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March 2024 Advocacy Newsletter
Summary:
When regulators propose new rules, we can expect industry players closest to the rulemaking to pay attention and comment—after all, they have a significant economic stake in the outcome of that rulemaking. But getting other stakeholders involved is a taller order. They may not be as close to the relevant issues, and may not have the incentive to study up and contribute informed comments.
One way regulators can try and mitigate this imbalance is by explaining in plain language what motivates their new rule proposals and how different stakeholders likely will be affected. We made this point to the Canadian Investment Regulatory Organization this past month, when commenting on their consultation paper “Leveling the Advisor Compensation Playing Field.”
The paper highlights an inconsistency in how securities dealers’ personnel can be compensated: some can direct their compensation to a personal corporation, while others can’t. The paper then discusses options for allowing all “approved persons” to direct compensation to a personal corporation. Unfortunately, without upfront discussion explaining why we regulate compensation in this way or what the stakes are for dealers’ clients, it’s tough for anyone other than dealers themselves to engage with this consultation. As CIRO’s rulemaking process evolves, we hope they will keep this consideration in mind.
Finally, I want to congratulate Michael Thom, CFA, on his appointment to the board of the Ombudsman for Banking Services and Investments. His appointment comes at an important time of transition for OBSI—they’ll benefit greatly from his input and advice.