While we discussed the changes in our earlier post, particular
attention should be given to the proposals respecting performance
reporting. Specifically, the amendments would require that
registered firms include original cost information for each
security position in a client's account statement. The
CSA is also specifically requesting comments on
whether the use of tax cost (book value) should be permitted
as an alternative.
Proposed changes to the Companion Policy would also provide
guidance with respect to calculating the market value of
securities. On that point, the amendments provide that
market value should be determined by reference to a
quoted value on a recognized exchange or
marketplace. If market value is not quoted on an exchange, it
could be determined by reference to quotes that are available
through brokers or, failing that, based on a valuation policy that
is consistently applied and based on measures considered reasonable
in the industry.
Where a market value of a security could not be determined,
however, firms would have to disclose this in the account
statement and exclude the security from the calculation of the
total market value. According to its notice, the CSA is
particularly interested in comments on the guidance related to the
valuation of exempt or illiquid securities where there are no
quoted values available.
Ultimately, the changes proposed by the CSA are operational
in nature and could require that registrants make a
substantial investment in time and resources to ensure
compliance. As such, registrants should review the proposals
carefully and consider providing comments to the CSA by the
September 23 deadline.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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