“The majority of individuals abide by the rules and regulations and what’s in the client’s best interest,” he says. “All additional regulation means is greater paper work and ultimately that has a negative impact on the consumer as a whole.”
From a regulatory perspective, Russell points out that although the CSA has finalized its rules, IIROC has yet to release its stance on CRM2. Though both sets of rules will be similar, exempting IIROC dealers from some CSA sections, Russell writes that the risk of regulatory overlap may add to costs, inhibit uniformity and leave room for non-compliance by non-regulated registrants.
“The encroachment of the provincial securities commissions into the self-regulatory world has meant the industry has in effect become subject to two separate rule-making exercises…,” he writes. “This rule-making effort, presumably aimed at achieving uniformity among the registrants, sets an unwelcome precedent for the investment dealer community. And to be worthwhile the CSA must ensure that registrants not regulated by an SRO actually meet the requirements.”
Overall, Russell believes, once implemented, that CRM2 will provide the investor with a clearer understanding of their portfolio’s financial performance, and the fees and charges paid to advisors and their firms, while allowing investment dealer firms to showcase and differentiate themselves in the marketplace.
“These results will enhance confidence among investors and encourage more active market participation,” he wrote. “Further, the rules will bring uniformity in the same standard across investment dealer firms.”
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