On April 11, 2019, the Ontario government announced in its 2019 Ontario Budget: Protecting What Matters Most (the 2019 Ontario Budget) a number of measures aimed at reducing regulatory burden for capital markets participants and fostering economic growth. A number of these measures, which we summarize below, signal a more hands-on approach by the Ontario government in shaping the regulatory priorities of the Ontario Securities Commission (OSC).

The OSC’s Burden Reduction Task Force

In alignment with the Ontario government’s priority to cut red tape, the OSC has identified regulatory burden reduction as one of its key priorities for the coming year and has recently established a Burden Reduction Task Force in coordination with the Ontario Ministry of Finance. The Task Force’s mandate is to identify ways in which the OSC could reduce regulatory burden for Ontario capital markets participants. For more details regarding the OSC’s Burden Reduction Task Force and its recent stakeholder consultations, see our previous article.

Establishing the Office of Economic Growth and Innovation

The Ontario government supports the creation of an Office of Economic Growth and Innovation within the OSC whose three core strategic objectives would be:

• To bolster capital formation in Ontario;
• To promote the proliferation of technology to reduce costs, increase competition and accelerate innovation in financial services; and
• To collaborate with businesses and other regulators to gain insights on how to support innovation, facilitate competition and reduce regulatory burden.

Improving Investor Experience and Protection

In conjunction with current OSC initiatives, the OSC will:

• Explore opportunities to introduce and expand “plain language” requirements for prospectus, fund and other disclosure documents;
• Through its Investor Office, implement the Seniors Strategy and Action Plan;
• Eliminate unnecessary or outdated regulatory requirements;
• Continue to provide relevant information for investors online; and
• Collaborate with the Ministry of Education to enhance the financial literacy curriculum.

Qualitative and Quantitative Analysis of the Impact of New Rules

The Ontario government is urging that when the OSC proposes new rules, the OSC must weigh the economic costs of the new rule against benefits to stakeholders. While the OSC already is supposed to address expected costs and benefits of new rules under existing protocols for rule-making, the 2019 Ontario Budget calls for the OSC to provide a “qualitative and quantitative analysis” of a new rule’s anticipated impact which will probably be different and may influence the dialogue between the provincial government and the OSC.

Competitiveness and Clear Service Standards

The Ontario government appears to be persuaded that Ontario businesses seeking to raise money and global investors seeking to invest in those businesses are faced with a needlessly complex regulatory system. As a new priority, the Ontario government and the OSC will work to achieve a global standard of excellence for Ontario’s capital markets. The OSC will report on metrics that track the competitiveness of Ontario’s capital markets relative to other jurisdictions. The OSC’s service standards will be tracked relative to securities regulators in leading jurisdictions.

Modernizing capital markets legislation

To further support the initiatives summarized above, the Ontario government plans to propose amendments to capital markets legislation:

• to facilitate innovation in Ontario’s capital markets;
• to ensure more economically focused rule-making;
• to clarify the payment of awards under the OSC’s whistleblower program. For more information about the OSC’s whistleblower program and the OSC’s recent $7.5 Million whistleblower awards, read our previous article.

Cooperative Capital Markets Regulatory System

The government of Ontario reaffirmed support in the 2019 Ontario Budget for the proposed Cooperative Capital Markets Regulatory System (CCMR).

The CCMR is a cooperative regulatory framework based on agreements between the Federal Government and participating provinces and territories that aims to replace the current securities regulatory regime with a single harmonized regime across all participating jurisdictions. Current CCMR participants are Ontario, British Columbia, Saskatchewan, Nova Scotia, New Brunswick, Prince Edward Island, Yukon and the Federal Government. For more detailed information regarding the CCMR, please see our previous articles HERE, HERE and HERE.

Adopting Title Protection for Financial Planners and Financial Advisors

At present, there exists no title protection for financial planners and financial advisors in Ontario and consumers are at risk of receiving financial planning and advisory services from individuals who may not be appropriately qualified. The Ontario government proposes to introduce legislation which would protect titles for financial planners and financial advisors and require that individuals using these titles possess the appropriate credentials. The proposed legislation intends to take into consideration the current regulatory oversight of licensees and registrants. Quebec has regulated the use of the financial planner title (and analogous titles) in a similar way for many years by requiring the successful passing of prescribed courses and registration with the Quebec Autorité des marches financiers under an Act respecting the distribution of financial products and services (Quebec).

Launching the Financial Services Regulatory Authority of Ontario

The Financial Services Regulatory Authority of Ontario (FSRA) is a new, independent regulatory agency created to improve consumer and pension plan beneficiary protections in Ontario. The Ontario government intends to proceed with launching FSRA, targeted for June 2019, and to complete the amalgamation of FSRA with the Deposit Insurance Corporation of Ontario. Further legislative changes to the Credit Unions and Caisses Populaires Act, 1994, Pension Benefits Act, Financial Services Tribunal Act, Insurance Act and Financial Services Regulatory Authority of Ontario Act, will be required to enable the framework needed to launch FSRA. 

Modernizing Legislation for Ontario’s Credit Unions

The government of Ontario announced that it intends to introduce new legislation to replace the Credit Unions and Caisses Populaires Act, 1994 in order to modernize the legislation and reduce regulatory burden for Ontario credit unions and caisses populaires.