Securities regulators to create single self-regulatory organization

The Canadian Securities Administrators (CSA) announced August 3 that it plans to establish a new, single self-regulatory organization (SRO). 

In the newly released CSA Position Paper 25-404 New Self-Regulatory Organization Framework, the regulators outline that they will consolidate the functions of the Investment Industry Regulatory Organization of  Canada (IIROC) and the Mutual Fund Dealers Association of  Canada (MFDA).

The CSA will also combine two existing investor protection funds – the Canadian Investor Protection Fund and the MFDA Investor Protection Corporation – into an integrated fund independent of the new SRO. 

"The new self-regulatory framework is the result of extensive research, consultation and analysis that informed the creation of a framework designed to protect Canadian investors and enhance public confidence, accommodate innovation, ensure fair and efficient market operations and navigate continually evolving industry conditions," said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. 

The CSA stated that the new SRO “will facilitate easier and more cost-effective access to a broader range of investment products and services for the public, and is generally expected to result in cost savings for dealers. The new SRO will also harmonize, where appropriate, IIROC and MFDA rules, and will streamline their complaint processes.” 

In a joint statement, the MFDA and IIROC expressed support for the proposal.

"The CSA's decision to establish a new SRO with an enhanced governance and accountability framework and a clear public interest focus will result in strengthened public confidence while maintaining the advantages of the self-regulatory model," said Mark Gordon, MFDA's President and CEO. "The CSA's decision will benefit all stakeholders by enhancing investor protection and creating significant efficiencies for industry participants." 

Andrew J. Kriegler, IIROC's President and CEO, said, "We enthusiastically support the CSA's decision and look forward to working with our MFDA partners to create a new, enhanced pan-Canadian SRO to better protect investors, increase access to advice, and support innovation." 

A year ago, however, the two organizations had opposing views with the IIROC proposing the merger of the two SROs and the MFDA rebuffing the idea. 

For its part, in a statement on Aug. 3 the Investment Funds Institute of Canada (IFIC) shared its support of the unified SRO. “A single national SRO will deliver significant benefits to investors by enhancing the investor experience, reducing investor confusion, and ultimately improving investor outcomes,” stated Paul Bourque, President and CEO, IFIC. “The industry stands ready to assist with the efforts to successfully integrate the two organizations in a timely manner.”