The Canadian Securities Administrators (CSA) has published a consultation paper on the exchange-traded fund (ETF) regulatory framework, setting out proposed approaches to better tailor investment fund rules to ETF-specific features such as primary market creations/redemptions, secondary market trading, and the arbitrage mechanism. The paper follows a CSA review begun in 2023 and is framed against continued Canadian ETF growth, with assets under management reaching CAD 518 billion by end-2024. The consultation proposes requirements for ETF managers to formalize key operational controls and disclosures. This includes written policies and procedures for creations and redemptions (covering, among other items, basket construction, custom baskets, fees and cash collateral), and new website disclosure of standardized “Trading and Pricing Information” with daily NAV and closing price comparisons, historical premium/discount presentation, and a rolling 30-day median bid-ask spread. It also proposes heightened disclosure when premiums/discounts exceed 2% for more than seven consecutive business days (including contributing factors, retained for at least one year), plus amendments to the ETF facts document to direct investors to the website metrics. Further proposals would require managers to monitor arbitrage effectiveness and liquidity provision against documented metrics and parameters; increase transparency and standardization around authorized participant (AP) arrangements by defining “authorized participant”, requiring written AP agreements, and filing AP and designated broker agreements as material contracts with prospectus disclosure; and require equal, simultaneous provision of valuation and creation/redemption information to all APs. The paper also consults on whether ETFs should have a minimum of two APs, how portfolio information is provided for arbitrage versus to the public (including a proposed “daily transparent ETF” concept and disclosure of each ETF’s portfolio information disclosure policy), the implications of offering exchange-traded and unlisted series in the same fund, and investor access to foreign ETFs (including U.S. ETFs via brokerage accounts and indirect exposure through fund holdings). Comments close on October 17, 2025. The CSA will assess feedback and, where it concludes rules are necessary, expects to publish proposed requirements for comment through the rule-making process, including potential amendments to National Instrument 81-102 Investment Funds and National Instrument 81-106 Investment Fund Continuous Disclosure.

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