New SRO Investor Advisory Panel – Questions & Answers

Introduction

On August 3, 2021 the Canadian Securities Administrators (CSA) published CSA Position Paper 25-404 – New Self-Regulatory Organization Framework which set out the decision of the CSA to establish a new single enhanced SRO (the “New SRO”). In the Position Paper, the CSA set out specific solution to address the issues previously identified by stakeholders in response to CSA Consultation Paper 25-402 – Consultation on the Self-Regulatory Organization Framework. One of the specific solutions is for the New SRO to establish an investor advisory panel in order to facilitate and formalize the New SRO's consideration of investor concerns.

Together, the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC) are working to establish the New SRO IAP (IAP) on behalf of the New SRO and are seeking comments on the proposed Terms of Reference that will govern the IAP.

The IAP will be an independent, advisory panel that will support New SRO staff by highlighting issues of concern to investors, providing advice on regulatory issues and other matters of public interest, and by conducting independent investor research in support of effective regulation. It is intended that the IAP will provide input and advice to New SRO staff during the development of regulatory policies, strategic plans, annual priorities and other investor-related initiatives.

The IAP will be comprised of between five to eleven members with experience in matters of investor protection and/or enhancing access to advice for under-served investors, and with diverse backgrounds and perspectives from across Canada.

Questions & Answers

  1. How will the IAP support the New SRO in protecting retail investors?

    The IAP will support New SRO Staff by enabling a deeper understanding of investor issues and concerns, leading to regulation that better reflects investor needs and perspectives. While SROs receive frequent and valuable input from investors through the public comment process and other formal outreach mechanisms, receiving input and advice from the IAP earlier in the policy development process will support better outcomes for both investors and industry participants.

    In addition, the IAP will provide a specific benefit to the New SRO by raising investor concerns directly to New SRO staff for consideration in support of the New SRO's effective fulfillment of its public interest mandate.

    Through regular dialogue and consultations with staff and annual meetings with the Board, the IAP will serve as a new and valuable advisor for the New SRO.
  2. Who should apply to be a member of the IAP?

    Individuals who would like to assist the New SRO in delivering on its mandate to protect investors and promote public confidence in Canada’s capital markets should apply. Candidates should have experience with matters of investor protection, concerns, issues or rights, including issues relating to enhancing access to advice for under-served investors. The New SRO is looking for individuals with diverse and varied backgrounds and expertise from across Canada. More detail regarding qualifications can be found in the Terms of Reference.
  3. How will the IAP be independent from the New SRO?

    The IAP will operate independently of the New SRO, and it will be responsible for setting and delivering on its own priorities and initiatives. IAP Members will be selected by the New SRO Board’s Governance Committee, which will be comprised of only Independent Directors. It is anticipated that a variation in the selection process that preserves the principle of an independent selection body will be followed to select the inaugural IAP members, as this process will occur before the New SRO Board is formally in place. 

    IAP plans and activities will be led by the IAP Chair. In addition, the IAP will be provided with its own funding to carry out its mandate and research activities.
  4. How will the IAP work with the New SRO?

    The New SRO will consult the IAP during the early stages of development of policies, strategic plans, annual priorities and other initiatives in order to enhance the investor voice in SRO regulation. The Investor Office of the New SRO will serve as the Liaison between the IAP and staff of the New SRO to facilitate frequent and productive dialogue and to enhance investor protection. The Investor Office will also provide procurement, administrative, and meeting coordination support to the IAP as required.

    Also, as the New SRO will have frequent and direct interaction with investors, it can provide timely investor insights to the IAP to help inform their discussions and plans for potential investor issues for consideration.

    The IAP will also meet a minimum of annually with the New SRO Board of Directors to discuss investor concerns and to provide an update on its activities.
  5. How will the IAP coordinate with other consumer-focused panels in Canada?

    In order to avoid potential duplication with other consumer-focused investor panels in Canada, IIROC and the MFDA are working with the CSA and the OSC to discuss strategies to coordinate efforts and communications.
  6. How will IAP members be selected?

    There will be a public call for applications to become a member of the IAP in the Summer of 2022. IAP Members will be selected by the New SRO Board’s Governance Committee, which will be comprised of only Independent Directors. It is anticipated that a variation in the selection process that preserves the principle of an independent selection body will be followed to select the inaugural IAP members, as this process will occur before the New SRO Board is formally in place.
  7. Will IAP members be paid?

    Yes, IAP members will be paid an honorarium and reimbursed for IAP -related expenses, consistent with the approach followed by other Canadian investor-focused panels.
  8. How often will the IAP meet?

    Under its Terms of Reference the IAP must meet at least four times a year (on a quarterly basis). The IAP Chair may schedule up to six additional meetings without the approval of the New SRO. 
  9. Will the IAP have its own annual budget?

    The IAP will have an annual budget that provides funding to effectively carry out its mandate and to conduct research activities. The funding provided will be similar to amounts provided to other consumer panels in the securities industry.
  10. Will the activities of the IAP be made public?

    The following activities of the IAP will be made public and available on the New SRO website:
    • The IAP annual report on its activities for the preceding year
    • All IAP meeting agendas
    • All IAP public comment letters
    • Other IAP sponsored research and work product that it determines is appropriate to publish (so long as the publication is consistent with the confidentiality requirements of the Terms of Reference) 
  11. Will IAP meetings be held virtually or in-person?

    Meeting format and logistics will be determined by the IAP Chair, although we anticipate that there will be a mix of both virtual and in-person meetings, to optimize efficiency, effectiveness and active participation by Members who are based in different parts of Canada.
  12. When will the IAP be established?

    We anticipate that IAP Terms of Reference will be finalized in October 2022 and initial members selected by December 2022.  The formal establishment of the IAP will align with the closing date of New SRO, December 31, 2022. IAP meetings are anticipated to begin early in 2023.