Canadian Securities Course (CSC) Level 2 Practice Exam

Which organization is responsible for overseeing mutual fund regulations?

1. SRO

2. IIROC

3. MFDA

4. 81-101 prospectus

The correct answer is: MFDA

The mutual fund industry in Canada is primarily regulated by the Mutual Fund Dealers Association (MFDA). The MFDA is a self-regulatory organization (SRO) that focuses on mutual fund dealers and their representatives, ensuring compliance with the applicable regulations, standards, and practices to protect investors and maintain the integrity of the mutual fund sector. The MFDA sets rules that govern the conduct of its members, which include mutual fund dealers, and provides oversight to help ensure that investors are treated fairly. This includes monitoring sales practices and ensuring that disclosures regarding mutual fund products are made clearly to investors. Other organizations such as the Investment Industry Regulatory Organization of Canada (IIROC) play a role in regulating investment dealers and trading activity in securities more broadly, but their primary focus is not exclusively on mutual funds. The term "SRO" refers to self-regulatory organizations in general, which encompasses various entities including both the MFDA and IIROC, but does not specifically pinpoint the organization responsible for mutual funds. The 81-101 prospectus relates to regulations concerning disclosure documents for mutual funds but does not oversee regulations as an organization. Thus, the MFDA stands out as the specific body mandated to oversee mutual fund regulations, making it the correct choice in this context.