Canadian securities regulators establish a new single enhanced self-regulatory organization

September 03, 2021

Alberta Securities Commission is sharing the new changes with the two self-regulatory organizations (SROs) in Canada that strive to promote investor protection and ethical conduct within the investment industry. These organizations are the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC).

On August 3, 2021, the Canadian Securities Administrators (CSA), the umbrella organization representing all of Canada’s securities regulators, announced its plan to oversee the creation of a new, single SRO to consolidate the functions of the MFDA and IIROC. The new SRO will provide an enhanced regulatory framework for the investment industry.

Similarly, the Candian Securities Administrators will oversee the creation of a new investor protection fund which will consolidate the functions of the MFDA Investor Protection Corporation and Canadian Investor Protection Fund. These funds provide eligible customers of investment dealers and MFDA members protection for cash and securities within defined limits, in the event that a dealer or member they work with becomes insolvent.

Understanding Self-Regulatory Organizations (SROs)

  • An SRO is an organization created to regulate the operations, standards of practice, and business conduct of its members and their representatives and to promote the protection of investors and the public interest.

  • The MFDA, founded in 1998, provides oversight to dealers that distribute mutual funds and exempt fixed income products to investors. The MFDA is structured as a not-for-profit corporation with its members comprised of mutual fund dealers licensed with provincial securities commissions, outside of Quebec and Newfoundland.
  • IIROC, formed in 2008, sets and enforces rules regarding the proficiency, business, and financial conduct of investment firms and registered securities dealers. With surveillance teams across Canada, IIROC oversees all Canadian marketplace activity, ensuring everyone trades fairly and follows trading rules.

What does the consolidation of the MFDA and IIROC mean for investors?

  • The CSA Position Paper 25-404 New Self-Regulatory Organization Framework outlines the framework for the new SRO, which is based on extensive research, analysis, and consultation with industry participants.

  • It is designed to streamline the protection measures for Canadian investors while enhancing public confidence, innovation in the capital markets, and fair and efficient market operations through continually evolving industry conditions.

  • The new, yet to be named, SRO will centralize the MFDA and IIROC complaint-reporting processes, allowing investors to easily file a complaint and have it directed to the new SRO or the relevant provincial securities regulator(s).

  • Additionally, the new SRO will facilitate easier and more cost-effective public access to a broader range of investment products and services.

Until the consolidation of the MFDA and IIROC is complete, investors are reminded that the functions and services of both existing SROs still remain fully operational. If you have complaints regarding trading issues or with your registered or dealing representative, please visit www.iiroc.ca, www.mfda.ca, or www.albertasecurities.com.


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