New SRO, total cost reporting on tap for 2022, Morisset says

By James Langton | September 29, 2021 | Last updated on September 29, 2021
2 min read

The Canadian Securities Administrators are hoping to have a new industry self-regulatory organization up and running in the second half of next year, according to Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers.

Speaking at the Investment Funds Institute of Canada’s virtual annual conference, Morisset said that the regulators, which are currently consulting on proposed SRO reform, are hoping to go live with the new organization that combines the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada in the second half of 2022.

More detail on the CSA’s precise timeline for launching the SRO and its implementation plans will come later this fall, Morisset said.

In the meantime, he reported that the regulators have struck a couple of committees: an executive committee headed by Stan Magidson, chair and CEO of the Alberta Securities Commission, and an operational committee that is jointly chaired by representatives from the Ontario Securities Commission and the British Columbia Securities Commission.

To start, the executive committee is focused on identifying the appropriate corporate structure and governance arrangements for the new SRO, while the operational committee is taking the lead on harmonizing rules, compliance and enforcement processes, and eventually on developing a fee model.

Those committees, and various subcommittees, will be engaging with the industry and investor advocates alike to seek input on the SRO reform project, Morisset said.

In particular, he stressed that smaller, independent fund dealers that are concerned about their status under a new, much larger SRO will have a voice in the process and a place in the new regime.

At the same time, Morisset announced that the CSA will soon — possibly as early as next week — be releasing proposals for reducing regulatory burdens in the investment fund sector. This may include measures such as consolidating certain disclosure requirements, curbing inefficiencies and easing delivery obligations.

And he said the next phase of reforms is also in the works, which could include measures such as an “access equals delivery” model for fund filings and a new shelf prospectus model in the fund sector.

Looking further out, in the first half of 2022, the industry should also get its first look at total cost reporting proposals (CRM3) that aim to harmonize and enhance cost disclosure for both mutual funds and segregated funds, Morisset said.

“This a very active project, and the CSA is all in,” he said.

As for the industry’s response so far to the client-focused reforms — in particular, the decision of several bank-owned dealers to stop selling third-party funds in their branches — Morisset said this was not the regulators’ intention and that the CSA is working to address these kinds of unintended negative consequences.

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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.