies to address the problematic behaviours and activities under consideration

To read responses to select consultation questions from CSA Consultation Paper 25-403 Activist Short Selling, view the published comment letter.

The Canadian Securities Administrators (CSA) Proposed Amendments to NI 33-109 and Related Instruments – Modernizing Registration Information Requirements, Clarifying Outside Activity Reporting, & Updating Filing Deadlines

We support efforts to lessen unnecessary regulatory reporting obligations, recognize that the current requirement to report all outside business activities is overly broad, and support a more principled, consistent, and risk-based reporting framework. However, we are concerned that the proposed amendments are potentially problematic and may result in gaps and underreporting of positions or activities that could raise conflict-of-interest issues.

The proposed amendments’ lessening of reporting requirements for Outside Activities may result in disclosure of fewer positions or activities that could give rise to conflict of interest issues, resulting in potential harm to investors. We do not agree with what appears to be a change in the onus of disclosure from one where registrants must consider a wide array of potential disclosure triggers, to one where registrants are only required to disclose certain activities in the narrower enumerated categories and/or if an aggregate hours threshold has been reached. This change and the temporal threshold proposed have not yet been adequately explained by a data-driven or analytical case. Instead of basing the disclosure obligation solely on what appears to be an arbitrary time threshold, an Outside Activity should be required as reportable if it relates to an existing or reasonably foreseeable material conflict of interest that would be required to be identified and/or inventoried by registrants under NI 31-103. This would include all conflicts where the interests of a client and those of the registrant are inconsistent or divergent.

We welcome additional reporting requirements regarding business/professional title(s), simplification of firm-level reporting, clarification of required disclosure of registrant information relating to professional bodies’ standards of conduct and related investigations/processes/sanctions, and codification of the rules relating to the client base of registrants whose Outside Activities would include positions of influence.  

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.