MFDA Interim Fee Model
The MFDA has updated its fee model to reflect implementation of the Interim Fee Model as part of the Amalgamation with Investment Industry Regulatory Organization of Canada (IIROC) to form the New Self-Regulatory Organization of Canada (New SRO).
This Interim Fee Model is applicable to the Mutual Fund Dealer Members of the New SRO. The New SRO is the corporation continuing from the amalgamation effective January 1, 2023 of the MFDA and IIROC.
Key changes to the MFDA’s fee model (included in Rule 8 of the Mutual Fund Dealer Interim Rules), which will be effective as of January 1, 2023, are summarized below:
- The MFDA minimum Annual Fee will be reduced from $3,000 to $1,500, with the related AUA fee rates under $1 billion reduced by 50% for small MFDA dealers, as part of the rebalancing of the Interim Fee Model. Small dealers are expected to represent a smaller portion of Member activities over the transition period for New SRO. This aligns with requirements that fees imposed must be equitably allocated and be proportionate to Members’ activities, and is in keeping with the public interest principles to facilitate access to advice and products for investors of different demographics, where underserved communities are largely supported by a robust small dealer community.
- The Annual Fee shall be payable in quarterly instalments by the Dealer Member in each year. Notice of the Annual Fees and quarterly payments shall be communicated to each Dealer Member on or about the first week of April. The first quarterly payment shall be made by each Dealer Member by the first business day of May. Each subsequent quarterly installment will be communicated at the beginning of the quarter, and payment shall be made by the first business day of the following month. Effect of non-payment of Annual Fees is described in Rule 8.7 of the Mutual Fund Dealer Interim Rules.
- For the purposes of the Interim Fee Model, where a member firm is registered as both a mutual fund dealer and an investment dealer, Member AUA shall include the mutual fund AUA, to align with the Recognition Orders and the Interim Rules.
- Considering the New SRO’s fiscal year-end of March 31 and the resulting impact on the timing of the annual budgeting / fee-setting cycle, MFDA will not be using the annual AUA Survey for determining membership fees going forward. Instead, the MFDA will be using AUA reported on Members’ December 31 Form 1 filing for fee purposes until the final fee model for the New SRO is in place. As a result, Members are advised to use reasonable diligence to determine and accurately report AUA as at December 31 on the Form 1.
- Fees for fiscal year 2023 will continue to be charged after the Amalgamation, through to the end of the previous fiscal year for MFDA (i.e. June 30, 2023).
The Interim Fee Model applicable to Investment Dealer Members and Marketplace Members is included in the IIROC Fee Model Guidelines and summarized in IIROC Notice # 22-0181 published on November 24, 2022.