The Boards of Directors of the Investment Dealers Association of Canada and Market Regulation Services Inc. announced today that they have approved in principle a proposal to create a new self-regulatory organization to succeed the IDA and RS.

A joint-steering committee has been established by the IDA and RS — which will work closely with the relevant oversight bodies, Canadian securities administrators in particular, as well as capital markets stakeholders. The committee’s responsibility is to develop a detailed implementation plan for approval. The detailed merger plan will be subject to various regulatory approvals and by IDA membership and RS shareholders.

“The new organization will further strengthen self-regulation within the Canadian securities industry and enhance the already strong levels of investor protection and market integrity,” says Bill Moriarty, RS chairman.

The unified SRO will create greater clarity for investors and further improve regulatory effectiveness by eliminating duplication and gaps. The new entity will contribute to better coordination of policies and procedures for overall regulation. In addition, the improved capacity and single profile will allow it to attract and retain talent. It will also participate more effectively in domestic policy initiatives and help enhance the global status of the Canadian capital markets.

“Combining member and market regulation will enhance the quality of self regulation in Canadian markets,” says Brian Porter, past IDA chairman. “The initiative is timely, given the recent reorganization of the IDA, the review of the SRO structure by Canadian and U.S. securities regulators and the ongoing national discussion about the need to harmonize Canada’s regulatory system.”

The new entity would be expected to operate on a not-for-profit basis. Stakeholders would initially include all those currently regulated by the IDA or RS, as well as marketplaces that have contracted with RS for outsourced regulation services. The governance structure is intended to be sufficiently robust to facilitate a broader range of responsibilities for the new entity over time, should other industry groups choose to participate.