New CSA amendments aim to simplify fund reports and reduce disclosure requirements for fund managers
The Canadian Securities Administrators (CSA) have released a series of proposed amendments for public comment, aimed at modernizing the continuous disclosure requirements for investment funds.
These amendments focus on improving the quality of information provided to investors while reducing the regulatory burden on investment fund managers.
The CSA proposes replacing the current annual and interim Management Report of Fund Performance (MRFP) with a new annual and interim Fund Report.
The development of the proposed Fund Report involved behavioural insights research, which examined how individuals think, behave, and make decisions. The research included rigorous investor testing to compare the effectiveness of different versions of the Fund Report against a sample MRFP.
“These amendments reflect our commitment to ensuring that investors have access to disclosure that includes appropriate information that is more likely to be read and understood and is easier to apply when making investment decisions,” said Stan Magidson, CSA chair and chair and CEO of the Alberta Securities Commission.
He added that streamlining disclosure requirements aims to reduce the regulatory burden on investment fund managers while improving the overall quality of information available to investors.
Two additional proposals include exemptions from certain conflict of interest reporting requirements in securities legislation if similar conditions are met and eliminating some class- or series-level disclosures from investment fund financial statements not required by International Financial Reporting Standards.
The CSA is also proposing to reference the term Fund Expense Ratio (FER), which combines the management expense ratio and trading expense ratio, in the Fund Facts and ETF Facts documents. Minor editorial revisions are also being proposed for the simplified prospectus form (SP Form).
The CSA invites comments on these proposals, available on CSA members' websites, with a comment period closing on January 17, 2025.
The results of the behavioural insights research, including the investor testing report, can be accessed on the CSA Secretariat’s website and on some CSA members' websites.
The British Columbia Securities Commission (BCSC) has not yet published the proposed amendments but plans to do so following the provincial general election.
The CSA, a council of securities regulators from Canada's provinces and territories, co-ordinates and harmonizes capital markets regulation across the country.
