Despite the impending consolidation of IIROC and the MFDA discussed earlier in this bulletin, staff of the Canadian Securities Administrators (CSA) are required to assess both self-regulatory organizations (SROs) and their respective investor protection funds (IPFs) for their compliance with securities legislation requirements. The latest report, released on April 28, covered the period from January 1 – December 31, 2021. Staff were generally of the view that the CSA continues to fulfill its oversight obligations, and the report sets out key highlights of some of these activities, including:
- Work related to the consolidation of the two SROs and two IPFs, including nine specific workstreams to manage the integration project and hiring Deloitte as an integration manager;
- Continuing to deal with issues arising from the COVID-19 pandemic;
- A project to streamline and modernize various orders and memoranda of understanding relating to CSA oversight;
- A project to identify and implement improvements to the CSA methodology for coordinated oversight, including updates to the CSA risk assessment framework; and
- Conducting a risk-based desk review of IIROC, targeting specific processes within IIROC’s equity market surveillance and debt market surveillance functions.
The Staff Notice reports that during regular meetings held with IIROC, key subjects were discussed including IIROC’s COVID-19 response, order-execution only service levels (particularly client complaints with respect to delays and service disruptions), crypto assets, and the client focused reforms (CFRs). Of interest, it is stated that the CSA, IIROC and the MFDA intend to publish findings from their coordinated review of the CFR conflicts of interest rules and provide implementation guidance to the industry on these enhanced requirements.
With respect to the MFDA, topics such as the COVID-19 response (focusing on the MFDA’s process in granting exemptive relief), the CFRs and the MFDA’s targeted review on performance data reporting to clients by members was discussed.
Going forward, CSA Staff intend to publish an activities report on the new SRO and new IPF on an annual basis.
May 31, 2022