IDA conference update: Canadian Securities Institute for sale

“I am strongly committed to advancing these important items. Of particular importance is SRO consolidation. Consolidation would provide clarity; it would streamline; it would create much needed uniformity, and last but not least it would help reduce the weight of regulatory burden on the industry,” says Sherwood.

Before his appointment, Sherwood, president and CEO of Odlum Brown, served as vice-chair of the IDA and a member of the executive committee of the IDA board. The former director of the Canadian Securities Institute and Canadian Investor Protection Fund also currently serves as director and chair of the selection committee of the Canadian Securities Institute Research Foundation.

On Monday afternoon before the AGM, Sherwood told Advisor.ca that he appreciates that all parties might not be onside with the idea of merging, an idea first floated by Oliver at the 2004 IDA conference. But Sherwood says it would be a positive development if all three organizations were even talking about the idea a year from now.

“I know we would like to merge with them, I don’t believe they would like to merge with us at this particular juncture in time,” he says, “There isn’t anybody in one of the three operations that wouldn’t [consider this] under certain circumstances; the question is: What are those circumstances? We haven’t sat down to do any negotiating. We don’t know what those circumstances would be or what the barriers to a merger are from their point of view. Let’s just get talking. That’s the best thing.”

Porter meanwhile made the big announcement about selling the CSI during his address, telling delegates the decision to put the IDA’s educational arm on the market and transfer education to a third-party provider would enable the organization “to focus more tightly on our self-regulatory mandate.” The IDA owns 100% of the CSI. It is not yet known who would be interested in buying the firm, or how much money the sale would generate.

Following Porter’s speech, Sherwood talked briefly about the association’s top priorities for the coming year. In his address, he promised delegates that the IDA will continue to work on reducing the costs of compliance and more effectively transferring knowledge. Investor protection and efforts to ensure investors are aware of their options for restitution and redress, along with commitment to the Fair Dealing Model also received top billing in his list of priorities going forward.

In the coming year, a committee of IDA and MFDA members will help draft final Fair Dealing Model rules, a proposal that is now part of the Canadian Securities Administrators’ Regulatory Reform Project.

Sherwood says regulatory reform in general remains a top priority for the association. “There is no doubt the regulatory burden on the securities industry has grown significantly in the past 10 years and it’s a burden that falls disproportionately on smaller firms,” he says. “The challenge remains to implement only those rules that are really needed and to do so in a way that achieves the intended result.”

In the past four years he says the IDA has taken steps to address the regulatory burden issue and implement risk-based regulation. “The fundamental principle of risk assessment is that scarce resources should be allocated effectively where they are most needed,” he says. “At the individual firm level, firms at low risk can look forward to less frequent and less intensive on site examinations by IDA staff.”

Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com