Investment industry groups have offered differing opinions about how the Canadian Securities Administrators (CSA) should go about launching the country’s new self-regulatory organization (SRO), with some saying implementation should occur as quickly as possible, while others encourage a more measured approach.
The Investment Funds Institute of Canada (IFIC), the Conseil des fonds d’investissement du Québec (CFIQ) and the Investment Industry Association of Canada (IIAC) were among those commenting and providing feedback to the CSA Position Paper 25-404, New Self-Regulatory Organization (SRO) Framework.
In their respective submissions, the CFIQ urges the CSA not to be too hasty, while the IIAC urges the regulator to proceed as quickly and expeditiously as possible to launch the new SRO.
“The IIAC encourages the CSA to consistently select the most expeditious and cost-effective means available to achieve implementation. Consideration of any substantive rule or policy changes should take place after the SRO is operational,” the IIAC writes in its submission.
While the IIAC also explicitly submits that the CSA dispense with subgroup and committee processes in favour of a more expeditious implementation, IFIC suggests that the Integrated Working Committee (IWC) outlined in the position paper should consider striking one or more industry advisory committees to facilitate organized industry input.
“The establishment of the new SRO and decisions regarding all governance, operational and technical aspects of the new SRO cannot be made exclusively by the CSA without appropriate input. These are matters that impact the day-to-day operations of industry members,” they write. “IFIC believes a better outcome can be achieved by drawing on this industry expertise through consultations. IFIC members are anxious to provide meaningful industry participation on these matters. We believe that the establishment of the new SRO provides the CSA and industry with an opportunity to adopt a fresh approach to consider the form and substance of the new regulatory system and its rules.” They also add that it would be more efficient and effective to have current SROs and industry representatives more directly involved in the process of rule and fee harmonization.
All three organizations further encouraged the CSA to consider a larger board of directors to more adequately represent all interests and stakeholders.
In Quebec, the submission from the CFIQ also contemplates the risk of cost increases and duplicative fees. They also point out that it will be necessary for the new SRO to align its rules explicitly to comply with civil law in that province.
“We urge the CSA not to make overly hasty decisions and to establish timelines that include further consultation at each stage of implementation,” the CFIQ writes in its submission. “The establishment of such an important new organization will only happen once in a generation. We believe that it is useful, even necessary, to take appropriate time for the initial implementation of the new SRO in order to establish from the outset, an optimal mode of operation to increase the chances of success of the new SRO and ensure its sustainability.”