Submitted by nsscadmin on
The start of the new year has been a busy time for the Canadian Securities Administrators. In the first two months seven new publications have been issued. In case you missed any of these publications here is a quick rundown of what they were and their purpose along with links to the CSA notices where you can learn more.
Jan 13 – 52-108: Amendments to Auditor Oversight
These amendments are intended to assist the Canadian Public Accountability Board (CPAB) with inspecting audit work performed in foreign jurisdictions. The amendments respond to challenges CPAB has faced in accessing audit work performed by firms that are not subject to the regulator’s oversight but complete a significant portion of the work for the audit of a Canadian reporting issuer. Audit firms performing such work are referred to as significant component auditors.
Jan 19 – 81-334 – ESG Related Investment Fund disclosure
This provides guidance to investment funds on their disclosure practices that relate to environmental, social and governance (ESG) considerations, particularly funds whose investment objectives reference ESG factors and other funds that use ESG strategies (ESG-Related Funds).
The guidance is based on existing regulatory requirements and addresses areas of disclosure, including investment objectives, fund names, investment strategies, risk disclosure, continuous disclosure and sales communications.
As the investment fund industry creates new funds and incorporates ESG considerations into existing funds to meet demand, there is an increased potential for “greenwashing” – where a fund’s disclosure or marketing intentionally or inadvertently misleads investors about the ESG-related aspects of the fund.
Jan 20 – 81-105 – Amendments to Mutual Fund Sales Practices and DSC prohibition
These amendments are being made to mutual fund sales practices in advance of the prohibition of DSCs which comes into effect on June 1, 2022.
Jan 20 – Request for comment – 93-101 Derivatives business conduct
Published for comment, is the proposed business conduct regime for regulating dealers and advisers in over-the-counter (OTC) derivatives in Canada.
The proposed derivatives business conduct rule was initially published for comment on April 4, 2017 (the first consultation) and again on June 14, 2018 (the second consultation). The rule was developed to help protect derivatives market participants by improving transparency, increasing accountability, and promoting responsible business conduct by dealers and advisers in the OTC derivatives market.
The revisions include, among other things, new exemptions for foreign liquidity providers and derivatives sub-advisers, as well as changes to streamline existing foreign derivatives dealer and adviser exemptions.
Jan 27 – Request for comment – 41-101/81-101 – Prospectus requirements and disclosure
This is a two-staged proposal to modernize the prospectus filing model for investment funds which would reduce regulatory burden without affecting the currency or accuracy of information available to investors.
In keeping with current requirements, investor access to continuous disclosure documents as well as delivery of the Fund Facts and the ETF Facts – which are renewed annually and provide key information in a simple, accessible, and comparable format – remains unchanged. Investors will still be able to request the prospectus or access it online.
Of the two stages, the first consists of proposed amendments that would allow investment funds in continuous distribution to file a new prospectus every two years instead of on an annual basis as they currently do. The requirement to file a final prospectus no more than 90 days after the issuance of a receipt for a preliminary prospectus for all investment funds would also be repealed.
As part of the second stage, the CSA is seeking stakeholder comments on a consultation paper introducing a new shelf prospectus filing model which could apply to all investment funds in continuous distribution. The conceptual framework for this model is based on an adaptation of the current shelf prospectus system.
Jan 27 – 94-101 – Amendments to mandatory central counterparty clearing of derivatives
These include amendments to National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives (NI 94-101) and changes to Companion Policy 94-101 Mandatory Central Counterparty Clearing of Derivatives.
NI 94-101 requires that certain market participants clear certain prescribed over-the-counter derivatives through a central counterparty, subject to exemptions set out in the instrument. The amendments are in response to feedback received from various market participants and are intended to refine the scope of market participants that are subject to the clearing requirement and reduce regulatory burden.
Feb 3 – 24-318 - Preparing for the Implementation of T+1 Settlement
This notice was issued to raise awareness, summarize the views, and describe the role with respect to an initiative by the Canadian securities industry to shorten the standard settlement cycle for most trades in securities from two days after the date of trade (T+2) to one day after the date of trade (T+1).