In our November bulletin we wrote about the Ontario Securities Commission (OSC) draft Statement of Priorities (SoP), which helps inform its business planning for the year ended March 21, 2023. The 2022-2023 SoP has now been finalized, setting out the OSC’s four strategic goals and its priority initiatives for the upcoming fiscal year. As set out in the initial draft, one of the OSC’s goals remains promoting confidence in Ontario’s capital markets, which includes developing a rule setting out climate change-related disclosures for reporting issuers. It is noted in response to comments on the draft SoP that the CSA will continue to focus on these disclosures, with broader environmental factors and other sustainability topics to be considered in the future.

In addition, registrants will be interested to note that priorities under the first goal also include strengthening dispute resolution services for investors (such as OBSI) through policy and oversight activities, and developing a total cost reporting disclosure regime for investors (i.e. CRM 3). The latter proposals are being developed in collaboration with the self-regulatory organizations, the Canadian Council of Insurance Regulators (CCIR), and the regulatory bodies in the CCIR, and impact the disclosure for mutual fund investors and segregated fund holders. It is noted that the focus will be on requirements for dealers and advisers to provide periodic reporting to clients, which shows the total amount of fees (such as management fees) after the initial sale of the investment and is intended to be built up on existing disclosure documents. The approach under the securities and insurance regimes is intended to be as consistent as possible. We will have more to say about these proposals, released on April 28th, shortly.

Other goals in the SoP remain modernizing the regulatory environment, facilitating financial innovation, and strengthening the organizational foundation of the OSC. The SoP goes on to outline the other of the 23 priority areas that the OSC will focus on during the year. Based on comments received on the initial draft, a new priority has been added which addresses how the OSC balances the importance of each of its mandates (to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation and to contribute to the stability of the financial system and the reduction of systemic risk) in its decision-making and other work. In addition, there are new statements regarding more engagement with Indigenous communities and reflecting the spirit of reconciliation within the OSC’s internal culture in response to comments to the effect that Indigenous reconciliation was not specifically mentioned in connection with inclusion, equity and diversity initiatives. The response to comments also notes that the SoP now includes specific actions to engage in consultations, including with Indigenous organizations, as part of the climate-related disclosure rule development process.

Under the goal of modernizing the regulatory environment, the SoP continues to state that the OSC will implement annual surveys of both private and public investment funds about their portfolio exposure to assess relevant systemic risks, focusing on asset classes and leverage information.

The numerous priorities set out in the SoP, together with other regulatory initiatives underway (such as the consideration of the draft Ontario Capital Markets Act, which we also wrote about in our November bulletin, and the operationalization of the changes to the governance and organizational structure of the OSC as set out in the Securities Commission Act, 2021) mean a very busy year ahead for registrants and other market participants.

April 29, 2022