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Published Canadian Advocacy Council of CFA Societies Canada (the “CAC”) comment letters
In its comment letter, the CAC:
- Supported the Proposed Access Model as a reasonable alternative to current delivery requirements
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Raised concerns about accessibility, particularly regarding SEDAR+ (System for Electronic Document Analysis and Retrieval), noting that while SEDAR+ had improved, investors might still face challenges with navigation and functionality
- Further enhancements to SEDAR+, including improved search and notification features
- Video tutorials to help investors learn to use the platform effectively
- Greater investor engagement to refine SEDAR+ based on user needs
- Implementing “permalink” functionality for consistent document access
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Adoption of machine-readable and structured disclosure formats, such as XBRL (eXtensible Business Reporting Language)
CSA – Proposed Amendments to Modernize the Continuous Disclosure Regime for Investment Funds
The Canadian Advocacy Council (CAC) submitted a letter to the Canadian Securities Administrators (CSA) regarding proposed amendments to the disclosure requirements for investment funds.
The CAC appreciated the regulators’ efforts to balance investor protection with reducing regulatory burden and supported the data driven approach used in crafting the policy proposals.
The letter provided specific feedback on key aspects of the proposal, highlighting areas for improvement and advocating for changes that would enhance investor transparency and protection.
Key points from the letter include:
+ Filing frequency of fund reports
The CAC largely supported maintaining the current filing frequency for annual and interim Management Reports of Fund Performance (MRFPs). However, it disagreed with the exemption for scholarship plans and recommended harmonizing these rules across all comparable investment products.
The CAC strongly supported disclosing performance of both the highest and the lowest management fee classes/series of a fund to help retail investors understand costs and distribution channel choices. It also suggested that performance information for fee-based accounts should include illustrative comparable fees.
+ Liquidity disclosure
The CAC agreed to add a Liquidity Profile section to the Fund Report, viewing it as a crucial investor protection measure. It is recommended that a legend be included in the liquidity chart and additional comparative statistics to improve investor comprehension.
The CAC advocated harmonizing disclosure requirements for scholarship plans with other investment funds, arguing that distinctions in regulatory treatment are probably outdated.
+ Fund performance assessments by IFMs
The CAC raised concerns about apparent conflicts of interest if Investment Fund Managers (IFMs) were required to self-assess their fund’s success. The CAC suggested clarifying expectations in the Fund Report instructions and considering alternative models, such as expanding the role of fiduciary oversight bodies.
The CAC provided feedback on Ontario Securities Commission (OSC) Consultation Paper 81-737, recommending better background information gathering by regulators in private markets to inform policy proposals. It suggested regulators reassess whether the wholesale exemption from securities oversight of managers of exempt-market funds invested in private equity, venture capital, and other private assets remains appropriate, especially considering US regulatory developments, noting that improved market knowledge relating to private assets would enable more informed regulatory policy.
The CAC:
- Acknowledged potential benefits for retail investors of greater access to these investment opportunities while questioning whether the proposal adequately addressed investor needs or was motivated by perceived capital formation issues
- Emphasized the need for analysis to be informed by the experience of similar proposals in similar jurisdictions and for collection of robust data on the quality and performance of funds and managers available to retail investors, particularly given the wide dispersion of returns in these asset classes
Investment fund structures
The CAC:
- Agreed that investment fund structures could mitigate some risks of illiquid Long- Term Assets but highlighted the importance of regulatory requirements tailored to the unique characteristics of these asset classes
- Stressed the necessity for carefully tailored regulatory requirements that address the unique characteristics and challenges of these specialized asset classes, highlighted the need for transparent rules governing fund operations, liquidity management protocols, and robust conflict management measures for investor protection
Governance and oversight
- The CAC endorsed applying specialized regulatory requirements for Ontario Long-Term Funds (OLTFs) while calling for a more thorough examination of Cornerstone Investors’ role, particularly regarding potential conflicts or misalignment with retail investor interests
The CAC:
- Supported aligning OLTF net asset value calculation requirements with distribution and redemption frequency, with additional related governance controls relative to other types of prospectus-offered investment funds
- Acknowledged that experienced investment fund managers could help address valuation challenges while recognizing that long-term assets present distinct governance and fund-management complexities
- Expressed a strong preference for independent boards of directors over enhanced independent review committees for effective OLTF oversight Investor protection
The CAC:
- Believes that OLTFs demand more comprehensive disclosure requirements (both initial in Fund Facts and ongoing in MRFP requirements) that communicate asset-specific risks to retail investors
- Raised significant concerns about the net result of the proposals being that retail investors in Ontario could potentially only receive access to a subset of Long-Term-Asset investment managers and investment opportunities, as the highest-quality opportunities would likely remain dominated by institutional investors
- Recommended additional investor protection measures for non-accredited retail investors into potential OLTFs, including suitability determinations from qualified registrants before investment and further exploration of financial eligibility tests or investment concentration restrictions
- CIRO – Proposal to Harmonize CIRO Continuing Education Programs
- CIRO – Proposed Amendments Respecting Mandatory Close-Out Requirements
- CIRO – Non-Tailored Advice in the Order Execution Only Channel
- CSA – Proposed Amendments to the Principal Distributor Model
- CSA – Applicability of Canadian Securities Laws and the Use of Artificial Intelligence Systems in Capital Markets
Who is the Canadian Advocacy Council?
