The Mutual Fund Dealers Association of Canada (MFDA) is proposing rule amendments that would give firms more flexibility in how they carry out branch supervision.

In Friday’s OSC Bulletin, the MFDA is publishing for comment proposed amendments to its branch manager rules that, it says, would allow a more flexible, principles-based approach to supervision. Currently, dealers are required to designate a branch manager for each branch and sub-branch, but sub-branches (which have fewer than four reps) aren’t required to have on-site manager.

The proposed changes would allow for more remote supervision, not limiting this to sub-branches. The amendments would allow dealers to designate managers for branches that they don’t normally work at, as long as they have a system to ensure effective supervision. Firms will have to get the MFDA to sign off on their arrangements to ensure investor protection is maintained.

The notice suggests that the change will allow firms “to develop compliance and supervisory structures that are appropriate for individual types of businesses, while continuing to ensure that there are adequate structures and procedures in place to identify and manage potential compliance issues at the branch level.”

The proposed amendments would also require that individuals designated as branch managers must submit to the jurisdiction of the MFDA, which it notes is necessary because the registration of branch managers is no longer required under securities rules.

According to the notice, when the MFDA was first established there were inconsistent requirements for branch supervision across Canada, and so it adopted the toughest standard that existed at the time. Since then, it says that MFDA staff have seen improvements in supervisory systems and processes, and firms have called for a more flexible approach, similar to what is allowed at investment dealer firms.

“The proposed amendments are intended to provide members with a more flexible, principle-based approach in determining how to best supervise their branches, while still ensuring that there are appropriate structures and procedures in place to identify and manage potential compliance issues at the branch level,” it says.

The proposals are out for a 90-day comment period.