The Ontario Securities Commission (OSC) has released its most recent draft statement of priorities (SoP) in OSC Notice 11-797 – Request for Comments Regarding Statement of Priorities for Financial Year to End March 31, 2024.

The draft SoP is open for comment until December 22, 2022, and describes the OSC's key priority initiatives, broken down into one of the following four strategic goals for the year:

  • Building Trust and Fairness in Ontario's Capital Markets;
  • Strengthening Investor Safeguards;
  • Adapting Regulation to Align with Innovation and Evolving Markets; and
  • Enabling the Organization to Deliver Effective Regulation.

A key priority under the first goal relates to advancing work on environmental, social, and governance (ESG) disclosures for reporting issuers. In addition to engaging in further targeted consultations to inform their work, including with Indigenous organizations, staff will complete their focused review of ESG disclosures by investment funds, and publish a summary of findings and any guidance updates by the end of 2023. With respect to the Total Cost Reporting (TCR) proposals that were released in April 2022, the draft SoP notes that the Canadian Securities Administrators and the Canadian Council of Insurance Regulators are moving forward with final TCR amendments. Another key priority under this goal relates to the OSC's ongoing review of diversity on boards and in executive positions. In the first quarter of fiscal 2023-2024, the OSC intends to publish for comment proposed changes to the disclosure requirements on diversity, board renewal and the director nomination process.

Also under the first strategic goal, the OSC will continue to enhance the domestic derivatives oversight framework. Actions next year will include finalizing and implementing the derivatives dealer business conduct rule by the third quarter of the OSC's fiscal year. With respect to the new consolidated SRO (New SRO), the OSC intends to initiate the work required to assess incorporating other registration categories into the New SRO, including Portfolio Managers, Exempt Market Dealers and Scholarship Plan Dealers.

As noted above, the second strategic goal set out in the draft SoP is to strengthen investor safeguards. One key priority under this goal relates to the Ombudsman for Banking Services and Investments (OBSI). As indicated earlier this year by press release, the CSA is developing a proposal that will provide OBSI with binding decision making authority. The draft SoP notes that actions in 2023-2024 will also include determining next steps in response to the independent evaluation of OBSI's investment mandate together with the CSA, other members of the Joint Regulators Committee and OBSI. A stated expected outcome of these proposals will be that investors do not experience undue pressure to accept offers to settle claims for less than they are entitled to receive. As an aside, we note that OBSI stated in response to its external review recommendations that it intends to consult on its loss calculation methodology for exempt market product cases in 2023.

The third stated goal involves aligning regulation with innovation and our evolving markets. The first key priority continues to refer to the crypto asset sector. Actions next year will involve continued application of regulatory obligations to crypto firms while completing the registration or approval process, including obtaining pre-registration undertakings from firms pending completion of the registration or approval process. Actions also include implementing and refining the program for ongoing oversight of crypto asset trading platforms. A stated action may also specifically impact investment funds, as the regulators intend to develop a regulatory framework with appropriate safeguards for how investment funds invest in crypto assets.

In connection with the existing CSA work on streamlining disclosure requirements for both investment fund and corporate finance reporting issuers, one planned action for the next fiscal year is to review the requirements in National Instrument 81-106 Investment Fund Continuous Disclosure and other disclosure requirements to publish rule amendments in December 2023, focusing on Management Reports of Fund Performance and non-IFRS content in issuers' financial statements. Regarding the delivery options for continuous disclosure materials, final amendments are expected to be published to allow for an access-based instead of delivery model for investment fund issuers continuous disclosure filings by December 2023. The legacy CSA filing systems are also expected to be replaced over time by SEDAR+, beginning with Phase 1 in mid-2023.

Under the final strategic goal of enabling the organization to deliver effective regulation, the OSC continues to review strategies to attract and retain talent, execute on its inclusion and diversity strategy, and integrate data and processes to support effective decision making and risk monitoring. The latter key priority includes rolling out the OSC's external portal, to streamline participants' interaction with OSC staff.

Readers may be interested in understanding that this is the first SoP published by the OSC under its new structure (separate tribunal, separate roles for the Chair and the CEO of the OSC).

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