Merger plan for watch­dogs comes un­der crit­i­cism


The In­vest­ment In­dus­try Reg­u­la­tory Or­ga­ni­za­tion of Canada is propos­ing to merge with the Mu­tual Fund Deal­ers As­so­ci­a­tion, a move IIROC says would re­duce du­pli­ca­tion and save mil­lions of dol­lars that could in­stead be in­vested in growth and in­no­va­tion in the in­vest­ment in­dus­try.

The plan, made pub­lic Tues­day, was de­vel­oped to present to the Cana­dian Se­cu­ri­ties Ad­min­is­tra­tors to con­sider in a planned re­view of the in­dus­try’s self-reg­u­la­tory or­ga­ni­za­tions later this year.

How­ever, it im­me­di­ately drew a re­buke from the head of the MFDA, which is ad­vo­cat­ing to start from scratch to cre­ate a new self-reg­u­la­tory or­ga­ni­za­tion for the in­dus­try.

The idea of merg­ing the MFDA and IIROC, which over­sees firms and fi­nan­cial ad­vis­ers, has been sug­gested over the years to re­duce over­lap. The lat­est such sug­ges­tion came last fall in a re­port from the C.D. Howe In­sti­tute.

“Our pro­posal can be im­ple­mented within three months, de­liv­er­ing real, tan­gi­ble ben­e­fits to Cana­di­ans and to the in­dus­try within a year of ap­proval from the CSA,” said An­drew Kriegler, IIROC’S chief ex­ec­u­tive.

The na­tional self-reg­u­la­tory agency has been work­ing with an in­de­pen­dent con­sult­ing firm to con­duct a cost-ben­e­fit as­sess­ment of the pro­posed merger and plans to pub­lish that re­port in the com­ing weeks.

IIROC grew out of the In­vest­ment Deal­ers As­so­ci­a­tion, while the MFDA was cre­ated in 1998 as the mu­tual fund busi­ness boomed.

In a state­ment late Tues­day, MFDA chief ex­ec­u­tive Mark Gor­don crit­i­cized IIROC’S merger plan, say­ing “it is clear their pro­posal is meant to ben­e­fit only in­dus­try, not in­vestors or the pub­lic.”

He coun­tered that any “se­ri­ous” re­vi­sion to Canada’s self-reg­u­la­tory in­dus­try over­sight needs to ad­dress the is­sue of pub­lic con­fi­dence.

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