On March 29, the Ontario Securities Commission (OSC) released its draft 2018-2019 Statement of Priorities. Of particular interest to the asset management sector, the OSC plans to:

  •  Publish rule proposals to create a best interest standard; embed a new client/advisor standard in core, targeted reforms to National Instrument 31-103 Registrant Requirements, Exemptions and Ongoing Registrant Obligations; and initiate work on remaining reforms such as titles and proficiency requirements;
  • Publish recommendations and then adopt policies on embedded commissions to mitigate certain investor protection and market efficiency issues;
  •  Develop with regulatory colleagues a regulatory framework to address issues of cognitive impairment and financial exploitation;
  •  Conduct targeted compliance reviews focusing on:

o New registrants and high risk, problematic (for cause), large/high impact firms identified from the 2018 Risk Assessment Questionnaire;

o Registrants’ sales practices; and

o Emerging risk areas including evolving business models, online advice and expansion of the exempt market;

  •  Support fintech innovation and capital formation while emphasizing regulatory compliance, through the OSC Launchpad, and work with the Financial Services Regulatory Authority on the Ministry of Finance’s SuperSandbox;
  •  Continue identifying potential regulatory gaps arising from crypto-currency, initial coin and similar offerings (ICOs) and blockchain developments, which can raise fundamental issues about the scope of securities regulation, and enhance guidance on when ICOs involve securities;
  •  Implement the orderly transfer of syndicated mortgage investments to OSC oversight, including development of a plan for the registration and oversight of market participants active in offering syndicated mortgages;
  •  Draft amendments to rules to reduce investment fund disclosure requirements;
  •  Analyze the impact of the Client Relationship Model (CRM2) and Point of Sale (POS) initiatives on investors and the investment industry to determine whether these policy projects achieved their goals;
  • Enhance the over-the-counter (OTC) derivatives regulatory regime by, among other things, publishing a derivatives dealer registration rule, hosting a business conduct roundtable, and republishing the derivatives business conduct rule for comment;
  • Conduct reviews of compliance with the OTC derivatives rules for trade reporting, clearing, segregation and portability; and
  •  Promote cybersecurity resilience through greater collaboration with market participants and other regulators on risk preparedness and responsiveness.