OSC and CSA Publish Priorities for the Coming Years
Each year the Ontario Securities Commission (the “OSC”) publishes its Statement of Priorities outlining its goals and priorities for the current fiscal year. The OSC recently published its 2019-2020 Statement of Priorities. Every three years the Canadian Securities Administrators (the “CSA”) set out the priorities they have committed to pursue for the next three years in a business plan. This year marked the end of its previous business plan and the CSA recently published its 2019-2022 CSA Business Plan.
There is significant overlap between the priorities in the OSC’s Statement of Priorities and the CSA’s Business Plan, which include the following:
- Enhance Advisor-Client Relationship and Registrant Conduct Rules
Both organizations are evaluating ways to enhance the advisor-client relationship and the registrant conduct rules to improve investor protection. This will involve rule changes to better align the interests of securities advisers, dealers and representatives (registrants) with the interests and outcomes of their clients. In the CSA Business Plan, the CSA highlights developing a regulatory framework to address issues of financial exploitation and cognitive impairment, particularly among older and vulnerable investors.
- Increase Awareness and Education
The OSC and CSA recognize the importance of improving investor awareness and education in order to enhance investor protection. Both organizations are reviewing ways to develop targeted campaigns for at-risk groups, increase collaboration with the community and other stakeholders, and expand the reach of their messaging. One example of the collaborative efforts being undertaken by the OSC is its involvement with the Ministry of Education to enhance the financial literacy curriculum.
- Improve Enforcement
Confidence in capital markets requires effective enforcement actions, which is why the two organizations are exploring ways to increase the deterrent impact of their enforcement actions. Some of the steps being taken under this priority include improving market analytics to strengthen detection and exploring cooperation opportunities with other agencies . For example, the OSC’s Joint Serious Offences Team works in cooperation with its policing partners. As well, the OSC plans to enhance the profile of its Whistleblower Program.
- Reduce Regulatory Burden
The OSC has been actively taking steps to review how it can streamline regulatory requirements, which has included the creation of a Regulatory Burden Task Force in November 2018 and three roundtable discussions with stakeholders in 2019. It is no surprise that reducing the regulatory burden remains a priority for the OSC for the coming year. This priority also ties in with the Ontario government’s overall goal to review and streamline regulations in Ontario. As well, the CSA has identified this as a priority area in the CSA Business Plan for the next three years. Some of the areas being reviewed by the CSA and OSC to reduce the regulatory burden include:
- Clarifying the historical financial information that must be included in the disclosure for an initial public offering or reverse takeover;
- Streamlining continuous disclosure requirements for public companies in their annual and interim filings;
- Modifying the criteria for filing a Business Acquisition Report (BAR) following a significant acquisition;
- Reviewing the regulatory framework for at-the-market offerings with a view to eliminating the requirement to seek exemptive relief;
- Harmonizing the prospectus and registration exemptions by adopting a start-up crowdfunding exemption as a national instrument;
- Identifying options for enhancing the electronic delivery of documents;
- Researching and identifying an alternative and streamlined offering regime for reporting issuers; and
- Modernizing, streamlining, and improving the existing registration process.
- Respond to Technological Innovations (Fintech)
Over the past few years there have been rapid advancements in financial technology that are changing the landscape of the financial industry, particularly innovation in distributed ledger technology (including blockchain). This has challenged regulators to create an environment that supports emerging technologies while balancing investor protection. The OSC and CSA have made it a priority to evaluate how to adapt the current regulatory framework to meet the unique challenges of emerging technologies, such as blockchain and crypto-assets. Some of the initiatives under this priority are to consider a regulatory framework for crypto-asset trading platforms and to continue to leverage the OSC LaunchPad and CSA Regulatory Sandbox to support innovation.
- Expand Systemic Risk Oversight
Promoting financial stability and reducing systemic risk through effective market oversight is a common priority of the OSC and CSA. This priority involves identifying areas of systemic risk and targeting initiatives to mitigate and reduce the impact of these risks. One area of particular focus has been looking at ways to build an effective framework for over-the-counter (OTC) derivatives. As well, the OSC is examining the need for companies to disclose their economic, environmental and social sustainability risks, including climate change, as part of its review of market stability issues.
OSC CSA Statement of Priorities registrant conduct regulatory burden reduction