FAIR Focus: October 15th, 2019

October 2019

FAIR Canada Comments on Regulatory Burden Reduction, including Technology and Plain Language Rule-Making

FAIR Canada submitted comments to the OSC on the Burden Reduction Initiative, which was created in support of the Ontario government's Open for Business Action Plan, the Making Ontario Open for Business Act and the related governmental burden reduction targets.

FAIR Canada supports the concept of better regulation, provided that investor protection and market integrity are not compromised. FAIR Canada supports improved IT platforms and websites for ease of access to information, the pursuit of various initiatives in parallel, and an overhaul of national electronic systems (NRD, SEDI, SEDAR), opining that SEDAR is neither user-friendly nor fit for purpose.

The Globe and Mail has published an op-ed by FAIR Canada on burden reduction as it relates to the technological environment in which capital markets stakeholders operate, and not just the specific regulatory rules, proposing burden reduction through improvements to "outdated IT systems and platforms".

The op-ed proposes the creation of a national securities portal which would be a project of a new CDS-style entity owned by the provinces and the federal government. More specifically it proposes as a trade-off, the scrapping of the conflict-ridden national securities regulator (the CMRA) in favor of a more pragmatic and beneficial national securities portal, as a national, securities regulatory initiative and burden reduction changemaker.

The portal would be a more stakeholder friendly, holistic and modernized database, filing and information system to replace outdated IT systems and platforms. Such initiative would benefit registrants, companies and investors by addressing fragmented, outdated, complicated and inconsistent systems. It would also resolve or avoid the decades old conflict over a national regulator, which national regulator would be at best be hybrid and partial, rather than national, excluding important Canadian jurisdictions that have refused to participate. The latter is a view echoed by many in financial services - that a national regulator may never come to fruition and many wouldn't want it to.

FAIR Canada circulated its statement via press release , on October 10, on the CSA's revised Client-Focused Reform rule amendments (entitled "Reforms to Enhance the Client-Registrant Relationship), slated to come into force at the end of the year, with a two-year phased transition period. FAIR Canada describes the Client Focused Reforms Initiative as a thoughtful and collaborative approach to shifting away from a "buy beware" traditional disclosure regime to one that does more to mitigate risk. Though FAIR Canada has long been a proponent of the "best interest standard" as an overarching duty of care, FAIR Canada acknowledges that the CSA has put considerable effort into trying to achieve a similar and nationally harmonized outcome using different tools, including suitability, KYC, KYP and conflicts of interest.

"OSC to examine trading activities of major banks after RBC, TD agree to pay nearly $22.9-million for failing to supervise foreign-exchange traders"

FAIR Canada was quoted by the Globe and Mail on August 30 on settlements achieved between the OSC and TD, and between the OSC and RBC, for failures to supervise foreign exchange traders in systemically important ways.

"Investor advocates are taking aim at proposed regulatory changes from IIROC "

FAIR Canada was quoted by the Globe and Mail on September 2nd on proposed amendments to IIROC's Minor Contravention and Early Resolution Offers . FAIR Canada made public policy submissions to express its concerns over the proposed changes. FAIR Canada as well as other investor or financial consumer committees, organizations and groups, including the OSC Investment Advisory Panel, Small Investors Protection Agency and Kenmar Associates, do not support the proposed changes because the changes will result in reduced transparency and will not benefit ordinary investors.

"What client-focused reforms mean for embedded compensation, referral arrangements and more"

FAIR Canada was quoted by Advisor's Edge on October 8 on the implications of Client-Focused Reforms. FAIR Canada also released its position on Client-Focused Reforms via press release on October 10.

"Investment companies can't limit liability with clauses in contracts, IIROC says"

FAIR Canada was quoted by the Globe and Mail on October 10 on IIROC's guidance note on IIROC dealer member limitation of liability contract clauses that exclude or unreasonably limit their accountability and that place the onus on clients.

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