MFDA discretionary trading push is pointless

There's no justification for lowering the standards for which individual advisors should be entrusted with discretionary power over client assets

Rudy Luukko 10 September, 2019 | 2:04AM

Sign of curved road ahead

It's hard to imagine a less compelling case for regulatory relief than the Mutual Fund Dealers Association's current proposal to allow dealers, for the first time, to make discretionary trades for their clients. The self-regulatory organization's proposed rule changes, which would apply only to dealer-administered fund-of-funds programs, were released in April for a 120-day comment period that ended on Aug. 2. The MFDA hasn't specified a target date for implementing rule changes.

There’s certainly no urgency, given that fund dealers already have access to an abundance of fund-of-funds portfolio programs and asset allocation services offered by the companies whose funds they distribute. The fund companies' multi-asset offerings are professionally managed by qualified personnel who meet all regulatory requirements. They're offered by prospectus to retail investors. Their performance rankings and ratings are readily available.

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About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.