A man walks through reflected sunlight while crossing the street at Queen and Bay in Toronto’s financial district on October 10, 2014. The umbrella organization for Canada’s securities regulators says it plans to combine the regulatory bodies that oversee investment dealers and mutual fund dealers into one new organization. THE CANADIAN PRESS/Darren Calabrese

A man walks through reflected sunlight while crossing the street at Queen and Bay in Toronto’s financial district on October 10, 2014. The umbrella organization for Canada’s securities regulators says it plans to combine the regulatory bodies that oversee investment dealers and mutual fund dealers into one new organization. THE CANADIAN PRESS/Darren Calabrese

Canada’s securities regulators to create new watchdog body combining IIROC, MFDA

Decision comes after calls for a review of the regulatory framework

TORONTO — The umbrella organization for Canada’s securities regulators says it plans to merge the regulatory bodies that oversee investment dealers and mutual fund dealers into one new organization.

The Canadian Securities Administrators, which represents provincial and territorial securities commissions, says the new self-regulatory organization would combine the functions of the Investment Industry Regulatory Organization of Canada (IIROC) with the Mutual Fund Dealers Association of Canada (MFDA).

It says the newly created organization would provide enhanced regulation of Canada’s investment industry.

The CSA says it will also combine two existing investor protection funds – the Canadian Investor Protection Fund and the MFDA Investor Protection Corporation – into an integrated fund independent of the new organization.

The decision comes after calls for a review of the regulatory framework as the roles of both watchdog groups have increasingly overlapped in recent years.

Last August, IIROC said a study conducted by Deloitte LLP showed that a consolidation of the two regulators would result in savings of up to nearly $500 million for the financial services industry over a decade.

The CSA said the new organization will harmonize IIROC and MFDA rules where appropriate and streamline complaint processes.

The new self-regulatory framework is the result of extensive research, consultation and analysis, said Louis Morisset, CSA chair and president and CEO of the Autorité des marchés financiers.

The organization is “designed to protect Canadian investors and enhance public confidence, accommodate innovation, ensure fair and efficient market operations and navigate continually evolving industry conditions,” he said in a statement on Tuesday.

The CSA said the next step is to create an integrated working committee to determine the appropriate corporate structure of the new self-regulatory organization.

It said the new organization will include “governance enhancements” such as ensuring that the majority of board members and its chair are independent to reinforce its public interest commitment.

It will also be required to create an investor advisory panel and solicit CSA comment and input on its annual priorities, business plan and budget, the CSA said.

“The CSA recognizes the high level of skill, dedication and experience that staff from IIROC, MFDA and the existing investor protection funds have consistently brought to their work,” Morisset said.

“The combined forces of these teams will be critical during the creation of the new self-regulatory organization and investor protection fund, and will be crucial to their future success.”

This report by The Canadian Press was first published Aug. 3, 2021.

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