In January, we reported that the Ontario Securities Commission (OSC) was seeking feedback on steps that it can take to reduce regulatory burdens and improve the investor experience. Its request for comment triggered a tsunami of comment letters, and now the OSC and its staff are focused on assessing that feedback, collecting additional feedback through further engagement, determining short, medium and long-term goals for reducing regulatory burdens, deciding on priorities, and establishing measurement criteria.
A. Our Takeaways from the Burden Reduction Roundtable
On March 27, AUM Law attended the OSC’s first regulatory burden roundtable, where stakeholder representatives and regulators discussed regulatory burdens and their impact and considered how to measure, set priorities for and maximize the impact of burden reduction initiatives. The roundtable was more of a therapy session than a forum for generating new ideas beyond what was already set out in the comment letters. Nevertheless, we gleaned a few takeaways from the event including the following:
- The concerns about regulatory burdens affecting the asset management sector and participants in the exempt market got a good hearing. The regulators acknowledged that undue regulatory burdens adversely affect the investor experience, either by making products and services more costly and/or harder or impossible to access.
- Regulated market participants expressed their concern about reform proposals that take too long to get from concept to finalization, as they introduce too much uncertainty into firms’ operations. Some panelists stressed that if regulators focus more attention on defining the regulatory problem and desired solution (in consultation with stakeholders) at the outset, they could move from proposed to final rules faster and with better outcomes.
- Panelists representing venture capital issuers and registrants reiterated that they want a stronger relationship with their regulator, where regulatory staff are willing to offer advice, deliver a consistent approach to regulatory issues, and facilitate cooperation with other regulators to reduce regulatory burdens (e.g. in the timing of audits).
- The OSC and other regulators at the event were pleasantly surprised that, in general, commenters aren’t using this initiative as an opportunity to chip at investor protection.
B. The OSC’s Next Steps
The OSC has two more roundtables scheduled for May. On May 6, the session will focus on regulatory burden issues relating to registration, compliance and investment funds. On May 27, the session will focus on trading, marketplaces, issuer requirements and derivatives. OSC staff also indicated that they are accepting additional submissions.
After OSC staff have collected and assessed the feedback that they receive from the submission process, roundtables and other discussions with stakeholders, they will publish a report to outline their action plan and analysis of expected impacts. There is no deadline set for this step, but given the progress they have made so far, we believe a report could be published as early as late summer.