More flexible CCO arrangements from CSA

As part of ongoing efforts to reduce industry compliance costs, the Canadian Securities Administrators (CSA) will allow firms to share chief compliance officers (CCOs), among other more flexible approaches to internal oversight.

The CSA released guidance today, July 2, that will enable industry firms to utilize more tailored CCO arrangements — and there are three models proposed.

The guidance details when a CCO can serve for more than one firm; how larger firms can employ multiple CCOs for separate business lines (such as dealer, fund manager, and portfolio manager); and, how innovative firms, such as fintechs, can appoint individuals as CCOs, with their proficiency based on their industry-specific experience.

“Our aim is to allow registrants to implement their CCO responsibilities in a manner that better aligns with their operational needs and business models,” the CSA said in a notice outlining the new guidance.

Firms seeking to use one of these approaches must apply to the CSA, which will assess firms’ proposed approaches on a case-by-case basis.

“We have heard from firms, especially small and medium sized, that the current one-size fits all approach doesn’t align with their business needs and can be burdensome on their operations,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers (AMF).

“These new arrangements will enhance competitiveness for firms with different business models and better serve investors, who benefit from more effective, tailor-made compliance systems,” he added.

The CSA noted that the guidance was developed in consultation with staff of the both the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA).

The regulators are inviting comment on the guidance by Sept. 30. Regulators will decide whether additional policy initiatives are needed in this area based on the feedback.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.