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Curbs for Canadian securitised products

Monday 4 April 2011 – by Will Henley

Securitised products in Canada face closer oversight including added disclosure requirements under a new framework proposed by the country’s regulators.

The Canadian Securities Administrators, an umbrella group of state-wide regulators, says it intends to force issuers to provide investors with information on the risks of products at the point of distribution “and on an ongoing basis”.

The announcement came as the Toronto-based body unveiled the results of a multi-regulator review of the Investment Industry Regulatory Organization of Canada, a self-regulatory organisation.

Under the proposals, non-reporting issuers that distribute securitised products in the exempt market will also be subject to some initial and ongoing disclosure requirements, it said on Friday.

The consultation suggests narrowing the class of investors who can buy securitised products in the exempt market to a “smaller, more sophisticated group”. The CSA argues this will help investors avoid high-risk and unsuitable products.

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Bill Rice, CSA chair and chief executive of the Alberta Securities Commission, said: “The proposed rules build on the CSA’s efforts to provide increased transparency to investors while taking into account the particular features of the Canadian securitisation markets.

“We will work toward striking an appropriate balance between strong investor protection and an efficient, open marketplace.”

The proposals are out to consultation until 1 July.

In a report on the Investment Industry Regulatory Organization of Canada, which regulates investment dealers and trading activity in debt and equity marketplaces, the CSA said the body was in “substantial compliance” with the terms of its establishment.

The review, which was conducted by regulators including the Ontario Securities Commission, Alberta Securities Commission and Autorité des marchés financiers, however indicated there remains “some areas for improvement”.

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