The MFDA Board of Directors and the recognizing securities commissions have approved amendments to MFDA Rule 2.1.4 (Conflicts of Interest). The amended Rule, as attached, is effective immediately.
The amendments clarify that the requirements of Rule 2.1.4 are intended to apply to any conflicts of interest that arise between the interests of the Member or the Approved Person and the interests of the client regardless of whether they relate specifically to Member business.
The amendments will also assist Members in meeting their obligations under the Rule with respect to conflicts of interest by expressly requiring Approved Persons to report conflicts or potential conflicts to the Member.
MFDA staff intends to issue a Member Regulation Notice to provide further clarification and guidance to Members and Approved Persons with respect to the scope and application of MFDA Rule 2.1.4.
MUTUAL FUND DEALERS ASSOCIATION OF CANADA
MFDA Rule 2.1.4 (Conflicts of Interest)
On September 14, 2005, the Board of Directors of the Mutual Fund Dealers Association of Canada made and enacted the following amendment to Rule 2.1.4:
2.1.4 Conflicts of Interest
- In the event that such a conflict or potential conflict of interest arises, the Member shall ensure that it is addressed by the exercise of responsible business judgment influenced only by the best interests of the client and in compliance with Rules 2.1.4
(b)and (c). (b) Any conflict of interest that arises or can reasonably be expected to ariseas referred to in Rule 2.1.4(a) shall be immediately disclosed in writing to the client prior to the Member or any person acting on its behalf in connection with its business, conducting business for the client. (c)Each Member shall develop and maintain written policies and procedures to ensure compliance with Rules 2.1.4(a) and(b) .