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Merger of investment and mutual fund dealer regulators could save $490M: report

TORONTO — The self-regulatory organization that oversees investment dealers and their trading activity in Canada says a merger with the Mutual Fund Dealers Association would save as much as half a billion dollars over 10 years.

IIROC — the Investment Industry Regulatory Organization of Canada — says a study conducted by Deloitte LLP shows that a consolidation of the two regulators would result in savings of between $380 million and $490 million for the financial services industry.

It says the savings would come from cutting expenses related to running two platforms to comply with overlapping regulation, adding the merger would benefit investors by giving access to more investment solutions and advice, while advisers would have more flexibility to expand and there would be less regulatory fragmentation.

IIROC, which commissioned the report, sets and enforces rules for 175 Canadian investment firms and their nearly 30,000 investment advisers, while also setting integrity rules regarding trading activity on Canadian markets. The MFDA oversees about 90 Canadian mutual fund dealers and their 80,000 salespeople.

The Canadian Securities Administrators, which represents provincial and territorial securities commissions, is in the midst of a review of the regulatory framework for IIROC and MFDA.

The MFDA recommends building a new organization from scratch, while IIROC favours a merger without changes to existing rules and fees.

IIROC is recognized by all 13 provincial and territorial jurisdictions and the MFDA is recognized by just eight provinces.

This report by The Canadian Press was first published Aug. 25, 2020.

The Canadian Press

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