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Re: Expert committees not the solution to a broken regulatory process, Investment Executive September 2022 editorial

The editorial says trade groups are “suggesting that regulators set up expert committees — comprising both regulatory and industry personnel — to bridge the gap between policy and reality.”

As a leader of a trade association proposing collaboration between the regulators and the industry to identify barriers and map timelines to implementation, I would like to respond to the two risks highlighted.

First, let’s identify the common ground.

The Investment Funds Institute of Canada (IFIC) agrees with IE that the full life cycle of policy reform development and implementation is too long. But let’s not try to make up for the time needed to develop the policy by rushing the critical implementation process.

We are also pleased to note IE’s agreement (at least in theory) that complex IT projects require industry operational expertise to achieve the policy goal in the most effective and efficient way possible.

Now, the risks.

The process I have proposed would not give the industry a “greater voice” in policy implementation, because the policy would not be up for discussion. While separating the policy objectives from the technical requirements, required to code the implementation solutions, is challenging, it must be done in every project. The implementation roadmap cannot be started until the rule drafting has finished. Coding the changes requires that the detailed final rule requirements have been approved.

In terms of using implementation as a competitive advantage, while the industry is not monolithic, implementation is not an area where firms, in my experience, want to compete. Implementation of the order-execution-only trailer ban rule is a good example of joint collaboration by industry and the Canadian Securities Administrators. While firms are free to adopt their own implementation strategy, most demonstrated a will to collaborate. By leveraging their collective resources, they were able to arrive at a consistent approach. Effective, efficient technical implementation is not a place the industry wants to compete.

The work to plan and execute implementation of a significant new rule is, more and more, a complex, multi-party, operational and IT project. This final leg of rule implementation requires specialized technical and operation expertise, quite different from the skills necessary to develop the policy. Bringing the right expertise to the table when the policy issues have been resolved should not be a partisan issue. It is the only way to deliver the full value of modern technology to investors.

Paul Bourque is president and CEO of the Investment Funds Institute of Canada.