On April 26, 2022, the Ontario Securities Commission (OSC) published its Statement of Priorities [PDF] (the Statement) for the fiscal year ending March 31, 2023. As in previous years, the Statement provides important insights into the OSC’s assessment of the most pressing issues facing the Ontario capital markets to be addressed by the regulator.
The Statement begins by setting out four broad strategic goals on which the OSC intends to focus. For 2022-2023, these goals are:
Goal 1: Promoting confidence in Ontario’s capital markets
Promoting confidence in Ontario’s capital markets is a core mandate of the OSC. Accordingly, this goal receives the lion’s share of the focus in the Statement. The initiatives that the OSC will be prioritizing in 2022-2023 include:
- Sustaining strong core regulatory operations: The Statements state that the OSC continues to be committed to its fundamental core regulatory operations work while, at the same time, continuing to streamline regulation with a focus on reducing regulatory burden without compromising investor protection.
- Strengthening investor dispute solution services: The Statement suggests that the OSC will work with the Canadian Securities Administrators (CSA) to increase oversight of the Ombudsman for Banking Services and Investments (OBSI), provide the OBSI with the authority to make binding decisions, and increase the limit on allowable OBSI claims (the limit is presently $350,000).
- Continuing efforts to implement a single self-regulatory organization (SRO): As we have previously reported, reform of the Mutual Fund Dealers Associations (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC) is a longstanding goal of the CSA. The Statement affirms the OSC’s commitment to streamlining these organizations and establishing a new SRO in line with the recommendations of CSA Position Paper 24-404.
- Strengthening oversight of crypto asset trading platforms (CATPs) and other dealers: As we have previously reported, 2021 was a landmark year for crypto asset regulation and enforcement activity in Ontario. In the Statement, the OSC commits itself to continuing to pursue non-compliance among CATPs, targeting misleading advertising among crypto market participants, and striking “an appropriate balance” between financial innovation and investor protection.
- Developing a rule setting out climate change-related disclosures for reporting issuers: We have previously reported on the CSA’s efforts to establish a National Instrument that would require reporting issuers (other than investment funds) to disclose certain climate change-related information. The Statement affirms the OSC’s commitment to proceeding with this framework. The final version of the proposed instrument is expected to be published in the coming months.
- Developing total cost reporting disclosure for investors: In collaboration with efforts taken by the SROs, the Canadian Council of Insurance Regulators (CCIR) and the regulatory bodies in the CCIR, the OSC will develop a form of total cost reporting disclosure for securities registrants to help investors better understand the ongoing costs of owning investments, including the total amount and impact of management fees charged by mutual funds and segregated funds.
Goal 2: Modernizing the regulatory environment
The Statement also emphasizes the OSC’s commitment to modernizing its “regulatory environment” to streamline the process by which the OSC develops new policies and to reduce the burdens of compliance on market participants. The priorities identified under this goal in the Statement include:
- Streamlining periodic disclosure requirements for reporting issuers: In May 2021, the CSA proposed certain changes to the periodic disclosure requirements for reporting issuers, which would include eliminating streamlining or reducing requirements which are no longer considered necessary. The Statement suggests that the OSC will make finalization of this framework a priority in 2022-2023.
- Develop an access equals delivery (AED) model: The CSA has proposed an AED model whereby providing electronic access to documents such as prospectuses would constitute delivery of them, provided investors are notified of their existence. It is hoped that this will reduce undue regulatory burden and related costs for issuers. The Statement confirms the OSC’s intention to implement this model in 2022-2023.
Goal 3: Facilitating financial innovation
The third goal articulated in the Statement is facilitating financial innovation in Ontario’s capital markets. The Statement suggests that this will be accomplished through “flexible and proportional regulatory approaches and enhanced support for novel and innovative businesses.” The priorities identified under this goal include increased engagement with novel businesses and the development of the OSC’s TestLab, whereby businesses can test innovative solutions and new approaches to regulation.
Goal 4: Strengthening the OSC’s organizational foundation
The fourth goal articulated in the Statement concerns improvements to the OSC’s internal polices, such as technological modernization and the OSC’s hybrid-working policies. The Statement also articulates the OSC’s commitment to promoting diversity and inclusion.
The Statement further confirms the OSC’s commitment to launching SEDAR+, which is the long-awaited replacement for the CSA’s legacy platform for filing, disclosing and searching for information in Canada’s capital markets. The Statement suggests that SEDAR+ will launch in 2022-2023. The OSC will also make continued use of the Market Analysis Platform (MAP), a critical enforcement tool used to analyze complex market abuse cases. MPA will continue to evolve to integrate additional data sets beyond equity trades, such as exchange-traded derivatives and more sophisticated analytics.
The annual publication of statements of priorities is an important tool for promoting the transparency and accountability of capital markets regulators. The OSC’s Annual Report [PDF] includes a “report card” by which the OSC assesses its performance against the goals identified in the Statement of Priorities.
The Statement is also an important means by which the OSC aligns its priorities with those of capital markets participants. After publishing a draft of the Statement in December 2021, the OSC received ten comment letters from diverse stakeholders, including industry groups, investment funds, and public interest groups.