CSA to review IIROC and MFDA regulations

By Kate McCaffery | December 12 2019 02:45PM

Photo: Freepik

The Canadian Securities Administrators (CSA) announced today that it will undertake a review of the regulatory framework governing the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). The CSA says it expects to publish a consultation paper on the matter by mid-2020.

“The regulatory framework for these self-regulatory organizations has been in place for several years and the industry has evolved significantly during this time,” said CSA chair and president and CEO of the Autorité des marchés financiers, Louis Morisset. “In response to requests from market participants, we believe it is appropriate to revisit the current structure and seek comment from stakeholders.”

Will examine strengths and challenges

As part of its effort, the CSA says it will re-examine the initial policy reasons for the current regulatory framework, and will also examine the existing framework’s benefits, strengths and challenges. “Additionally, the CSA will consult with industry stakeholders and consider the evolution of the financial services industry and the impact of innovation on the current framework,” the CSA added in a statement released Dec. 12.

The MFDA released its own statement in response to the announcement, applauding the decision: “We support the CSA and congratulate them for commencing this consultation. This is a very important initiative for Canadian investors, industry and regulators,” says MFDA president and CEO Mark Gordon. “As part of its ongoing strategic planning, the MFDA has conducted extensive research and analysis on the role of SROs with a view to determining the regulatory model that will best meet Canada’s current and future needs. The MFDA will share this analysis with the CSA and all relevant stakeholders in early 2020.”

IIROC, meanwhile, says self-regulation is an efficient and effective way to protect investors and support healthy capital markets, adding that “we must always strive to improve its efficiency and effectiveness.”

The regulator says its own consultations with investors have also signaled the need for change and regulatory flexibility.

“IIROC thanks the CSA for demonstrating strong leadership to evolve the SRO model to better serve and protect Canadians while reducing regulatory duplication,” says IIROC’s spokesperson, Andrea Zviedris. “IIROC looks forward to participating in this important discussion and encourages all stakeholders to engage in the process of improving the system.”

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