The Mutual Funds Dealers Association has established a special committee of the MFDA board of directors to consider the cost and benefits of joining the Canadian Investor Protection Fund, versus establishing an independent MFDA Investor Protection Fund.

The MFDA is required to establish an investor protection fund to protect client assets in the event of a member insolvency as a condition of its’ recognition as a self-regulatory organization. To that end, the MFDA submitted an application of the MFDA Investor Protection Corp. to the provincial securities commissions, and the application was published for public comment in November 2002.

The MFDA notes that many public comments suggested the MFDA explore the possibility of joining the CIPF rather than establish a separate fund. CIPF is the established investor protection fund for members of the Investment Dealers Association, the Bourse de Montreal Inc. and the TSX Group of Companies. A special committee of the MFDA’s board has been established to consider that option. And, as part of this comparative analysis, the special committee is seeking input from MFDA members regarding the implications to their business under each option.

Firms will be receiving in the mail a summary of the options under consideration and a survey, with responses expected by February 13.

The MFDA is also seeking input from its’ members about possible areas of inconsistency, or duplication, in its’ rules.

“As a national self-regulatory organization, the MFDA is in a position to raise and address with other securities regulators issues of regulatory duplication and harmonization in order to further the goal of providing better, more effective and more efficient regulation,” it says. “To this end, the MFDA is currently undertaking a review of its own rules in relation to requirements and practices imposed by other securities regulators across Canada to identify areas of duplication or inconsistency.”

Comments should be directed to Laurie Gillett, manager, Membership Services.