CSA Staff Notice and Request for Comments 11-343 – Proposal to Establish a CSA Investor Advisory Panel

February 1, 2022

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CSA Staff Notice and Request for Comments 11-343 – Proposal to Establish a CSA Investor Advisory Panel 

Letter Summary:

The CSA has proposed to establish an Investor Advisory Panel (Panel), in order to better represent the views of retail investors through a pan-Canadian panel instead of just through ad hoc engagement with various CSA members or through comment letters. The Panel is intended to represent a diverse range of investor interests, be independent from the CSA yet have direct access to the CSA, and the CSA will invest resources to support the Panel. Its focus will be on providing feedback to proposed CSA rules and policies. The Panel will be able to use a number of methods to get input, including focus groups and surveys. Applications for membership will be solicited in early 2022 (5-9 members) and members will be remunerated for their work. The Panel is expected to meet at least quarterly, provide an annual report on its activities and attend the CSA Chairs’ meeting to report on matters specified by the CSA. The draft terms of reference sets out a number of operational items, including the membership selection process, the duration of Panel terms and expectations for disclosure of conflicts.

Overview of the Council’s Comments:

The CAC is highly supportive of the CSA’s proposal and efforts to gain insights from an investor perspective through the proposed creation of an Investor Advisory Panel (“IAP”). As one of the more active investor-minded commenters in Canada on securities policy matters, the CAC welcomes additional informed and resourced advocates for the interests of investors and fairer markets. As such, the CAC applauds the CSA for the major step in that direction that this Staff Notice represents.

With investor protection being a primary purpose of securities legislation and attendant regulation, the CAC believes that it’s incumbent upon regulators to develop more robust sources of investor-related information and inputs, both qualitative and quantitative. The proposed CSA IAP would be well-positioned to inform and potentially partially direct such development, and to contribute to solving the collective action problem of the diffuse beneficial interests of retail investors in improved securities regulation.

The CAC noted prior proposals and discussions relating to formalized investor advisory mechanisms for IIROC and the New SRO, of which the CAC was supportive, and the CAC encourages formalized communication and coordination with such a body. The CAC believes the Panel could be improved through additional resourcing and consideration of an expanded mandate, either initially or following some series of initial Panel milestones.

The CAC is supportive of greater resourcing of the IAP relating to in-person IAP meetings, particularly in its formative stages, as the degree of engagement in and efficacy of longer-form strategic and governance-oriented meetings in virtual/electronic formats is limited. Further, relationships within the IAP and with the CSA Secretariat and Chairs could be strengthened through increased support for regularized in-person meetings.