The Ontario Securities Commission (OSC) has released its annual draft Statement of Priorities for 2024-2025 (SoP). There are no less than 16 key priorities set out in the SoP. The priorities we think may be of most relevance to our readers are described below.
- Assess implementation of Client Focused Reforms and consider impact of limited product shelves. The draft SoP mentions that OSC staff is concerned about the impact proprietary product shelves could have on clients, including potentially higher fees and inferior performance, if other products are not easily available to investors. The Canadian Investment Regulatory Organization (CIRO) and the Canadian Securities Administrators (CSA) intend to consider this further. The current sweeps with respect to the Client Focused Reforms (CFRs) will continue, and regulators plan to consider the need for additional measures to ensure the CFRs are attaining desired outcomes.
- Advance Cooperation with Indigenous Peoples and Work to Understand and Integrate their Perspectives and Interests. As part of this priority and as part of its larger inclusion and diversity strategy, the OSC intends to develop an action plan for truth and reconciliation, and integrate its learnings to engage with Indigenous Peoples more meaningfully.
- Conduct Initiatives for Retail Investors Through Specific Education, Policy, Research and Behavioural Science Activities. The draft SoP discusses the increasing complexity of Ontario’s capital markets, including new products continually being introduced. The importance of ensuring that appropriate investor protections are in place, and that investors have the information needed to make informed financial decisions and have confidence in the capital markets is emphasized. The OSC intends to expand its application of behavioural science to policy making and operations, in part to improve investor outcomes. Through the Investor Office Research and Behavioural Insights Team (IORBIT), the OSC will continue applying behavioural science to policy and operational activities. A number of initiatives support this priority, including programs to enhance investor education and timely publication of investor research.
- Strengthen the Dispute Resolution Framework of the Ombudsman for Banking Services and Investments and Modernize OSC’s Disgorgement Framework. The OSC (as part of the CSA) will release a proposal for comment that contemplates providing an independent dispute resolution service with binding compensation decision authority. The SoP also noted that earlier this month, the Ontario government introduced legislation to provide a streamlined statutory process for the distribution of money received by the OSC under disgorgement orders to eligible investors who have suffered direct financial losses in prescribed circumstances.
- Further Initiatives that Promote Capital Formation and Foster Competition. Actions in the next fiscal year include reviewing the current temporary blanket order (Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption) that allows purchasers in Ontario who do not otherwise qualify as accredited investors to purchase exempt market securities provided they otherwise demonstrate financial knowledge, investment knowledge or relevant industry-specific experience. In addition, and of particular interest to exempt market dealers, it is noted that the OSC will consider taking steps to allow EMDs to participate as a selling group member in a prospectus offering and sponsor reverse takeover transactions, subject to “reasonable conditions.” The SoP also referenced consideration of the registration regime and issues in connection with introducers and finders.
Comments on the draft SoP will be accepted until December 18, 2023, and the final version of the SoP will form part of the OSC’s business plan for the fiscal years 2025-2027.
November 30, 2023