MFDA proposes proficiency standard for selling ETFs

August 4, 2015

On July 22, 2015, the Mutual Fund Dealers Association of Canada (MFDA) published a consultation document proposing individual proficiency standards for Approved Persons selling Exchange Traded Funds (ETFs).  The proposal is made in conjunction with proposed amendments announced in June 2015 with respect to MFDA Rule 1.2, which we previously wrote about.

The MFDA’s proposed Rule 1.2.3 would prohibit an Approved Person from performing an activity that requires registration unless the person has the required education, training and experience, in accordance with section 3.4 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

There are important differences between ETFs and conventional mutual funds and, according to the MFDA, existing courses and examinations do not adequately address the sale of ETFs. In order to satisfy the proficiency principle under proposed Rule 1.2.3, Approved Persons would need to receive training on information about characteristics and features of ETFs, as well as, training on how ETFs will be offered through MFDA members.

ETF training should highlight the key differences between ETFs and conventional mutual funds. Training would include, but not be limited to, the following: detailed product information for the ETFs approved for sale by the MFDA member;  information on how market quotes will be obtained; the disclosure information required for each transaction; and how trade orders will be processed.

For further information, please see MFDA Bulletin 0653-P. The MFDA is seeking comments by September 16, 2015.

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