5 ways new “Cost and Performance” rules will help you evaluate performance
The Canadian Securities Administrators (CSA) are implementing new requirements to ensure investors receive essential information about the costs and performance of their investments. The new requirements apply to all firms registered to deal in securities or act as portfolio managers and will be phased in over 3 years. Here are some key ways the new rules will help you:
- More information about transaction fees
- More information about total costs
- More information about performance
- Consistent formats and calculations
- Clearer information about scholarship plan investments
Key dates for new requirements
As of July 15, 2014
- Pre-trade disclosure of charges – Your adviser or dealer will have to tell you the charges you’re paying for the purchase, including deferred sales charges when you sell and whether they receive a trailing commission.
- Annual yield in trade confirmation – For fixed income (debt) securities, the security’s annual yield must be included in your trade confirmation.
- Explanation of scholarship plan risks – At the time of purchase, your scholarship plan dealer will have to discuss the risks of potential loss of contributions and earnings.
As of December 31, 2015*
- New account statement – You will get quarterly statements including all transactions during the period and securities held by your adviser or dealer.
- Additional statement – You will get quarterly statements including securities not held by your dealer or adviser. This statement is given if your adviser or dealer has trading authority, receives a trailing commission or other ongoing payment, or if the securities are issued by a scholarship plan, mutual fund or labour-sponsored fund.
* The requirements originally scheduled to come into place on July 15, 2015 will now be effective as of December 31, 2015. Read more from the Canadian Securities Administrators.
As of July 15, 2016
- Deferred sales charge in trade confirmation – Any deferred sales charges when you sell the security must be included in your trade confirmation.
- Report on charges and other compensation – You will get an annual report including detailed information on charges and compensation paid to your dealer or adviser.
- Investment performance report – You will get an annual performance report using standard formulas explaining how your investments have performed over time.
All cost and performance changes, as well as examples of the annual charges and compensation report and investment performance report are available from the Ontario Securities Commission (OSC)