FAIR Canada provided brief comments to the MFDA on the proposed Staff Notice on MFDA Intermediary Arrangements intending to clarify requirements under MFDA Rules 1.1.3 (Service Arrangements) and 1.1.6 (Introducing and Carrying Arrangements). FAIR Canada agrees that the MFDA should justifiably be concerned with the practices it describes in the proposed Staff Notice involving non-registered intermediaries (NRIs).
FAIR Canada is of the view that confusion as to who is responsible for the financial consumers' investments should be avoided and responsibility and regulatory oversight of the client's investments (both securities and non-securities) should be seamless and avoid regulatory gaps. While we understand the MFDA's position that such intermediary arrangements should be entered into as Introducing/Carrying Dealer arrangements pursuant to requirements under Rule 1.1.6, we wonder if that can be a complete solution since, from the description provided in the proposed Staff Notice, such arrangements only permit clients to hold investments in which the Member is able to trade or advise. We also question whether this will lead to greater outside business activities by Members.
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