By James Langton

(February 21 – 16:30 ET) – The Ontario Securities Commission has published the final rules of the Mutual Fund Dealers Association.

As discussed in the Mid-Febuary 2001 issue of Investment Executive, the OSC has formally recognized the MFDA, and has issued terms and conditions of its recognition. Among other things, the OSC is upholding the three-year transition period for personal corporations. There was some discussion of shortening it to 18 months.

The OSC is also imposing requirements for the MFDA to alter its governance structure in the next several years to ensure its independence and to eliminate the current roles of the Investment Dealers Association and the Investment Funds Institute of Canada.

The MFDA has also been recognized in B.C. Alberta was expected to recognize the association as well, but the province has decided to wait until mid-March when the B.C. and Ontario finance ministers have signed off on the mandatory rule, according to MFDA chief operating officer Larry Waite.

The OSC has asked that the Ontario finance minister approve the rule so it comes into force by March 30, and so dealers can begin applying to join the MFDA 30 days after that. Assuming the commission’s timing holds, that puts dealers applying to the MFDA at the end of April and continuing for a couple of months. Dealers would get about a year after that to actually join the MFDA, making the deadline to join July 2, 2002.

A raft of other conditions will apply to the MFDA’s recognition — including enshrining its power to investigate and discipline members, and requiring it to make the outcome of those disciplinary proceedings available to the public.

The MFDA will be required to approve all reorganizations and acquisitions of equity interests of 20% or more. It will also require that reps may only carry on financial planning services through their dealer, or through “another entity that is otherwise regulated or that is subject to the rules of a widely recognized professional association”.

The next step for the MFDA is a board meeting on February 23 to formally approve the rules.