The Canadian Securities Administrators group has pitched changes to National Instrument 81-102 Investment Funds and the accompanying policy related to liquidity risk management for all investment funds.
The proposed reforms center on funds’ LRM frameworks, operational LRM matters, and LRM framework supervision. They build on the CSA’s 2020 LRM guidance, which was published in CSA Staff Notice 81-333.
The pitch codifies the guidance and sets specific mandates for policies and procedures, oversight, operations, and stress testing. The initiatives seek to limit the risk of liquidity crises that would affect the overall financial system.
The proposals also aim to align the country’s LRM framework with major LRM regulatory developments worldwide and are in line with CSA’s initiatives to enhance Canada’s investment fund practices.
“A robust liquidity risk management framework is essential to protect investors and maintain confidence in our capital markets. These proposed changes will help ensure that investment funds are better equipped to manage liquidity under various market conditions, safeguarding both redeeming and remaining investors,” said CSA chair Stan Magidson, who is also Alberta Securities Commission chair and CEO, in a statement.
The CSA presented a consultation paper focused on LRM tools, the liquidity classification of underlying portfolio assets, and LRM-related regulatory disclosure and data. The organization requested input on possible further amendments to the LRM regulatory framework in the paper.
The window for feedback provision shuts on March 27, 2026 and is open to stakeholders for 120 days. The notice outlines how people can submit input.
The CSA is the council of the securities regulators of Canadian provinces and territories. It coordinates Canadian capital market regulation. Last month, the organization also asked for input on proposed changes to National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure, which focused on the International Financial Reporting Standards Accounting Standard, IFRS 18 Presentation and Disclosure in Financial Statements.