My July 29 column “Closing the circle to benefit investors” has prompted interesting and reflective commentary on SRO consolidation. I am glad to hear and engage with these other opinions as they contribute to the eventual consolidation process. The purpose of my column was not to force a “quick-fix” solution or short-change the self-regulatory system, but to stop the prevarication and finally get structural reform — which has been nearly 20 years in the making — underway.
Ken Kivenko’s informative letter spells out the goals of SRO reform — better regulation and enforcement, improved complaint handling and higher conduct for advisors. And we know what’s needed to achieve these goals. The Ontario Capital Markets Modernization Taskforce has set a clear direction — a multi-stage consolidation and revamped SRO governance to include wider stakeholder input on strategic and regulatory priorities.
My plea is to get on with it. Many aspects of SRO consolidation have already been discussed and debated. A beginning step would be to merge IIROC and the MFDA, and to seize the significant efficiencies identified by the CSA. At the same time, the framework for a governance structure and process can be overhauled in fairly short order, widening stakeholder representation and building CSA oversight, and mandating an annual strategic plan and accountability framework that includes client complaints and enforcement.
Moreover, SRO consolidation is not the only factor affecting investor welfare. The task force recommendations for binding OBSI decisions and revamped governance will ensure proper resources for rigorous and effective judgment, bolstering investor confidence. The new rule framework for CRM1 and 2 and the completed client-focused reforms will raise advisor conduct and effective regulation.
We have had much debate on structure, and we now have a clear direction to pick up the tools and re-build self-regulation. If we don’t do this now, then when?
Ian Russell is president and CEO of the Investment Industry Association of Canada, the national association representing the position of Investment Industry Regulatory Organization of Canada-regulated dealer member firms on securities regulation, public policy and industry issues.