The Portfolio Management Association of Canada (PMAC), through its Industry, Regulation & Tax Committee’s securities sub-committee, is pleased to have the opportunity to provide comments on the Notice and Request for Comment from the British Columbia Securities Commission (BCSC) consulting on the securities law framework and fintech regulation (the Consultation). Capitalized terms used in this letter but not defined here have the same meaning given to them in the Consultation.
PMAC represents over 250 investment management firms registered with the Canadian Securities Administrators (the CSA) to do business in Canada as portfolio managers. PMAC members encompass both large and small firms managing total assets in excess of $1.6 trillion. Our membership spans organizations ranging from private client firms, family offices, institutional client firms, and insurance and pension funds. Among our members are a number of on-line or “robo” advisers, firms who employ a more traditional model of asset management while also leveraging a variety of aspects of fintech as part of the services offered to clients, and those who do not employ fintech.
PMAC applauds the BCSC for initiating this Consultation on potential regulatory action to clarify or modernize securities laws to benefit all stakeholders. PMAC is pleased to have the opportunity to contribute to this important conversation about the maintenance of a competitive regulatory environment that fosters innovation and investor confidence.
A number of PMAC’s members and affiliates have commented on the leadership being shown by the BCSC in the fintech space and have noted with approval the level of technology-related expertise that the commission has in-house. We support the efforts of the BCSC and other members of the CSA to implement regulatory sandboxes and to proffer fintech-specific guidance and opportunities. These initiatives have provided market entrants and existing players with valuable insight and opportunities to dialogue about fintech solutions.
We believe that it is important and timely, albeit time-consuming and often challenging, to assess the securities law framework for fintech regulation to ensure it is appropriate, robust, principles-based, and able to respond to market innovation whilst protecting investors and preserving the integrity of our capital markets. PMAC views the Consultation as a welcome opportunity to further the growth of this sector as well as to explore efficiencies that may allow portfolio managers to be nimbler and thus able to provide discretionary management coupled with a fiduciary duty to more investors.
We also caution that the review of regulation should be done with every type of adviser in mind, and not solely focused on those advisers that primarily employ sophisticated AI and/or primarily engage fintech to interact with investors and manage client portfolios.
Investors are better served when firms have secure, simple and cost-effective technology available to them to facilitate client transactions, verification, reporting and general compliance functions. We are supportive of initiatives that leverage cost and time-reducing technologies to help firms address the ever-mounting regulatory burden for the benefit of their investors. Enabling the smooth adoption of time and cost savings for firms is one important way that regulators can assist in improving the affordability and accessibility of advice as well as address the CSA’s concerns about an advice gap for certain Canadian savers. Additionally, since there are various levels of fintech adoption amongst registered firms, principles-based, technology-agnostic regulation is crucial to ensuring a level playing field for firms that will assist in maintain maximum investor choice.
We believe that the Consultation is an important first step in a broader, national discussion and PMAC looks forward to reviewing additional information – including an assessment of measures taken to adapt the securities law framework of comparable jurisdictions – alongside any proposed rule amendments.