Industry stakeholders weigh in on new SRO plans

Comment letters ask for more representation, clarity on new SRO's rule, and flexibility for provincial nuances

Industry stakeholders weigh in on new SRO plans

Three groups representing Canada’s investment industry have submitted their comments on the Canadian Securities Administrators’ (CSA) position paper on its plans to establish a new single self-regulatory organization (SRO).

In its submission, the Investment Industry Association of Canada (IIAC) urged the CSA to work quickly to implement the new SRO in order for investors to reap the expected benefits.

While the IIAC agreed that the SRO’s mandate should be outlined in recognition orders and other constating documents, it also called recommended the creation of a broader, overarching statement of principles. Aside from setting out the SRO’s targeted outcomes, the statement would lay out the new SRO’s commitment to a risk-based, balanced regulatory approach that recognizes different business models and evolving investor needs.

“The overriding objectives of the Statement of Principles are to promote access to advice for all investors, reduce investor confusion, enhance investor education, and foster fair, efficient and competitive capital markets that encourage capital formation and economic growth,” said IIAC President and CEO Laura Paglia.

The association also backed the CSA’s proposed solutions related to proficiency-based registration, though it added that any public consultations on proficiency should be conducted after the SRO has been set up to avoid unnecessary delays and uncertainties.

Meanwhile, the Conseil des fonds d'investissement du Québec (CFIQ) called on the CSA to ensure the province is given adequate representation on the integrated working committee (IWC) to set up the new SRO, as well as the new SRO’s board. It also supported the proposed imposition of term limits on board members, adding that making term limits staggered and non-renewable would help promote healthy turnover and continuity.

The CFIQ also stressed the need to clarify the SRO’s role in Québec vis-à-vis the Autorité des marchés financiers (AMF) and Chambre de la sécurité financière (CSF), as well as embed enough flexibility in its harmonized rules to avoid having to make exceptions for the province’s laws.

“We urge the CSA not to make overly hasty decisions and to establish timelines that include further consultation at each key stage of implementation,” said Eric Hallé, chair of the CFIQ Board of Governors.

Separately, the Investment Funds Institute of Canada (IFIC) expressed its support for the SRO’s 14 targeted outcomes, which are meant to address the needs for investor protection, public confidence, and making room for innovation. The group encouraged the CSA to ensure maximum flexibility for a variety of business models, structures, and sizes.

“The establishment of the New SRO, and decisions regarding all governance, operational and technical aspects of the New SRO, cannot be made exclusively by the CSA without appropriate input,” said IFIC President and CEO Paul Bourque. “These are matters that impact the day-to-day operations of industry members, and expertise resides within the current SROs and the industry.”

And while it generally supported the CSA’s proposal for the composition of the new SRO’s board, IFIC suggested that the board include more than 15 members to provide more room for industry representation – a suggestion echoing the CFIQ’s call for more seats to accommodate investors and ensure adequate representation for Québec stakeholders.

“It remains essential to recognize that meaningful industry representation is needed on the Board of Directors for the SRO to respond effectively to evolving investor concerns,” IFIC said in its letter.