More work to do on Capital Markets Stability Act: IFIC

IFIC appreciates the clarifications that have been made, says Joanne De Laurentiis, IFIC president and CEO. However, she adds, “the new draft authorizes the [national] regulator to designate products or practices as systemically important or systemically risky without any requirement that the regulator consult with affected firms in advance of such a designation.

“The draft is also missing an express right of appeal and mechanisms for reversal or withdrawal of [such] a designation. The CMSA should be amended.”

IFIC notes the mandates of several provincial regulators include the goals of supporting fair, efficient and innovative capital markets. So the organization encourages the government to expand the mandate of the proposed Capital Markets Regulatory Authority to incorporate similar language as is used by provincial regulators.

Regarding the draft CMSA’s mention of information and data collection, IFIC notes that responding to requests for data can be labour-intensive and expensive for individual firms. As such, the association proposes that CMSA regulations be drafted to include a requirement to consult with the industry to establish a standardized data collection process.

IFIC also identifies issues with the CMSA’s proposed approach to vicarious liability, which would make investment fund managers fully liable for a violation committed by an investment fund. IFIC says the language of the draft legislation doesn’t take into account the arms-length structure of many mutual funds, where some functions may be assigned to a trustee or other provider who then assumes sole responsibility for those activities.

As the CMSA is finalized, says IFIC, there must be collaboration between federal, provincial and territorial governments to “create a solid, workable framework that will serve the needs of investors and the investment sector.”