The Ontario Securities Commission (“OSC”) recently issued its 2021-2022 Draft Statement of Priorities for comment (the “Draft Statement”). The document sets out the priority initiatives that the OSC will pursue for the period from April 1, 2021 through March 31, 2022 in support of its four strategic goals, which are to: promote confidence in Ontario's capital markets; reduce regulatory burden; facilitate financial innovation; and strengthen the OSC's organizational foundation.
Overview of the OSC's Proposed Regulatory Priorities
The draft priorities largely reflect the effects of the COVID-19 pandemic on Ontario's capital markets and the regulator's efforts to modernize regulatory processes and create more flexible options for issuers and investors during this time. The Draft Statement also notes that the OSC will review and consider the recommendations from the Ontario Government's Capital Markets Modernization Taskforce (the “Taskforce”) and will adjust its priorities to accommodate any changes adopted by the Ontario Government.
The draft priorities include the following:
- Implement Mutual Fund Embedded Commissions Policies and Ontario Regulatory Response to Deferred Sales Charges
- Complete Actions Identified in the OSC Burden Reduction Plan
- Implement Multi-Year Plan for Office of Economic Growth and Innovation
- Engage with Fintech and Support Innovation in Capital Markets
- Continue Redevelopment of CSA National Systems
- Modernize OSC Technology Platform
- Foster Inclusion and Diversity
- Continue to Monitor and Adapt to the Impacts of the COVID-19 Pandemic
In furtherance of its goals to reduce regulatory burden and facilitate financial innovation, the OSC will be prioritizing the implementation of its newly minted Office of Economic Growth and Innovation (the “Innovation Office”). The Innovation Office will have two main priorities in 2021-2022. First, it will expand and enhance the work of OSC LaunchPad by providing innovative Fintech businesses with flexible solutions to meet their regulatory obligations. Second, the Innovation Office will lead the OSC's efforts to complete the recommendations set out in its Burden Reduction Plan, including delivering new tools to assist navigation of regulatory processes, ensuring less duplication of regulatory requirements, and providing rules, guidance and information in more digestible formats. We have written several posts relating to the OSC's Burden Reduction Initiative (see “OSC issues anticipated Burden Reduction Initiative Report”, “ OSC Burden Reduction Initiative – OSC roundtables”, “ OSC Burden Reduction Initiative – Rules-based versus principle-based regulation”, “ OSC Burden Reduction Initiative – Revisiting the 2003 Regulatory Burden Task Force”, and “ OSC Burden Reduction Initiative – Focusing on ‘Principles' for more responsive and effective regulation”), and the Innovation Office builds on the OSC's efforts in that direction.
The OSC also added the new priority of fostering inclusion and diversity amongst its workforce. To further this objective, the OSC undertook actions outlined in the BlackNorth Initiative pledge to address and end anti-black racism. Further information on the BlackNorth Initiative pledge and Osler's own commitment can be found here and here, respectively.
The Draft Statement is informative, particularly with respect to the regulator's response to the COVID-19 pandemic and pending recommendations from the Taskforce.
It is clear from the Draft Statement that OSC hopes to emphasize that the pandemic has not deterred the regulator from pursuing its commitment to the development and implementation of more sophisticated and efficient enforcement processes. If anything, the pandemic appears to be motivating the OSC's efforts in this regard. For example, the OSC has stressed in its recent decisions that it is intent on advancing enforcement proceedings via videoconference during the pandemic, and that the regulator will not lightly depart from this now standard practice (see Re First Global Data Ltd, 2020 ONSEC 23, which we previously reported on here). Further, the pandemic is likely spurring the OSC's efforts to modernize its platform by digitizing its operations and leveraging data analytics to deliver regulatory outcomes, as is described in the 2021-2022 Draft Statement.
It is also apparent from the Draft Statement that further modernization of Ontario's regulatory landscape will come by way of the Taskforce, which began its work in February 2020. The Taskforce published a consultation report in July 2020 outlining its findings and its proposals to modernize securities regulation in Ontario and the final Taskforce report, expected by the end of 2020, could result in significant changes to the Ontario Securities Act. We have previously written on the Taskforce here and here, and this site will continue to monitor and report on developments in this area. A number of the draft priorities (for example, continued implementation of Client Focused Reforms, and continued consultation on the current self-regulatory organization framework) will undoubtedly be impacted by the final Taskforce report based on the draft recommendations published by the Taskforce. While some of the draft priorities are aligned with the preliminary Taskforce recommendations, there are a handful where competing visions have been presented.
How stakeholders can get involved
Stakeholders are invited to provide written comments on the Draft Statement by December 16, 2020. After receiving and considering comments, the OSC has advised that it will continue to update its 2021-2022 priorities to reflect the impacts and lessons learned from COVID-19 pandemic and recommendations from the Taskforce. Any changes will be reflected in the final publication of the Statement of Priorities (which will be prior to June 30, 2021 per statutory requirement).
Co Author by Reba Nauth, Articling Student
Originally Published by Osler Hoskin, December 2020
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