Initiatives of interest to funds and managers feature prominently in the Ontario Securities Commission’s 2017-2018 Draft Statement of Priorities (OSC Notice 11-777). These include new initiatives, such as a welcome proposal to reduce redundant and ineffective disclosure and reporting requirements for investment funds, as well as ongoing initiatives such as the development of a “best interest standard”.
The Draft Statement, which we previously discussed in a more general context, sets out the priority actions that the OSC will take in 2017-2018 to address each of its regulatory goals. It was published on March 23, 2017, with a 60 day comment period as noted below.
For funds and managers, the most important new OSC priorities include:
- Red tape reduction, through the elimination of redundant and ineffective disclosure and reporting requirements for investment funds. The OSC will consider options for streamlined disclosure while determining potential impacts on stakeholders.
- FinTech innovation, to be supported through OSC LaunchPad by:
- Engaging with the FinTech community to identify and understand any regulatory barriers, trends and gaps.
- Offering direct support to eligible businesses in navigating the regulatory environment.
- Integrating findings into the regulation of similar business models going forward.
- Prospectus and continuous disclosure reviews. Targeted reviews of investment funds and structured products as they respond to market developments and engage in product innovations.
- Effective oversight of registrants, with a focus on new registrants, higher risk firms and emerging risks, including:
- Focused reviews targeting fund expenses and funds with large holdings in illiquid securities.
- Reviews of high-risk firms and continuing the “Registration as a First Compliance Review” program.
The OSC’s key continuing initiatives include:
- Best Interest Standard: Working on regulatory reforms that will improve the advisor/client relationship by creating a “best interest standard” (this will include targeted regulatory reforms and/or guidance under NI 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations.)
- Discontinuing embedded commissions:Defining regulatory action needed to address embedded commissions through the review and evaluation of stakeholder feedback received on CSA Consultation Paper 81-408 – Consultation on the Option of Discontinuing Embedded Commissions.
- Ombudsman for Banking Services and Investments (OBSI): Addressing the independent evaluator’s recommendation that OBSI be better empowered to secure redress for investors.
The OSC has invited anyone with an interest in these matters to make written submissions no later than May 23, 2017.