Securities Administrators' new business plan show devotion to preserving investor confidence: lawyer

The CSA's new business plan prioritizes client focus reforms, ESG and other regulatory changes

Securities Administrators' new business plan show devotion to preserving investor confidence: lawyer
Nancy Mehrad is a securities lawyer and CEO at Registrant Law.

The Canadian Securities Administrators (CSA) has issued their 2022-2025 business plan, which outlines its priorities over the next three years. Nancy Mehrad, CEO of Registrant Law, says the business plan sets out six strategic goals that reflect the CSA members’ commitment to maintaining investor confidence in the Canadian capital markets and ensuring an efficient operation.

Registrants have never been busier keeping up with all the regulatory changes, and many are starting to outsource this work to law firms as they cannot keep up, Mehrad says.

The CSA’s business plan seeks to implement improvements to boost the capital markets regulatory system by leading the creation of a new self-regulatory organization (SRO) for the investment industry and a new investor protection fund (IPF) and pursuing collaboration with federal and provincial agencies on systemic risk, enforcement and other matters relating to the financial markets.

The CSA is replacing its national filing systems, including the System for Electronic Document Analysis and Retrieval (SEDAR), the System for Electronic Disclosure by Insiders (SEDI) and the National Registration Database (NRD) with SEDAR+.

As part of its business plan, the CSA will incorporate Indigenous Peoples’ issues and perspectives in its policy work through the CSA Taskforce on Indigenous Peoples in the Capital Markets and develop a data strategy to support greater use of data for policy development and regulation.

The CSA seeks to optimize investors’ ability to contribute to policymaking and expand investor education outreach by ensuring the successful launch and operation of the CSA Investor Advisory Panel and increasing investors’ awareness of emerging issues and threats by developing campaigns to raise awareness on issues regarding investor education and protection.

The CSA strives to enhance investors’ ability to obtain redress and strengthen the advisor-client relationship by amplifying Ombudsman for Banking Services and Investments’ (OBSI) powers, reviewing title and proficiency requirements, particularly registrant requirements such as client-facing titles, proficiency, and designations and enhancing fee transparency through total cost reporting by mandating enhancements to client reports.

The new business plan will conduct targeted sweeps to ensure the implementation of client-focused reforms, review and modernize mutual fund sales practices and contemplate whether amendments are necessary, including reviewing principal distributors’ practices. In addition, it would support the implementation of the framework addressing financial exploitation and cognitive impairment of older and vulnerable investors.

 The CSA’s business plan would address emerging market issues and trends by finalizing climate change-related disclosure requirements, considering diversity disclosure and related governance issues, building regulatory capacity for emerging digital business models, and continuing to develop a comprehensive oversight, compliance and enforcement regime for crypto asset trading platforms. In addition, it would explore the regulatory implications of stablecoins in the capital markets, including their use in connection with crypto asset trading.

The CSA also seeks to monitor ESG-related investment fund disclosure. The business plan would address market abuse and offensive promotional activity in venture markets and enhance enforcement through improving technology and analytical capacity. 

The CSA seeks to deliver responsive regulation protecting investors while reducing the regulatory burden by streamlining continuous disclosure requirements for non-investment fund issuers, developing an alternative offering system for well-known Canadian seasoned issuers and implementing the access model for corporate issuers and investment funds. In addition, the CSA would modernize the prospectus filing system for investment funds and continuous disclosure for investment funds.

Finally, the CSA seeks to promote integrity & financial stability through effective market oversight by finalizing and implementing Over The Counter (OTC) derivatives framework, monitoring the use of the Canadian Dollar Offered Rate (CDOR) in derivatives transactions, assessing the listing function of exchanges and analysing developments in short selling and assessing whether regulatory changes are needed.

The business plan also includes overseeing issues relating to the Canadian Dollar Offered Rate (CDOR), initiating public consultation regarding Canadian real-time equities market data, and reviewing the rules regarding special transactions and the early warning reporting regime.

Mehrad says registrants must implement recent regulatory changes such as Client-Focused Reforms and registration amendments – including conducting a review of compliance manuals, onboarding documentation, and providing training. 

“Review and comment – either directly or through an industry association – to the regulatory initiatives that are being proposed. Regulators always welcome feedback.”

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