The Canadian Investment Regulatory Organization’s (CIRO) proposed fee hike for mutual fund reps has been approved by the Ontario Securities Commission (OSC).
Last October, the self-regulatory organization (SRO) proposed changes to its dealer fee model, including an increase in the annual fee charged for each mutual fund rep from $250 to $300. The move came in the wake of the SRO’s expanded responsibility for registration, as various provinces delegated the job to CIRO.
Alongside the increase in rep fees, the SRO will end its cost recovery arrangements with certain provincial regulators, and stop collecting fees through the national registration database (NRD). CIRO said it is taking a “harmonized and simplified approach” to recovering the costs of administering registration.
The bulk of the increase will be felt by larger dealers that have bigger populations of mutual fund reps.
During the consultation process, certain industry groups criticized the proposal, complaining about the impact on dealers and their clients, and a lack of transparency, among other criticisms.
In its response, the SRO defended the proposal, citing the need to offset the annual added costs it faces due to taking over responsibility for registration. Those costs are estimated at $4.6 million, and include additional staffing costs, the cost of performing background checks and related IT support.
At the same time, the SRO must replace revenue that it will lose as it stops collecting NRD fees and ends its cost recovery arrangements with certain provincial securities regulators. In fiscal 2025 (prior to delegation) CIRO collected $1.8 million worth of registration fees, most of which (apart from administrative fees) will be discontinued along with the fee hike.
The new fees will be in effect on April 1.