On June 30, the Mutual Fund Dealers Association of Canada (MFDA) released a consultation paper that considers the regulatory concerns arising from the use of third party back-office service providers. Back-office services can include such things as software or systems for processing trades, generating client account statements and supervising compliance with regulatory requirements.
The paper identifies a number of regulatory issues emanating from the use of such services and requests feedback from stakeholders regarding potential solutions to address the MFDA's concerns. Issues identified in the paper include the need for MFDA members to ensure compliance with regulatory requirements prior to implementation of a back-office system, the need for such systems to maintain the data necessary to meet record-keeping requirements and the need to ensure that compliance tools incorporated into back-office systems actually result in compliance with MFDA requirements.
The paper goes on to consider a number of options to address the MFDA's concerns including, for example, the development of a non-mandatory list of approved service providers. Ultimately, the paper requests stakeholders to provide their views on the various issues and options and to provide any recommendations or alternatives.
Comments are being accepted by the MFDA until September 30. For more information, see MFDA Bulletin #0484-P.