March 2026

Canada has seen record numbers of homegrown basketball players in March Madness in recent years, a testament to our deep athletic talent pool. While the first NCAA Division 1 men’s basketball tournament was held back in 1939 with only 8 teams, the current 2026 tournament spans 23 days from tip off to the final buzzer, with a total of 68 teams in the running. Last year, the games averaged an estimated 10 million viewers across all networks (18 million during the finals), proving the popularity of the tournament. Regulators share the same enthusiasm – except their brackets are filled with new rules, guidance and lists of priorities. This year, we’ve done the scouting, so you don’t have to. No upsets here – continue reading for the updates your compliance program needs to stay ahead of the game.

In this edition

1. One rulebook to rule them all: CIRO publishes consolidated rule book for comment

2. Why going viral isn’t always a win: CSA and CIRO’s finfluencer guidance
3. OSC’s latest report on gamification: Changing the game
4. Scouting it out: CIRO’s 2026 compliance report

In Brief

Updating the playbook: CSA’s amendments to investment fund continuous disclosure ▪ Dropping the double-double: CIRO proposes to retire dual registration ▪ Reading the defence: The 2025 systemic risk report ▪ Full court press: Changes to the New Brunswick Securities Act

Important Reminders

Don’t miss the buzzer: Change of auditor notice requirements

The Canadian Investment Regulatory Organization (CIRO) has been consolidating the rule sets for investment dealers and mutual fund dealers for the past several years, and has now republished the Proposed CIRO Rules, which are intended to create a single set of rules applicable to all CIRO Dealer Members. The proposed CIRO Rules incorporate feedback from the previously published five phases of the Rule Consolidation Project and propose both material and non-material changes to improve clarity and address stakeholder comments.

It should be noted that the CIRO Universal Market Integrity Rules are not being consolidated with other CIRO Rules as part of this project and will continue as a separate set of rules.

The Proposed CIRO Rules cover several topics, including Dealer Member organization, business conduct, client accounts, financial and operational matters, and procedural rules for enforcement. The proposals also incorporate several changes related to the new proficiency model for investment dealer Approved Persons that came into force at the beginning of the year. Of particular interest to Mutual Fund Dealer Members, CIRO intends to apply the IDPC Proficiency Model to the corresponding categories of Mutual Fund Dealer Member Approved Persons. While there will be some exceptions, such as Registered Representatives dealing in mutual funds only, and Chief Compliance Officers (CCOs), other categories will be impacted. This includes Mutual Fund Dealer Member Directors, Executives, Chief Financial Officers (CFOs), Ultimate Designated Persons (UDPs) and Branch Managers (as Supervisors). As a result, Mutual Fund Dealer Members should pay particular attention to these requirements.

Despite mixed reactions, no changes were made with respect to previously published proposals relating to the general requirements for CFOs across investment dealers and mutual fund dealers. CIRO notes that Dealer Members can request exemptive relief from the CFO requirements to CIRO’s Board, and that if these requests are successful, CIRO may re-evaluate if a threshold for exemptive relief should be included directly in the CIRO Rules.

CIRO did indicate its intention to minimize the need for existing Approved Persons of Mutual Fund Dealer Members to reapply for Approved Person status under the Proposed CIRO Rules, and that further details will be included in the final implementation bulletin.

Some of the other material changes made to the proposed CIRO Rules include:

• Narrowing of the term “investment product” from one that included securities, derivatives, precious metals bullion and “other products designated by the CIRO board” to remove the latter category; 
• Adding a rule in the standards of conduct section requiring Dealer Members to pay annual membership fees and other fees as established by the CIRO Board; 
• Lengthening the required minimum notice period regarding changes to Dealer Members or their business activities from 20 days to 30 days; 
• Adopting provisions requiring that the use of trade names be compliant with all applicable laws and giving CIRO staff the ability to grant relief from trade name ownership requirements in appropriate circumstances; 
• Allowing Approved Persons who are also employees employed by a credit union to receive consideration from the credit union, provided certain conditions are met; and 
• Removing “prospective clients” from the definition of “complaint.”
  

An 18-month implementation period is generally proposed, with immediate implementation for certain procedural enforcement rules and extended periods for other requirements, such as a 2-year implementation period for Mutual Fund Dealer Members to have a qualified CFO. Similarly, as it is proposed that the same proficiency requirements will apply to Approved Persons across Dealer Members (except for certain carve-outs described above), Mutual Fund Dealer Members’ Approved Persons will have a 2-year period to complete these requirements. It is anticipated that existing Approved Persons of Mutual Fund Dealer Members will generally be granted legacy status from new proficiency requirements, except conduct training. Other extended time periods include a 2-year period for Mutual Fund Dealer Members to have an approved panel auditor.

CIRO seeks further comments on the implementation approach, proficiency requirements, and potential impacts on Mutual Fund Dealer Members by June 12, 2026. We continue to encourage all CIRO Dealer Members to carefully consider the impact of the CIRO Rules on their specific business models and provide comments on the consultation.

Firms should review these proposals alongside CIRO’s proposals to retire the dual registration rules (see article below). Additionally, we are all waiting for the final publication of CIRO’s incorporated advisor rules which are anticipated this spring. Taken together, this triptych of changes is likely to result in material impacts on dealers. Stay tuned for BLG’s upcoming Webinar on implications arising from the CIRO incorporated advisor rules, with more details to follow shortly.

In response to concerns raised by the activities of social media financial influences (finfluencers), late last year the Canadian Securities Administrators and the Canadian Investment Regulatory Organization released Staff Notice 31-369 Guidance on the Application of Securities Legislation to Finfluencer Activity (Joint Staff Notice). While the Joint Staff Notice speaks primarily to finfluencers themselves, and describes how various securities laws apply to their activities, registrants should take note because in certain circumstances, they may be held responsible for what is said on their behalf.

The Joint Staff Notice indicates that the regulators consider a finfluencer to be a person who creates online content to offer “advice, tips, and guidance on how to manage money, invest, and achieve financial goals.” If activities cross the threshold of becoming registerable advisory activities, then it is possible an advisory registration exemption, the “general advice” exemption, could apply to such activities, provided that clear and timely disclosure is provided about any financial or other interest in the securities referenced by the finfluencer. Of interest, the Joint Staff Notice stated that the use of certain emojis or language such as “not to be missed” may amount to an investment recommendation.

The Joint Staff Notice provides further information with respect to the business purpose trigger for registration and the requirements for use of the general advice exemption. For example, the disclosure about the finfluencer’s interest in the securities should be specific and include the security, the nature of the compensation, the payer and the recipient of the payment or other incentive. Disclosure of such interest should be prominent and would typically be appropriate at the beginning of the communication. The Joint Staff Notice specifically indicates that it would not be sufficient disclosure if the reader needs to make additional clicks to receive the information in full.

Finfluencers should be aware that no equivalent exemption is available for those in the business of dealing or trading in securities from the requirement to be registered as a dealer. Activities amounting to trading could include, for example, the facilitation of “copy trading” by providing a link to a DIY trading account to replicate a finfluencer’s trades for a fee.

Other potential securities law requirements that should be considered by finfluencers include whether their activities amount to entering into a referral arrangement subject to all of the requirements for such arrangements set out in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. As well, persons who are paid to market or promote particular securities may be undertaking regulated investor relations activities and thus found to be acting on behalf of a registrant or issuer. Finfluencers are also warned about prohibitions against misrepresentations and market manipulation activities.

Registrants who engage the services of finfluencers must also be mindful of the securities law implications of doing so. As noted above, such engagements may amount to referral arrangements, and the general rules relating to conflicts of interest, marketing activities, and advertising all still apply. The Joint Staff Notice warns that registrants might be facilitating registerable activity by unregistered finfluencers, depending on the circumstances.

Registrants can take several steps to address such risks, including the following:

• Engaging in due diligence on the finfluencer prior to engaging them; 
• Ensuring written agreements set out each parties’ roles and responsibilities; 
• Ensure the finfluencer discusses the registrant’s products in a fair, balanced, substantiated and not misleading way; 
• Ongoing monitoring of claims and statements; 
• Employee training regarding direct involvement with finfluencers; and 
• Complying with conflict of interest obligations by identifying, disclosing, and addressing material conflicts of interest in the clients’ best interests.
  

The Joint Staff Notice concludes by reminding registrants and finfluencers that these online activities are monitored for breaches of securities laws. Regulators, as it turns out, follow back.

Last month, the Ontario Securities Commission (OSC) published an additional behavioural science research report on gamification, entitled “Gamification and Retail Investing: Positive Use Cases and Mitigation Techniques.” Unlike prior research reports, this one focused on use cases where gamification techniques could have a positive outcome on investor decision making, as well as available techniques to help mitigate any negative influences on retail investor behaviours. In this context, gamification refers to the use of game-like elements (e.g., points, rewards, leaderboards) to influence user behaviour.

Like other studies, to conduct this research the OSC and the Behavioural Insights Team held an online simulated trading experiment involving more than 4,000 Canadians, each of whom invested a hypothetical $10,000 across eight stocks. Participants were subjected to different gamification techniques, with the aim of trying to increase the diversification of their portfolios. These techniques included:

• A diversification score, based on diversification level; 
• Goal framing, which set diversification goals and tracked progress; 
• Leaderboards, which compared diversification scores to other participants; and 
• Rewards, which provided badges when diversification thresholds were met.
  

The research found that all the above techniques had a positive (albeit modest) impact, resulting in a 3.5-4.5 per cent increase in portfolio diversification.

The research also included a literature/environmental scan to look at both positive applications of gamification and to identify strategies to mitigate negative effects, some of which have been explored in the OSC’s prior research reports. Techniques such as educational interventions, enhanced disclosure, and friction-based interventions such as requiring a confirmation step before a high-risk trade, were found to potentially be helpful to investors in making more deliberate decisions, although additional research is recommended.

As a result, the report concluded that regulatory activities should not preclude positive use cases for gamification, and that additional research should be conducted on mitigation practices and positive use cases. A suggestion was also made to apply gamification techniques for investor education.

The Canadian Investment Regulatory Organization (CIRO) has published its 2026 compliance report for dealers (Report), which describes some priorities for CIRO regulated dealers to tackle in order to strengthen their compliance programs and thus investor protection and market integrity.

The Report continues to stress the risk relating to cybersecurity, and notes that CIRO will conduct another cybersecurity tabletop exercise later this year. The need for continuous training for all staff is highlighted to enhance awareness of the risk and reduce the vulnerability to attacks. Although the positive impact that artificial intelligence has had on defensive capabilities through better threat detection was mentioned, the increased use of AI in sophisticated cyber attacks muted some of these positive developments.

AI is also mentioned in the Report in the context of FinOps examinations, where CIRO will be asking dealers about the use of AI in their daily operations, as well as about their operational controls to ensure that the AI is working as anticipated. Dealers are also reminded to consider whether their use of AI is a material business change that would require advance notice to CIRO.

Various trading concerns were also raised involving inadequate policies and procedures to prevent extended failed trades, manipulative trading activity across asset classes and ensuring that the correct client identifiers are included for listed securities.

No report is complete without a reference to the Client Focused Reforms Phase 2 Sweep Report, and dealers are strongly encouraged to review that report against their own internal practices. For BLG’s take on the sweep report, please refer to our Insight here. The Business Conduct Compliance (BCC) team expects to focus on whether dealers have taken steps to action any deficiencies described in the report that may be applicable.

The BCC team also noted in its exams that the most common deficiency related to anti-money laundering compliance is the failure by dealers to effectively conduct the required 2-year AML compliance effectiveness review, and that the BCC team will continue to focus on the quality of these reviews moving forward.

Other notable findings in BCC examinations included concerns about supervisory practices particularly with respect to reviewing outside activities for potential conflicts, and client communications through non-approved channels. Issues were also identified with respect to referral arrangements, in that dealers did not conduct effective due diligence prior to onboarding referral parties and did not provide the requisite client disclosure at account opening prior to delivering services.

CIRO dealers should review the Report to help set their own individual compliance priorities in the year ahead.

Updating the playbook: CSA’s amendments to investment fund continuous disclosure

The Canadian Securities Administrators (CSA) published final amendments relating to the modernization of the continuous disclosure regime for investment funds, impacting National Instruments such as National Instrument 81-101 Mutual Fund Prospectus Disclosure, National Instrument 81-102 Investment Funds, National Instrument 81-106 Investment Fund Continuous Disclosure, and National Instrument 81-107 Independent Review Committee for Investment Funds.

The changes made are intended, in part, to improve disclosure and reduce the regulatory burden of certain investment fund continuous disclosure requirements. As an example, the CSA has eliminated some class/series level disclosures from the required investment fund financial statements and made certain changes to Form 81-101F1 Contents of Simplified Prospectus.

New exemptions will also come into effect providing relief from certain conflict of interest reporting requirements, in particular related party transactions, provided similar requirements are satisfied through the filing of a new standardized form less frequently than what is required to be filed in the current form of reports. For more information on these requirements and transition periods, please see BLG’s in-depth article here.

Of note, the CSA has postponed replacing the existing annual and interim Management Report of Fund Performance (MRFP) with a new annual and interim Fund Report. In addition, the CSA is not currently adopting its proposals relating to use of the term Fund Expense Ratio (FER), which would combine both the management expense ratio and the trading expense ratio of a fund. The notice of the amendments stated that the CSA is working on a more streamlined Fund Report, and they expect to have a subsequent publication relating to these forms and the FER in the future.

Dropping the double-double: CIRO proposes to retire dual registration

On February 12, the Canadian Investment Regulatory Organization (CIRO) proposed to end the dual registration model, enabling investment dealers to operate a mutual fund division without separate registration as a Mutual Fund Dealer. The change is anticipated to facilitate advisor mobility and give firms the ability to operate both types of business without requiring mutual fund only advisors to upgrade their proficiencies to those of an advisor at an Investment Dealer Member.

To accomplish this, CIRO proposes to repeal the proficiency upgrade requirement for mutual fund-only advisors who work at an Investment Dealer Member and codify exemptive relief conditions under which existing dual-registered firms operate. Currently, a Registered or Investment Representative dealing only in mutual funds who is employed by an Investment Dealer only is required to upgrade to meet the proficiency requirements applicable to either a Registered or Investment Representative within 270 days of approval.

Comments on the proposal are due on June 12, 2026, and should be considered together with the Proposed CIRO Rules (the consolidated investment dealer and mutual fund dealer rules) for a complete picture of the potential impact on firms and their advisors.

Reading the defence: The 2025 systemic risk report

The Canadian Securities Administrators Systemic Risk Committee (SRC) has released its 2025 Annual Report on Capital Markets (Report), which includes an analysis of capital market trends and vulnerabilities, as well as the CSA’s mitigation efforts, confirming that risk is still very much present in the Canadian arena.

Of particular interest to registrants, the Report indicates that while AI can reshape financial systems, being used by major players for asset allocation, fraud detection and algo trading, it also brings risks. For example, concentration risk resulting from a small number of firms that control cloud infrastructure, GPU computing, and AI models. The expanded use of AI by financial institutions and other market participants also increases cyber risks, while at the same time, AI is being used to scale cyber attacks. It is specifically noted that regulators must balance supporting growth in AI while avoiding AI becoming a source of financial instability.

The Report also observes that, as the role of stablecoins and crypto assets tied to a reference value take on a more significant role in money markets, there may be a need for greater regulatory oversight through stablecoin regulatory frameworks.

Some private asset funds appeared to be under liquidity pressure in 2025, leading in part to the CSA’s proposals on liquidity risk management (LRM), which BLG wrote about here. In fact, the Report noted that aligning redemption terms with portfolio liquidity would help reduce mismatches in liquidity, a core principle of the CSA’s LRM proposals. As a reminder, these proposals would apply to all investment funds, including those offered on a prospectus-exempt basis. The Report closes with a note that additional information available to regulators on private asset fund-type entities would give a better view of their size, exposures, leverage, and liquidity, meaning potential future regulation may be on the horizon.

Full court press: Changes to the New Brunswick Securities Act

Key changes are in the works to the New Brunswick Securities Act which registered firms in the Province should note. An Act to Amend the Securities Act received Royal Assent from the Province on December 12, 2025. The Financial and Consumer Services Commission of New Brunswick will be granted additional enforcement tools, such as improved safeguards for confidential informants and whistleblowers, the ability to impose materially higher fines (from $1 million to $5 million) aimed at promoting compliance and discouraging misconduct, and broader powers to impose administrative penalties by notice for issues that do not necessitate a formal hearing.

There will also be a new explicit prohibition on taking measures of reprisal against another person, because that the other person has, in good faith, among other things sought advice about making a disclosure or expressed an intent to make a disclosure of wrongdoing or made a disclosure of wrongdoing to the Commission.

In addition, new provisions will regulate misleading promotional activities, which include a representation that by itself or together with one or more other activities encourages or reasonably could be expected to encourage a person (a) to purchase, not purchase, trade, or not trade a security, or (b) to trade or not trade a derivative. Among other prohibitions, no person will be permitted to make a statement that the person knows or ought reasonably to know contains a misrepresentation while engaging in a promotional activity.

There will also be enhanced fund-on-fund investment restrictions like those imposed by other provinces, as well as a framework for dispute resolution services.

Interestingly, the Executive Director may, having regard to a registrant’s or issuer’s past conduct with respect to the use of advertising and sales literature, order that the registrant or issuer file, at least seven days before it is used, copies of all advertising and sales literature which the registrant or issuer proposes to use in connection with trading in securities or derivatives.

Supporting rules for these amendments will be drafted in future, with opportunities for stakeholder feedback on proposed changes at that time.

Don’t miss the buzzer: Change of auditor notice requirements

A friendly reminder to registrants of obligations under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) to file a written notice with regulators of the appointment of a new auditor or when an auditor resigns or is terminated on Form 33-109F5. There is also a requirement to file a copy of the direction to the new auditor to conduct required audits, and for this set of requirements to be set out in a registrant’s policies and procedures.

The Executive Director of the British Columbia Securities Commission (BCSC) recently imposed an administrative penalty on a registrant based in the province for failing to comply with these requirements, including with respect to the missing information in the registrant’s policies and procedures manual.

If you have any questions regarding your firm’s registration information on file that may require updating, please don’t hesitate to contact us.

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