The Canadian securities industry should consider moving toward a single self-regulatory organization for the sake of fairness and efficiency, the head of the Investment Dealers Association says.

IDA president and CEO Joe Oliver proposed combining the existing SROs — the IDA, the Mutual Fund Dealers Association, Regulation Services Inc. and the member regulation responsibilities of the Bourse de Montréal Inc. “The question remains whether we can do better for the public and the industry by combining the [existing SROs],” he told the IDA’s annual conference in Mont Tremblant, Que. on Monday.

“The IDA stands ready to work with the other SROs, individually or collectively, to achieve this objective,” Oliver said. “Each SRO has its own unique mandate. Combined, we could create a single organization that would be functional, for more fair, efficient and effective self-regulation. That result would contribute to our overall regulatory system and enhance the competitiveness and reputation of the Canadian capital markets.”

Larry Waite, chief executive of the MFDA, agreed that a single SRO may make sense. However, he suggested that the brokerage industry should probably restructure its business before it contemplates absorbing the mutual fund side of the business too.

First, Waite suggested, the IDA probably needs to deal with its dual role as both regulator and trade association before it can assimilate the SROs from the other parts of the business. Then, it should look at absorbing RS and the functions of the Bourse, before it comes to rolling in the MFDA.

Indeed, Waite said that if the IDA takes responsibility for both the issuer and dealer side of the securities business; it may then make sense to look at bringing the entire fund industry under its ambit, including the issuer side (currently regulated directly by the securities commissions).

The pressure to consolidate fund dealer and investment dealer self-regulation also appears to have some traction with the Ontario Securities Commission, which issued a paper last week concerning investor protection concerns it has about business arrangements between fund dealers and securities dealers.

In that paper, the OSC asks whether it still makes sense to offer restricted fund dealer licences. As part of the fair dealing model, it is also proposing a single service provider license, which would presumably spell the end of restricted licenses too, should that model ever be implemented.

While the idea’s appeal to the securities commissions is important to the ultimate approval of any merger, it will be up to the SROs themselves to work out such a deal. Oliver said in his speech that such a merger would be a private matter, up to the organizations and their members to decide, subject to regulatory approval.

When this sort of SRO merger has been proposed before, the provincial regulators have taken the stance that it is up to the SROs themselves to decide whether this makes sense; and then they will review it.