New SRO should oversee Quebec’s fund dealers: IIAC

With the imminent launch of a new single self-regulatory organization for investment dealers and fund dealers in the rest of Canada, the Investment Industry Association of Canada (IIAC) is calling on the Quebec government to give the new SRO oversight of fund dealers in that province, too.

In a letter to Quebec finance minister Eric Girard, the industry trade group recommended that the government re-examine the role of the Chambre de la sécurité financière (CSF) and its oversight of mutual fund dealers, proposing that the new SRO take over the CSF’s responsibilities in this area.

Historically, fund dealers in Quebec have been overseen under a joint agreement between the Mutual Fund Dealers Association of Canada (MFDA), the Autorité des marchés financiers (AMF) and the CSF.

Recently, the Canadian Securities Administrators (CSA) approved the planned merger of the MFDA with the Investment Industry Regulatory Organization of Canada (IIROC) and the launch of a new SRO on Jan. 1.

At the same time, the regulators noted that, before the merger is final, the AMF will publish amendments to establish a transition plan for Quebec-based fund dealers, which will see dealers become members of the new SRO once it is established, but won’t see their regulatory arrangements change.

As a result, the new SRO’s requirements will not apply to Quebec-based fund dealers on Jan. 1. Instead, they will continue to be regulated under the CSA’s rules, apart from “provisions required to ensure the smooth operation of the new SRO, to their Quebec activities.”

Fund reps will continue to be registered by the AMF, not the new SRO.

Additionally, the CSF will still set continuing education requirements and handle discipline for fund reps in Quebec. The AMF will cooperate with the new SRO in the oversight of dealers registered in Quebec and other provinces.

The AMF will continue to provide enforcement for fund dealers in Quebec, while the CSF disciplines reps.

Now, the IIAC is advocating for streamlining the supervision of fund dealers in Quebec by giving oversight to the new SRO.

Among other things, it argued that the move would reduce confusion for investors, curb compliance costs for industry firms, and align the framework in Quebec with the rest of Canada.

“The transfer of tasks in relation to [fund dealers] to the new SRO is well placed. It has the benefit of the many years of experience of both IIROC and MFDA, both of whom are knowledgeable on all issues necessary to ensure that mutual funds are sold responsibly,” the IIAC said in its letter.

“The new SRO remains subject to the oversight of the Autorité des marchés financiers, as a member of the Canadian Securities Administrators, and without duplication of functions between the new SRO and the AMF,” it added.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.