The MFDA was established in mid-1998 at the initiative of the Canadian Securities Administrators (CSA) in response to the rapid growth of mutual funds in Canada in the late 1980s from $40 billion to $400 billion and a recognition by the CSA that the mutual fund industry and investors would benefit from more effective regulation and oversight.
These concerns prompted Ontario Securities Commissioner Glorianne Stromberg's January 1995 report entitled Regulatory Strategies for the Mid-90s: Recommendations for Regulating Investment Funds in Canada (the "Stromberg Report"). The Stromberg Report identified a number of deficiencies in the regulatory structure of the mutual fund industry.
The CSA responded to the Stromberg Report by inviting a group of industry leaders and representatives to comment and make recommendations in respect of the Stromberg Report. This group, the Investment Funds Steering Group, submitted a report to the CSA in November 1996 entitled The Stromberg Report: An Industry Perspective.
The CSA responded with the establishment of priorities reflecting recommendations made in the Stromberg Report and the Report of the Investment Funds Steering Group, including those specifically relating to the regulation of mutual fund dealers. One of the CSA's high priorities was the establishment of a national self-regulatory organization (SRO) to regulate mutual fund dealers and, potentially, all dealers and distributors of securities or other financial products. It was recognized that separate self-regulatory structures would likely be required for mutual fund dealers and for securities dealers that handle a wider range of financial products and services.
In 1997, the CSA requested that the mutual fund industry participate in the development of a new self-regulatory organization that would regulate mutual fund dealers and their representatives. The CSA requested that the Investment Dealers Association of Canada (IDA) and the Investment Funds Institute of Canada (IFIC) work cooperatively to develop an SRO, the mandate of which would be the direct regulation of distributors of mutual funds. The result of these efforts was the establishment of the Mutual Fund Dealers Association of Canada. It was incorporated as a non-share corporation under Part II of the Canada Corporations Act on June 19, 1998. The objects of the MFDA are set out in the Letters Patent summarized in the following link: Objects.