Canadian Securities Administrators (CSA), which represents securities regulators throughout Canada, will publish a concept proposal for comment on Friday that would alter some basic mutual fund compliance operations.
One of the main proposals is for a new requirement to be implemented forcing mutual funds to create their own independent government agency, which would be responsible for making sure that the fund manager acts in the best interests of investors. The agencies would be comprised of three or more individuals, a majority of whom are independent parties, according to the proposal.
"Most Canadian mutual fund investors currently have neither the resources nor the inclination to effectively oversee fund managers," said Rebecca Cowdery, chair of the CSA staff group that drafted the proposal. "For this reason, the market is increasingly demanding independent oversight."
While some funds in Canada have already established similar boards to the ones being proposed, it is not currently a requirement, according to the CSA. Canada is one of few developed countries that does not have an independent mutual fund governance system.
The proposal also calls for streamlined product regulation for mutual funds which would consist of broader guidelines monitored by the governance agencies; an enhanced regulatory presence, including more on-site compliance examinations; and a review of investor rights and disclosure requirements.
The CSA will accept public comments on the proposal until June 7, 2002.