MFDA: The “client relationship” amendments to the MFDA rules were approved by the applicable CSA members in mid-July 2010. These rule amendments relate to client accounts, minimum standards for account supervision, client communications and client reporting. The MFDA has indicated that the amendments will be presented to MFDA members at the December 2010 annual meeting for final approval and if approved will be made effective shortly thereafter subject to transition periods for certain requirements.
If approved by the MFDA membership, the amendments will, among other things,
- require MFDA members to provide investors with certain fundamental information at the time an account is opened – similar to the “relationship disclosure information” requirements under National Instrument 31-103;
- clarify the duty of MFDA members and approved persons to assess the suitability of investments in each client account when various triggering events occur;
- clarify the responsibilities of MFDA members and their representatives in discharging obligations to ensure suitable recommendations;
- require MFDA members to provide certain information to clients on an annual basis with respect to the performance of the client’s account; and
- clarify an MFDA member’s supervisory requirements regarding client communications that disclose a rate of return.
IIROC: IIROC has also proposed “client relationship” amendments to its rules similar to those proposed by the MFDA. IIROC’s proposed amendments which were approved by the IIROC Board of Directors in June 2010 are expected to be republished in the near future for a 90-day comment period.