The investment industry should streamline its own duplicative efforts in self-regulation and client restitution, says the president and CEO of the Investment Dealers Association of Canada in a speech Monday at the IDA’s annual conference in Banff.

Joe Oliver revived the issue of creating one industry SRO, suggesting that it’s time to wring out inefficiencies inherent in running multiple SROs by bringing together the IDA, the Mutual Fund Dealers Association, Market Regulation Services Inc. and the Canadian Investor Protection Fund in a single body.

Oliver argued that a single SRO would ensure market integrity and better protect investors, while enhancing efficiency and competitiveness. Consolidation would result in “less public confusion, increased investor confidence, a more secure role for self-regulation,” he says, adding that there aren’t any obstacles that can’t be overcome with “good faith” and “reasonable compromise.”

This suggests the IDA is prepared to deal with some of the challenges impeding a rationalization of regulators — governance and the IDA’s dual functions. When the SRO consolidation issue has been raised in the past, the response from other regulators has been to concede that although a merger may make sense of efficiency grounds, it’s hardly likely to happen while the IDA maintains both a regulatory and a trade association function.

The IDA has doggedly refused to give up the trade association function, maintaining that the dual roles don’t represent a conflict because regulation always takes precedence and the real conflict is inherent in self-regulation. However, there are now signs that it recognizes that surrendering the trade function may be a necessity to get a deal done on the regulatory side, and it may be open to some governance reforms. Oliver says there are no active merger talks between the organizations.

“Before the IDA comes calling, [it has] some work to do with respect to [its] own house,” says Larry Waite, CEO of the MFDA, noting that regulatory consolidation isn’t a new topic for the IDA. He says the MFDA is open to any proposal that would improve investor protection and make regulation more effective and efficient.

And Waite stresses that the MFDA believes it has the SRO model right. “We perform no trade association functions for our members. Fifty per cent of our board is made up public directors. Our public director definition ensures independence. Our chair is a public director and all of our board committees are chaired by public directors”

CIPF is a new addition to the roster of possible merger targets for the IDA, in part because it conducts dealer inspections, which duplicates some of the IDA’s work. Oliver says that an independent CIPF is unnecessarily duplicative. “It is time to leave prudential regulation to the IDA, with CSA oversight. Our track record justifies it. Registrants would avoid costly, redundant financial compliance visits. And the IDA, which is expert in these matters, can get on with modernizing capital standards under CSA oversight.”

CIPF president and CEO, Rozanne Reszel, says that there is some overlap between CIPF’s risk management work and the IDA market conduct activities, but she suggests that there’s value to it on a stand alone basis. She says CIPF’s board is looking at the best way to deploy its resources toward both investor protection and risk management.

Reszel adds that governance and independence issues need to be assessed in deciding whether it makes sense to bring prudential regulation and investor compensation under the same roof as member regulation. “There are times when an independent perspective is helpful,” she says.

Oliver also called for the integration of the industry’s ombuds-services into a single system. “Right now, the structure is confusing and multi-layered,” he argued. “It’s time to get rid of the extra cost and confusion by eliminating an unnecessary organizational layer,” he says.