IIROC proposal would “destabilize the MFDA,” says IFIC

The Investment Funds Institute of Canada (IFIC) has responded to an IIROC white paper that floats two game-changing proposals: Eliminating the current IIROC requirement for firms and individuals to be qualified to offer a full range of investment products, and instead allow firms and individuals to offer only mutual funds and exchange-traded funds in the IIROC channel; and second, allowing all firms and individuals under IIROC’s oversight to direct a portion of commissions earned to a personal corporation, often referred to as directed commissions.

Read: IIROC proposal changes game for advisors

IFIC’s submission states that it would not be in the public interest for IIROC to remove the current requirement that firms and advisors operating under an IIROC registration be fully qualified (the 270 Day Rule), and instead allow firms and individuals to offer only mutual funds and exchange-traded funds.

“The proposal might create efficiencies for some members of IIROC; however, it would destabilize the MFDA and its membership, causing a disorderly and costly restructuring of the SRO regulatory system,” says Joanne De Laurentiis, president and CEO, IFIC. “We agree that the future structure of the SROs is an important and legitimate question to consider, especially in light of the imminent Capital Markets Regulatory Authority, but such major structural change should occur through a deliberate, fulsome process rather than as a supplemental outcome of a specific rule change.”

IFIC acknowledges that the proposal on directed commissions would be of interest to advisors but cautions that further analysis and consultation are needed before a final decision is made.

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