Canadian Securities Administrators and Canadian Investment Regulatory Organization issue guidance on marketing and sale of foreign-listed ETFs

The Canadian Securities Administrators and the Canadian Investment Regulatory Organization have issued guidance on industry practices for marketing and selling exchange-traded funds that are listed on foreign exchanges but not in Canada. The guidance responds to calls for clearer disclosure while maintaining Canadian investors’ access to foreign ETFs through registered dealers. Active marketing or promotion of a foreign ETF in Canada may trigger prospectus requirements and, in some jurisdictions, investment fund manager registration requirements. The guidance also clarifies how know-your-product, know-your-client and suitability obligations apply to foreign ETF sales, and encourages order execution-only dealers to improve pre-purchase disclosure for investors. The authorities will monitor developments to assess whether further policy measures are needed.