Weekly Wrap: The Regulator Beat

Weekly Wrap: The Regulator Beat

Weekly Wrap: The Regulator Beat

OSC to make decision on embedded commissions in 2015
The Ontario Securities Commission (OSC) said, in its statement of 2014-2015 priorities released Thursday, that it will rule on embedded commissions by next year.
The regulator says it will decide whether to ban embedded commissions, cap them, or leave them untouched.
It has also pledged to conduct third-party research to determine whether compensation, such as embedded commissions, influence an advisor's behaviour, how it affects fund sales and whether a fee-based model improves advice. Whether ffiduciary duty should be imposed on advice is also slated for review. Results on the mystery shop of advice - carried out with IIROC and the MFDA - of advice will also be published, including guidance on non-compliant, compliant and good advice.  .

IIROC issues guidance on alternative trading systems
The Investment Industry Organization of Canada (IIROC) released a Proposed Guidance on Marketplace Thresholds, which suggests imposing price and volume thresholds on exchanges and alternative trading systems to reduce unexpected, short-term trading volatility. The principles outlined recommend that each market implement its own thresholds appropriate for the type of trading that takes place. In short, the guidance notes say market controls should minimize the impact on price discovery and access to "tradable" liquidity, while not imposing regulatory burden  on other markets, service providers, regulators, dealers, or other players.

Life insurance tops agenda of FSCO
The Financial Services Commission of Ontario (FSCO) has released a draft statement of its priorities this year, which includes reviewing the suitability of insurance and mortgage products and assess how agents and brokers are providing advice and handling the financial literacy needs of their clients.
The provincial regulator says it will also work with
the Canadian Insurance Services Regulatory Organization and Canadian Council of Insurance Regulators to establish harmonized standards for life insurance license qualification. In collaboration with the Ministry of Finance, the FSCO will review insurance company solvency regulation and pension sector intiatives including introduction of Pooled Registered Pension Plans (PRPPs and the establishment of an Ontario Pension Plan.
Other initiatives included in the statement include implementing an anti-fraud engagement strategy and working with regulators to identify emerging trends and risks. 

IIROC permits use of part-time CFOs
The Investment Industry Regulatory Organization of Canada (IIROC) is permitting the continued use of part-time Chief Financial Officers, the regulatory body announced Wednesday. The guidance notes, which are up for comment until June 2, say dealers can hire CFOs on a part-time basis and that the same person can serve as a CFO for more than one firm. According to IIROC, the regulatory obligations for a full or part-time CFO are the same, whether they work on or off-site, or for more than one dealer. Dealers must supervise the CFO, actively managing any conflicts of interest and preserving confidentiality, it notes.

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