Who represents the national interests of Canada’s CFA charterholders? Who promotes investment industry professionalism and ethical standards based on the CFA charter and adoption of CFA Institute’s industry codes and standards in Canada? CFA Societies Canada, that’s who.

Many know little about this relatively new organization that was set up in 2017. Yet it plays a critical role in Canadian CFA charterholders’ overall goals by advancing professionalism, proficiency, and ethics in the Canadian investment industry.

The early days

Canada’s twelve CFA Societies have collaborated on issues for decades, originally as the Canadian Council of Financial Analysts (CCFA). CCFA’s incorporation in 1995 also led to the creation of the Canadian Advocacy Council (CAC), which focused on responding to requests for comment on securities regulatory proposals.

Historically, the CAC volunteers struggled to have a voice in policy dialogues that was comparable to powerful industry lobby groups that have resources for professional policy analysis and legal expertise. This imbalance was especially apparent in key investor protection debates of the past few decades, and there was appetite for change with the growing numbers of charterholders in Canada. This challenge led to the creation of CFA Societies Canada, mainly to amplify and professionalize the CAC’s efforts.¹

“There was a recognition that we were having quite a bit of influence relative to our resources, but that it was difficult to consistently translate that into policy outcomes without professionalized (staff) resources,” says Michael Thom, CFA, who, as Managing Director, today leads a CFA Societies Canada team of three staff.

CFA Institute provides most of the funding, with oversight by a board of twelve directors nominated by each of Canada’s CFA societies and an independent chair. In addition to the CAC and a portfolio of other operational priorities, CFA Societies Canada also operates the volunteer Canadian Investment Performance Council and fosters collaboration on shared interests among member societies.

Advocacy is key

The focus of CFA Societies Canada is advocacy. With most industry bodies advocating for their members’ corporate interests or those of a particular market segment, CFA Societies Canada fills a gap by providing expert commentary and regulatory feedback from the professional practitioner’s perspective, in pursuit of professionalism and the public interest.

Tapping the deep knowledge and long-standing experience of Canadian charterholders and CFA Institute, the organization can make highly informed suggestions on regulatory issues that are perennially being examined in the Canadian investment landscape, such as ethical decision-making, identifying and managing conflicts of interest, and eliminating problematic compensation structures.

“We think we have a huge role to play given the unique history of the CFA Program and how we approach credentialling, building knowledge and professionalism, and the ethical foundation on which it is based,” Thom says.

Strict litmus test

The potentially overwhelming range of regulatory bodies and issues across Canada means CFA Societies Canada applies a rigorous litmus test before embarking on an initiative. The initiative must align with established advocacy priorities, the organization’s potential for influence on the issue, and the value and strength of the relevant regulatory or industry relationship. Recently updated in February 2023, this litmus test also considers the urgency of the issue at hand, and the opportunity to address key principles like transparency and investor protection.

There is, in fact, much work underway to improve the proficiency of Canadian securities registrants. Notably, the newly minted Canadian Investment Regulatory Organization (CIRO) is spearheading a multi-year project to enhance the competency expectations of its registrants. The Canadian Securities Administrators have also identified proficiency enhancements as a key priority within their current multi-year business plan.

“CFA Societies Canada is deeply invested in working with securities regulators on their stated desire to improve securities registrant proficiency,” Thom says. “We stand for intellectual leadership. And we’re numerous enough in the Canadian market that we can hold up professionalism as a defining value and say that it’s absolutely doable at scale in this industry.”

The unwavering advocacy of the CAC and its volunteers since the 1990s and the steadfast commitment of CFA Societies Canada in championing charterholders’ commitments to the investing public since 2017 has built reputational capital with securities regulators who face challenges in finding allies holistically aligned to investor interests.

“Regulators could have reasonably expected that we’d come to the table advocating for our narrow professional or functional interests,” Thom says. “When, instead of that, we apply our considerable expertise to advocate for what we think is the right thing to do for the public interest, that gains notice and attracts allies.”

Promoting industry standards

CFA Societies Canada plays an integral role in promoting the adoption of global industry codes and standards developed and maintained by CFA Institute. Notably, the organization actively champions the adoption of the Global Investment Performance Standards (GIPS^® Standards), which articulate global best practices in investment performance measurement and reporting. The volunteer-based Canadian Investment Performance Council fosters awareness of the GIPS Standards through articles and events. CFA Societies Canada staff handle direct outreach, connecting asset owners and asset managers interested in adopting the GIPS Standards with resources and the network of Canadian firms that are already compliant.

CFA Societies Canada also leads Canadian outreach on CFA Institute’s Asset Manager Code, its Global ESG Disclosure Standards for Investment Products, and its recently launched Diversity, Equity, and Inclusion Code (DEI Code).

Today, many market participants compete for voice, particularly regarding environmental, social, and governance (ESG) considerations, according to Thom. He parallels this to an earlier era in performance presentation practices, before the widespread adoption of the GIPS Standards. During that time, there was much greater risk of fund managers cherry-picking performance metrics in presentations to clients and prospects, and a lack of regulatory consistency that hindered consensus on best practices.

With continuing advocacy to help grow awareness, and the credibility of CFA Institute and its expert volunteer practitioners reflected in the content of the Standards, Thom is hopeful the CFA Institute’s ESG Disclosure Standards for Investment Products will follow the same path as the GIPS Standards, becoming a widely-embraced industry norm rather than a niche marketing consideration.

“I’d like to think that ESG disclosure is in the early stages of a similar journey,” he says. 

Recent advocacy initiatives

Recent commentary on regulatory proposals includes: 

• CIRO proposal on distributing disgorged funds to harmed investors
• Canadian Securities Administrators (CSA) request for feedback on transparency and accountability on real-time market data access fees
• Joint CSA-IIROC (Investment Industry Regulatory Organization of Canada) request for feedback on the regulation of short-selling
• Ombudsman for Banking Services and Investments (OBSI) request for input on OBSI organizational governance
• Autorité des marchés financiers’ (AMF) draft regulation on complaint processing and dispute resolution in Quebec
• Financial Services Regulatory Authority of Ontario’s (FSRA) proposed amendments to its Unfair or Deceptive Acts or Practices (UDAP) Rule
• Ontario Securities Commission (OSC) request for comments on its Statement of Priorities for year ending March 31, 2024
• CSA’s proposed amendments to options for delivering financial statements or management reports of fund performance (MRFPs) to investors
• IIROC/CIRO request for comment on proposed competency profiles for supervisors, traders, associate portfolio managers, and portfolio managers.