The Ontario Securities Commission (OSC) released its draft Statement of Priorities for 2016-2017. The comment period ends May 9th.
Investor Protection Priorities
Advance Best Interest Standard – The OSC will recommend and conduct consultations on regulatory provisions to create a “best interest” standard for advisors. This standard is controversial for some industry participants but the OSC is committed to it. The OSC will also continue to focus on advisor compensation practices and identify those that are inconsistent with a “best interest” standard.
Compensation Arrangements in Mutual Funds – The OSC will regulate embedded commissions and other types of compensation practices and develop regulatory proposals to address conflicts of interest created by investment fund compensation practices.
Increased Oversight of Exempt Market – The OSC will increase oversight of market participants who rely on recently expanded capital raising exemptions in Ontario (e.g. the crowdfunding exemption, offering memorandum exemption and the modernized prospectus-exempt rights offering regime), by creating a risk-based supervision program for registrants, issuers and portals using the new exemptions. The OSC will use its 2016 Risk Assessment Questionnaire (RAQ) to gather information on the use of the new exemptions. The OSC also aims to publish a report on exempt market status based on data collected.
Investor Protection for Seniors – The OSC will improve outreach and education for senior and vulnerable investors by responding to issues identified through targeted research, seminars and roundtables. The OSC Investor Office will use the information gathered to develop solutions designed to reach at-risk investor groups, specifically, seniors, millennials and new Canadians.
Compliance & Enforcement Priorities
Effective Inspections, Supervision and Oversight – The OSC will conduct targeted compliance reviews of high-risk and new registrants, including online advice and portal business models.
Enforcement Against Fraud and Other Serious Violations – The OSC plans in the Spring of 2016 to implement its Whistleblower Program and establish a staff to supervise it.
OTC Derivatives Priorities
Continue Development and Implementation of OTC Derivatives Regulation – The OSC will develop and implement a regulatory program for effective oversight and supervision of the OTC derivatives market.
Enhance Oversight of Systemic Risk – The OSC will continue to work with domestic and international regulators in order to remain informed of emerging and systemic risks.