IIAC SUMMER HIGHLIGHTS
OF NOTE
New SRO
The IIAC encourages and supports CSA efforts to achieve a harmonious transition to a fresh SRO. The fresh SRO should be connected to evolving investor needs with minimal bureaucracy and disruption to the capital markets. A summary of our recommendations is found here. Our full submission is found here.
Total Cost Reporting For Investment Funds And Segregated Funds
The IIAC supports the objectives of meaningful cost disclosure for investors but does not believe that objective can be achieved through the CSA’s initial proposals which may cause investor harm. The IIAC’s comments represent views from investment fund managers, investment dealers and insurance intermediaries. Read our full letter, available here.
CAPITAL MARKETS
Derivatives Rules
Though we are pleased to see that the current IIROC Derivative Rules proposals reflect several of the IIAC’s prior recommendations, the IIAC recommended that the proposals be harmonized with the equivalent CSA requirements, namely Proposed NI 93-101 Derivatives: Business Conduct, and NI 93-102: Registration. Given the scope of the proposals and the imposition of new requirements impacting processes, procedures, documentation and systems of the dealer, the IIAC is also advocating for an extended rule implementation period.
Prospectus Delivery
The IIAC submitted a response to the CSA’s proposed amendments to permit an Access Equals Delivery (AED) model for non-investment fund reporting issuers. While supportive of the AED model and the efficiencies realized by this modernized approach to document delivery, the IIAC recommended that the model be extended to include structured notes given the volume of notes issued and the material benefits to investor. The IIAC also recommended that the AED model not preclude alternative electronic delivery formats, if preferred by investors.
RETAIL WEALTH DISTRIBUTION
Financial Consumer Protection Framework
The Financial Consumer Agency of Canada’s new Federal Financial Consumer Protection Framework came into effect on June 30, 2022. While the Consumer Framework does not directly apply to securities, where IIAC members are acting as agents, representatives or other intermediaries to sell or to further the sale of a bank product, the Banks must ensure that their arrangements with IIAC members complies to the Consumer Framework.
TAX
Withholding Requirements For Publicly Traded Partnership Distributions
The IRS has proposed amendments to QI Agreement that operationalizes rule changes under Sections 1446(a) and 1446(f) relating to new withholding requirements for publicly traded partnership distributions. The proposed requirement to obtain a US TIN from non-US account holders is challenging, and non-cooperation could result in material failures and events of default for the QI. The IIAC asked for transition relief from obtaining a US TIN from account holders for the purpose of ascertaining tax treaty benefit claims. In addition, the IIAC requested a “best efforts” implementation period, as QIs will have under six months from the date the QI amendments are finalized to implement systems and update policies. The IIAC’s comments can be found here.