Regulatory Alerts2020-09-17
Regulation to Amend Regulation 81-105 Respecting Mutual Fund Sales Practices
Canadian securities regulators amended Regulation 81-105 to prohibit participating dealers from soliciting or accepting trailing commissions when no suitability determination was required for the client. The amendments define suitability determination by referencing specific provisions in Regulation 31-103 and industry rules, while clarifying that trailing commission calculations must be based on the value of securities held in the specific client's account. These changes aim to prevent conflicts of interest by ensuring dealers are not compensated for ongoing services they did not perform, with key provisions coming into force in December 2020 and June 2022.
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