TCR are amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registration Obligations (“NI 31-103”) and its companion policy relating to enhanced cost disclosure reporting requirements that requires firms to provide investors with a clear and detailed view of the fees and expenses attached to their investments. These include management fees, transaction costs and administrative expenses.

In April 2023, the Canadian Securities Administrators (CSA) and the Canadian Council of Insurance Regulators (CCIR) announced their adoption of TCR enhancements, building upon an existing TCR mandate from 2017. The goal of the TCR enhancements is to improve transparency to ensure investors are fully aware of all costs associated with investment and segregated funds, so they know what they are paying for and can make better-informed investment decisions. These enhancements impact registered dealers, advisors and investment fund managers, requiring them to include additional information on embedded fees in a fund’s annual report.

Canadian securities registrants and insurers will have to deliver the first round of compliant annual reports to clients and policyholders for the calendar year ending December 31, 2026.

Typically, there are different types of fees attached to an investment that an investor pays, such as a fee that covers the cost of services an investment servicer provides. These are sometimes referred to as “embedded fees” because they are not always itemized to the investor and are instead baked into the total cost.

Under the TCR enhancements, firms are required to report to investors the Fund Expense Ratio (FER), which is made up of two common fees:

• Management expense ratio (MER) – The total cost of managing an investment fund, including management fees, operating costs and taxes.
• Trading expense ratio (TER) – The percentage of a fund's assets used to cover trading commissions when a fund's portfolio management team buys and sells equities (stocks). It reflects the cost of trading activity within a fund.

Investors cover these added costs, ultimately reducing their return on an investment. It is critical for investors to be aware of these costs because they directly impact their bottom line. TCR enhancements aim to provide investors with transparency into these expenses.

The new TCR mandate is an enhancement that builds on Client Relationship Model 2 (CRM2), a 2017 regulatory framework with a similar objective. CRM2 was also implemented to deliver greater transparency to investors, but the TCR enhancements – also referred to as CRM3 – takes this framework a step further.
CRM2 focused solely on disclosing fees advisors earn in addition to client account performance. TCR enhancements expand on investor transparency by requiring the disclosure of all fees attached to investment funds.

To meet compliance standards, firms will have to continuously track and keep records of these added costs to include in annual reports for investors.

Investors will gain greater visibility into the charges embedded in each of their investments, and as a result can better gauge the value of any single investment to make more informed and educated decisions. Investors will not be surprised at their total expenses since investment fees will not be hidden.

The TCR enhancements mandate will come into effect on January 1, 2026, which will require Canadian investment firms to provide the first enhanced annual reports to clients and policyholders for the calendar year ending December 31, 2026.

The TCR enhancements were announced by the CSA and CCIR on April 20, 2023, giving Canadian investment firms over two years to prepare for it.

Transparency is not just a growing trend, but an expectation among investors. In the US, investment firms already adhere to the regulatory requirements of the Securities and Exchange Commission (SEC), which includes quarterly reporting of performance, in addition to a breakdown of fees and expenses. These US requirements are similar to the new Canadian TCR enhancements, but US firms provide transparency to US investors regardless of TCR. US firms working with Canadian investors will have to abide by TCR enhancements as well.

The new TCR enhancements require Canadian investment firms to obtain and track information regarding account expenses on a regular basis before reporting it to clients. To help firms comply with this new requirement, we are offering a TCR service for Canadian clients with open- and closed-end mutual funds, segregated funds and ETFs. Through this new service, we will act as an accounting and administrative agent for these firms to easily comply with the TCR enhancements and build deeper trust with their investors.

State Street’s TCR service enhances financial reporting for clients by automating the daily delivery of MER, TER and DCF data by series to key vendors. These vendors act as centralized data hubs, connecting manufacturers, distributors and service providers to streamline the buying, selling and transfer of investment funds.

Through this service, State Street assumes responsibility for collecting, reporting and distributing the required data, helping you meet TCR compliance obligations with ease. By expanding your partnership with State Street, you benefit from a simplified and more efficient compliance process. This solution is designed to reduce costs associated with IT licensing, implementation and staffing, enabling investment firms to meet regulatory demands more effectively.

Our new TCR service is available to our clients in Canada since the second half of 2025 and will be ready for FER and DCF reporting on January 1, 2026, when the Canadian TCR enhancements take effect. This service will serve as an important tool for clients to adhere to the mandate’s data calculations and reporting requirements. Staying ahead of this new mandate will allow firms to build trust with investors by exercising transparency and demonstrating compliance.

Your first point of contact should always be your State Street representative.