Unit 1 Lesson 1 Flashcards
Regulatory Bodies
As a Dealing Representative, you need to be aware of what kind of regulatory bodies and regulations?
In Canada, there are a number of regulatory bodies and regulations that govern the sale of mutual funds. As a dealing representative, you need to be aware of these bodies and regulations.
These regulations are designed to protect the interests of whom?
To protect the interests of the investing public and industry participants. (mutual funds industry)
There are several monitoring bodies in the mutual funds industry in Canada at what 2 levels?
1) Provincial & Territorial Level
2) National Level
Each province and territory has a regulatory body usually referred to as a…?
Securities commission.(Securities Regulator)
Name the organizations that play a role in the regulation of the mutual funds industry at a national level?
1 - CSA: Canadian Securities Administrators.
2 - MFDA: Mutual Fund Dealers Association of Canada.
3 - OBSI: Ombudsman for banking services and investments.
4 - IIROC: Investment Industry Regulatory Organization of Canada.
5 - OSFI: Office of the Superintendent of Financial Institutions Canada.
What does a securities regulator do and what mandate/authority does a securities regulator have?
Each securities regulator sets its own standards for registration and has the power to grant or revoke registrations.
Securities Regulators generally have a mandate (authority) to:
1) protect investors from unfair, improper and fraudulent practices.
2) promote fair and efficient capital markets.
3) promote confidence in capital markets.
4) reduce systemic risk.
For registered firms and individuals that are directly regulated by the provincial and territorial securities regulators, the rules, regulations and legislations apply specifically to what? (securities regulation)
For registered firms and individuals that are directly regulated by the provincial and territorial securities regulators, the rules, regulations and legislations apply specifically to securities and are not extended to related investment products.
SRO member firms and their dealing representatives are subject to rules and regulations that apply to..?
Securities and related investment products, including structured products.
What is the role of the securities regulator/ securities commission?
1) Establishing strict standards for disclosure of information before new securities can be offered to the public.
2) Reviewing and approving mutual funds and new issue prospectuses (brochures/announcements), before they are offered for sale in their province or territory.
3) Registering the companies and individuals who sell securities in their province or territory.
4) Registering the companies and individuals that manage mutual funds portfolios established in their province or territory.
5) Enforcing securities regulations governing the buying and selling of securities.
6) Investigating investor complaints against their companies and their employees.
7) Disciplining companies and individuals found to contravene the regulations.
What is your role as a dealing representative?
Your role as a dealing representative is to:
1) Register with your securities regulator.
2) Adhere to the Securities Regulator’s rules, regulations and standards.
Explain what the CSA is and their 3 main goals.
the Canadian Securities Administrators (CSA), is a policy-making body comprised of members from each Securities Regulator in Canada. The CSA serves as a forum for these regulators to enhance, coordinate, and harmonize the regulation of Canadian capital markets.
The CSA has three primary goals as part of its mandate:
Protect Investors: The CSA aims to safeguard investors from unfair, improper, or fraudulent practices in the capital markets.
Foster Fair and Efficient Capital Markets: Another goal is to promote fair and efficient capital markets, creating an environment that benefits both investors and market participants.
Reduce Risks and Enhance Market Integrity: The CSA seeks to minimize risks to the integrity of the market and to boost investor confidence. This involves implementing a national system of harmonized securities regulations, policies, and practices.
To achieve these objectives, the CSA relies on a coordinated approach, implementing a national system of harmonized securities regulations, policies, and practices. Enforcement of these regulations, policies, and practices falls under the jurisdiction of Securities Regulators. Overall, the CSA plays a crucial role in maintaining the integrity of the Canadian capital markets and ensuring the protection of investors.
What is the MFDA, what is its role and what authority does this regulatory body have?
The Mutual Fund Dealers Association of Canada (MFDA) is the self-regulatory organization overseeing the distribution sector of the Canadian mutual funds industry. Operating as a not-for-profit corporation, it comprises of its members, which are mutual fund dealers, licensed with Securities Regulators. It is mandatory for all members outside of Quebec, to be members of the MFDA.
The MFDA regulates its members and their dealing representatives, by focusing on operational standards, business conduct, and adherence to rules to enhance investor protection and bolster public confidence in the Canadian mutual fund industry.
Authorized by securities regulators in various jurisdictions, the MFDA has the authority to admit members, conduct compliance reviews, and enforce rules through a transparent disciplinary process that may lead to fines, suspension, or termination of membership.
Additionally, the MFDA oversees the MFDA Investor Protection Corporation (IPC), a distinct entity offering protection for eligible customer losses due to an MFDA Member’s insolvency. Funded by contributions from MFDA Members, the IPC provides coverage up to $1 million for general accounts and $1 million for retirement accounts, limited to accounts held by MFDA Members in nominee name and excluding funds held in client name at fund companies.
What is the OBSI and what is its role and what authority does this organization have?
The Ombudsman for Banking Services and Investments (OBSI) operates as an independent and impartial organization, distinct from a regulator. Its primary goal is to resolve disputes between participating banking services and investment firms and their clients.
Since August 1, 2014, all dealers and advisors are required to be OBSI members, with the exception of Quebec, where the Autorité des marchés financiers (AMF) mediation regime remains applicable.
OBSI has the authority to make recommendations for settling claims, up to/with a cap of $350,000. Serving as an alternative to the legal system, OBSI ensures that its members engage/deal fairly with their customers.
Explain what the 2 monitoring bodies in Quebec are, their roles and their authorities.
In Quebec, there are two key regulatory bodies:
1) Autorité de marchés financiers (AMF):
Role: Securities regulator in Quebec.
Requirement: Mutual fund dealers operating in Quebec must be registered under AMF.
Delegation: AMF delegates ongoing compliance and continuing education responsibilities to Chambre de la sécurité financière (CSF).
2) Chambre de la sécurité financière (CSF):
Role: Recognized self-regulatory organization (SRO) for Quebec representatives dealing in certain investment funds. (Investment funds that are not under IIROC supervision. In Québec,
IIROC is the recognized SRO for investment dealers.)
Mission: Focuses on protecting consumers by maintaining discipline, overseeing training, and ensuring ethical conduct of its members, including Dealing Representatives and financial planners.
Empowerment/Authority: Authorized by AMF in Quebec to admit members, investigate complaints, and enforce rules through a disciplinary process, potentially leading to fines, suspension, or termination of membership.
Note: Financial planning activities require registration in Quebec, and CSF is the designated regulatory authority for this purpose.
What is the IIROC, what are its principal activities and main objective?
The Investment Industry Regulatory Organization of Canada (IIROC) is the national self-regulatory organization for investment dealers.
Its key activities involve safeguarding the investing public, engaging in self-regulation, coordinating with provincial securities commissions, representing public policy, maintaining orderly marketing and trading, providing education, publishing statistical information, and collaborating/liaison with other financial institutions.
IIROC’s primary goal is to establish a favorable/positive environment for the investing public by promoting high practice standards and ensuring regulatory compliance within its membership.
