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. Following is a summary of three areas where we have recently provided comment letters to consultation processes. 

To see the comprehensive catalogue of our commentary letters, visit us online at cfacanada.org/advocacy.

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

CSA – Notice and Request for Comment – Registered Firm Requirements Pertaining to an Independent Dispute Resolution Service

The Canadian Securities Administrators (CSA) is seeking public comment on a proposed binding regime for investment-related disputes.

Under the proposed framework, the Ombudsman for Banking Services and Investments (OBSI) is expected to be the designated or recognized independent dispute resolution service for the investment industry. The proposed regulatory framework also includes proposed rule amendments to certain complaint-handling provisions under Canadian securities law.

The CAC provided feedback on specific consultation questions, highlighting our long-standing call for securities regulators to grant OBSI the authority to issue binding decisions in respect of investor complaints. Additionally, the CAC stressed the importance of OBSI remaining an independent decision-maker, emphasizing how critical it will be for OBSI to monitor and publicly report on the effectiveness of this framework as it comes into place.

CIRO – Proposed Amendments Respecting the Reasonable Expectation to Settle a Short Sale

The Canadian Investment Regulatory Organization (CIRO) is publishing for comment Proposed Amendments to support and clarify the short-selling framework under the Universal Market Integrity Rules (UMIR). The main objectives of the Proposed Amendments are to:

• Add a new positive requirement to have, prior to order entry, a reasonable expectation of settling on the settlement date any order that, upon execution, would be a short sale
• Add supervisory and gatekeeper requirements for the proposed requirements

Consolidate other current provisions related to short selling into one common section in UMIR focused on short selling

The CAC supports the Consultation, as the requirement to establish a reasonable expectation to settle a short sale is an appropriate and targeted response and will not place an unnecessary burden on industry or deter short selling generally.

Reliance on easy-to-borrow lists will better ensure an adequate locate for securities and may reduce the number of failed trades. Given that short selling is vital to fostering efficient markets and the promotion of price discovery and liquidity, we stress that any regulation in this area should be subject to ongoing data-based reviews.

CIRO Policy Options for Leveling the Advisor Compensation Playing Field

CIRO requests feedback on its position paper regarding policy options for leveling the advisor compensation playing field.

Currently, Approved Persons governed by CIRO’s Mutual Fund Dealer (MFD) Rules are permitted to utilize an approach where the compensation they have earned through a sponsoring Dealer Member is paid to a party other than themselves. Approved Persons governed by the CIRO Investment Dealer and Partially Consolidated (IDPC) Rules are not permitted to use such an approach.

The position paper analyzes three policy options for leveling the Approved Person compensation playing field, sets out CIRO’s preliminary position on the option to pursue, and requests public comment on which option they should pursue.

The CAC hesitates to support the tax-driven regulatory reforms as contemplated in the Consultation. We are concerned that tax benefits to Approved Persons are being placed tantamount to investor protection as a motivator for policy reform, and that any perceived benefits may not outweigh the cost to industry in compliance measures. We acknowledge, however, that there is industry momentum to pursue changes in this area; considering this, we would prefer CIRO to work jointly with the Canadian Securities Administrators (CSA) to establish the regulatory framework necessary to permit the Incorporated Approved Person approach in a fulsome manner at the outset.

Other letters filed:

• CIRO Rule Consolidation Project – Phase 2 – Canadian Investment Regulatory Organization (CIRO)
• FCNB – Publication of Proposed Financial and Consumer Services Commission Rule TPA-001 General and Rule TPA-002 Fees under the Financial Advisors and Financial Planners Title Protection Act

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 of 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.