Statement of Priorities for FY2019-2020 renews focus on reducing regulatory burden for issuers to ensure Ontario is “open for business”

  • The Ontario Securities Commission (OSC) recently released a draft Statement of Priorities for its upcoming fiscal year ending March 2020.
  • While the draft Statement of Priorities shares some of the same broad goals of those of years past, the main theme for the upcoming fiscal year is supporting the Ontario Government’s priorities of ensuring the province is “open for business” and building more efficient regulators.
  • The OSC is accepting comments on the draft Statement of Priorities until May 27, 2019.

Regulatory Goals and Environment

The OSC has identified four key priorities for the upcoming fiscal year, namely: (i) promoting confidence in Ontario’s capital markets, which includes continuing policy work on mutual funds embedded commissions, expanding systemic risk oversight for derivatives, and supporting the transition to the Capital Markets Regulatory Authority; (ii) reducing regulatory burdens; (iii) facilitating financial innovation by engaging with the Fintech sector and implementing an alternative funds regime; and (iv) strengthening the OSC’s organizational foundation.

Regulatory Reduction

On the topic of regulatory reduction, the OSC plans to undertake a number of initiatives, including:

  • proposing amendments to streamline and eliminate duplication in financial statements, management disclosure and analysis, and annual information forms, including by potentially consolidating these disclosures into one report;
  • considering modification to business acquisition report requirements;
  • codifying routinely-granted exemptive relief, and considering whether other changes would be appropriate to “liberalize the current approach”;
  • identifying opportunities to “enhance” the electronic delivery of documents; and
  • identifying an alternative and streamlined offering regime for reporting issuers.

According to the OSC, the goal of these changes would be, in part, to make it easier for companies to participate in capital markets while maintaining investor protection.

Fintech

In regards to engaging with the Fintech and start-up sector, the OSC states that it intends to, among other things, support emerging businesses, examine the unit creation process for the ETF market, and publish a CSA/IIROC consultation paper on the regulatory framework for crypto-asset trading platforms. Ultimately, the OSC seeks to make greater use of “creative regulatory approaches” in order to provide “an environment for innovators to test their products, services and applications”, while reducing the time-to-market of novel fintech businesses.

Derivatives and Other Priorities

The OSC also seeks to expand systemic risk oversight of derivatives. Among other things, the OSC intends to publish a proposed business conduct rule and develop a registrant regulation framework, develop a compliance review program for derivatives market participants, and improve the quality and completion of trade reports. These planned actions are intended to provide a framework for analyzing over-the-counter derivatives data for systemic risk oversight and to provide higher quality trade reports.

Of particular note, the draft Statement of Priorities omits some of the key priorities identified last year. Notably absent is discussion of the effectiveness of disclosure requirements regarding women on boards and in executive officer positions. That said, the OSC intends to publish a progress report on last year’s priorities in June, which may provide further information on these topics. 

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