Published on April 27 by the Canadian Securities Administrators (CSA) and the Canadian Council of Insurance Regulators (CCIR), the Joint Notice and Request for Comment proposed enhanced cost disclosure reporting requirements for investment funds and new cost and performance reporting requirements for individual variable insurance contracts (Segregated funds), (together the Proposals).
For the securities sector, the Proposals is amending National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations and Companion Policy to ‘improve investors’...awareness of the ongoing embedded fees such as management fund expense ratios (MER) and trading expense ratios (TER) that form part of the cost of owning investment funds.
The following new provisions will be added to the current client reporting requirements:
In the account statement (s.14.14) or additional statement (s.14.14.1), the fund expense ratio, stated as a percentage for each investment fund held by the client.
In the annual report on charges and other compensation (s.14.17) for the account as a whole:
o the aggregate amount of fund expenses, in dollars, for all investment funds held during the year; and
o the aggregate amount of any direct investment fund charges (e.g., short-term trading (fees or redemption fees), in dollars.
The methodology for determining the information included in the reports will be prescribed.
Presently, registrants are not required to provide ongoing reporting on the amount of these costs after the initial sale of the investment product, in a form that is tailored to the investor holding and that is easily readable.
Comments must be provided before July 27, 2022.