The Toronto-based investment Industry Association of Canada (IIAC) recently formed a derivatives committee to explore these investments further as a result of increasing interest from high net-worth retail clients.

Over the past few months, the IIAC began to receive comments from member firms about clients asking about derivatives, says Stéphane Rozier, chairman of the derivatives committee in Montreal. The IIAC felt its members needed a place to voice their concerns and raise any questions about the derivatives market.

Launched this past November, the committee will act as a forum for IIAC members to discuss concerns and ideas on the derivatives markets, from an industry, regulatory and individual firm level, says Marcel St-Amour, regional director of the IIAC for Quebec and a member of the committee in Montreal. The IIAC’s derivatives committee will discuss matters related to all derivative products traded by members of the Investment Industry Regulatory Organization of Canada, whether listed on the Montreal Exchange, ICE Futures Canada or on any foreign exchange.

It is expected that as the committee shares observations and information regarding operational, compliance and regulatory questions, financial advisors will benefit from those discussions, however indirectly.

Says Rozier: “Inevitably, [advisors] will get the benefit of this by everybody getting together to voice their concerns [and] to share the concerns of their customers.”

So far, the new derivatives committee has received a very positive response, Rozier says. With roughly 28 current members, he adds, he would like to see representation on the committee from across Canada and from all facets of the domestic financial services industry.

Updates on the committee’s discussions will be distributed to members through the IIAC’s weekly newsletter. Or, if the committee is commenting on a proposed rule change to an existing regulation, says St-Amour, the response would appear as a public document submitted by the IIAC.

Toronto-based Canadian Foundation for Advancement of Investor Rights (a.k.a. FAIR Canada) regards communicating with the public and clarifying the risks and uses of these sophisticated products as a positive step for the financial services industry.

“If they have people on the committee,” says Marian Passmore, associate director with FAIR Canada, “who are familiar with the type of products that use derivatives and can provide some sort of guidance or parameters on the sale of those kind of products, I don’t see that as a negative thing.”

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