The Mutual Fund Dealers Association of Canada (MFDA) has immediately rebuffed the latest merger proposal from the Investment Industry Regulatory Organization of Canada (IIROC).
IIROC issued a paper Tuesday that sets out its case for consolidation with the MFDA.
Among other things, the IIROC paper contends that merging the two self-regulatory organizations (SROs) would create “hundreds of millions” of dollars in benefits by expanding investor access to products and services, and eliminating regulatory duplication — all without disrupting existing business models.
In response, MFDA president and CEO Mark Gordon issued a statement spurning the overture.
“In reading IIROC’s position paper, it is clear that their proposal is meant to benefit only industry, not investors or the public. Canadian investors deserve better. Canada deserves better,” Gordon said.
Back in February, the MFDA published its own proposal for SRO reform, which would involve creating a new SRO to oversee all registered firms (dealers and fund managers), and moving market regulation into a separate entity.
Gordon reiterated that vision, saying that the MFDA’s proposal “sets out a framework for a new SRO that is built from the ground up to allow for a truly modern SRO with a culture that puts the public interest first.
“Any serious revision of Canada’s SRO framework that is truly focused on the public interest needs to address the issue of public confidence. That means addressing the conflict of interest concerns that exist between the mandates of SROs and the interests of SRO members,” he said.
The competing visions come in the wake of the Canadian Securities Administrators (CSA) promising to launch a review of self-regulation.
The CSA’s consultation paper is expected to be published by the end of June.
“The time for real change is now,” Gordon said. “We cannot allow this to be a missed opportunity to improve the state of regulation in Canada. The MFDA looks forward to further collaborating with the CSA, IIROC and all stakeholders toward our collective goal of a lasting solution which is beneficial to all Canadians.”