February 3, 2020 (Toronto, Ontario) – The Mutual Fund Dealers Association of Canada (“MFDA”) today released its Special Report on Securities Industry Self-Regulation titled, “A Proposal for a Modern SRO” (the “MFDA Special Report”) and an accompanying Guiding Framework.
The MFDA Special Report provides analysis and commentary relevant to the self-regulatory organization (“SRO”) experience in Canada and proposes employing a “blank page approach” to create a new kind of SRO. This new kind of SRO would be one which is suited to the changes of the past decade, which improves on the existing model, and one which is adaptable to the dynamic nature of securities regulation in Canada. The model proposed in the MFDA Special Report represents a modern CSA/securities industry regulatory partnership.
“We believe that there is a significant opportunity to improve the current system by providing for a modern SRO that is investor-focused, nimble and competitive”, said MFDA President and CEO Mark Gordon.
The model we have arrived at, which we have dubbed “NewCo”, has its grounding in several key principles:
1) Real change in the public interest
By designing a new SRO from the ground up, rather than simply patching together existing structures, there is an opportunity to pursue meaningful change which will create real and lasting benefit for Canadians.
2) A scalable, flexible and forward-looking model
Given the practical reality of impending change in Canada’s securities regulation, the NewCo model is designed with the current and future needs of Canadian capital markets in mind. The model is also scalable, with mandate, membership and regulation activities open to modification by CSA statutory regulators as they see fit.
3) An empowered CSA and a renewed SRO
The NewCo model would provide the CSA with greater SRO oversight capacity, registrant and market conduct visibility and regulatory expertise. This arrangement will bolster public confidence in a renewed SRO and foster a stronger relationship between NewCo and statutory regulators.
4) Collaborative, rather than competitive reform
In order to overcome certain obstacles which have historically stood in the way of effective and comprehensive reform of Canada’s securities regulation, the MFDA has approached the design of NewCo as a highly collaborative process. Under this proposal, if implemented, the MFDA would no longer exist as a separate SRO, allowing for the establishment of an “ideal” SRO, based on meaningful cooperation with CSA members, SROs, industry and public stakeholders.
The MFDA special report represents a considered, balanced approach that has been prepared with this larger public interest objective in mind.
“The proposal is both bold and achievable. It is the right plan for the right time and provides a model for the design and operation of a new kind of regulatory organization that can best serve the public interest,” noted Mr. Gordon. “It is my sincere hope that the MFDA Special Report will assist and support the CSA and other relevant stakeholders in the CSA’s recently announced SRO review.”
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its Members and their approximately 81,000 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA’s complaint and enforcement processes, as well as links to ‘Check an Advisor’ and other Investor Tools, visit the For Investors page on the MFDA website.