Last November, we wrote about the Ontario Securities Commission (OSC) report Reducing Regulatory Burden in Ontario’s Capital Markets. On May 27, the OSC published a progress report (Report) on these initiatives. Of the 107 initiatives described in the original report, 27% have been completed, 36% are on track, and 37% of them are delayed (nine of them due to COVID-19). We think the following updates will be of particular interest to our readers:
Registrant Regulation: The good news is that 23 of the 30 registrant-related initiatives are complete (14) or in progress and on-track (9). All the initiatives relating to compliance reviews are complete. Delayed initiatives include:
- Developing a rule to exempt international dealers, advisers and sub-advisers from registration under the Commodity Futures Act (Ontario) (CFA); and
- Evaluating options to reduce duplication in certain regulatory processes for firms that are members of the Investment Industry Regulatory Organization of Canada (IIROC).
Investment Funds: Unlike the registrant regulation-related initiatives, a majority (16) of the 24 investment funds-related initiatives have been delayed, while five have been completed and four are in progress and on-track. The delayed items include changes to the investment funds prospectus regime and some of the continuous disclosure initiatives. Most of the completed items relate to discrete projects such as:
- Finalizing an exemptive relief precedent to allow an investment fund to have more than one custodian;
- Codifying relief to allow any body corporate that is an investment fund manager (IFM) to act as a trustee of any pooled fund organized as a mutual fund trust in Ontario that it manages; and
- Adopting an internal process at the OSC to ensure the use of sunset clauses in exemptive relief decisions only where appropriate.
Derivatives Participants: Of the eighteen initiatives concerning derivatives participants, only two are complete, while eight are in progress and on-track, and eight are delayed. Among other things, the OSC expects to:
- Complete its review of how proficiency requirements apply to registered advising representatives (ARs) advising in recognized options and determine whether to provide clarification (Fall 2020); and
- Complete its review of the existing registration regime to determine whether regulatory gaps can be addressed by measures less burdensome than an over-the-counter (OTC) derivatives registration rule (Spring 2020).
AUM Law will continue monitoring the progress of the OSC’s burden reduction initiatives and keep you informed.
May 29, 2020