What organizations protect investors in Canada?

There are two main bodies in Canada that protect investors:

1. Provincial and territorial securities regulators

Provincial and territorial securities regulators, such as the Ontario Securities Commission (OSC), administer and enforce rules around how securities are issued, bought, and sold. And these regulators set minimum entry standards for market intermediaries who deal with investors. Securities regulators work together through the Canadian Securities Administrators (CSA).

Securities regulators also regulate marketplaces and clearing agencies, approve individuals and firms for registrationRegistration A requirement for any person or company trading investments or providing advice in Canada. Securities…+ read full definition based on proficiency and educational requirements and discipline firms and individuals.

2. Canadian Investment Regulatory Organization (CIRO)

The Canadian Investment Regulatory Organization (CIRO) is a self-regulatory organization that oversees all investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition dealers, mutual fundMutual fund An investment that pools money from many people and invests it in a mix of…+ read full definition dealers, and trading activity on Canada’s debt and equity marketplaces. It consolidated the operations of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA).

In Quebec, the Montréal Exchange (MX) is also considered an SRO. MX is the only financial derivatives exchange in Canada, and currently lists equity options, options on ETFs, currency options, index derivatives, and interest rate derivatives.

What is the role of securities regulators?

Securities regulators in Canada oversee advisers, dealers, investment fund managers, reporting issuers, and securities markets. The OSC, the securities regulator in Ontario, is an independent Crown corporation that:

• Provides protection to investors from unfair, improper, or fraudulent practices and fosters fair and efficient capital markets and confidence in capital markets.
• Uses its rulemaking and enforcement powers to help safeguard investors, deter misconduct, and regulate participants in Ontario’s capital markets.
• Regulates firms and individuals who sell securities and provide advice in Ontario, as well as public companies, investment funds and marketplaces, such as the Toronto Stock Exchange.
• Gets its power from the Securities Act (Ontario) the Commodity Futures Act (Ontario) and certain provisions of the Business Corporations Act (Ontario).
• Is funded by fees paid by public companies and intermediaries.

How does regulation protect investors?

There are 5 ways that regulation protects investors:

 1. Meeting the standards

Dealers, advisers, and investment fund managers must demonstrate fitness for registration at the time they apply for registration, and they must continue to do so throughout the period that they are registered.

For a firm, fitness for registration is assessed in terms of the firm’s ability to carry out its obligations under securities legislation, including the maintenance of:

• Adequate working capital and insurance, books, and records,
• Robust compliance systems.
• Procedures for dealing with clients, such as at account opening and in ongoing reporting.

Fitness for registration is assessed through proficiency, integrity, and solvency criteria. For individual representatives, registration means that they have met the minimum standards for education and experience required for their category of registration.

2. Setting the bar

Together with the Canadian Investment Regulatory Organization (CIRO), securities regulators administer, develop, update and enforce the rules for all firms and individuals that operate in Canada’s markets, including public companies, investment funds, intermediaries, dealers, advisers, and investment fund managers.

3. Checking in

Securities regulators, and CIRO,  regularly monitor firms, public companies and dealers, investment fund managers or advisers to make sure they’re meeting standards and following the rules.

4. Fair markets

Securities regulators and CIRO oversee all securities marketplaces in Canada, including the Toronto Stock Exchange (TSX) and TSX Venture Exchange. They watch markets closely and monitor compliance with securities law and rules. Public companies must disclose information on a timely basis and in accordance with securities laws.

5. Taking action

If an individual or firm breaks rules of conduct, regulators take action, such as imposing appropriate sanctions or other disciplinary measures to prevent future harm. This could include placing terms and conditions on an individual or firm’s registration or suspending or revoking registration if the firm or individual becomes unfit for registration.

Regular compliance reviews are one way the OSC checks whether firms are following securities regulations. Some reviews are targeted inspections, or sweeps, where the regulator focuses on one particular issue or theme, across a sample of registered firms. Findings from sweeps may be used to help OSC better protect investors through guidance and updating rules.

Remember: Generally, anyone selling securities, offering investment advice or acting as an investment fund manager must be registered with their provincial securities regulator. Before you buy a new investment, check before you invest. Make sure the investment dealer is registered and qualified to sell you the investment you are considering. If you’re investing using an online platform, check to see that the platform is registered. You can also check if they have had any disciplinary actions taken against them.

Learn how your investments are protected at financial institutions.

The OSC Inquiries and Contact Centre can help if you think you may be a victim of investment frauds and scams. You can also report potential unfair, improper or fraudulent practices to the Contact Centre. Find out more about the OSC Inquiries and Contact Centre.