The OSC has publicly responded to criticism of its proposed exempt market regulation.

In late November, a Calgary professor questioned those proposals, which were first released for comment in March 2014.

Read: Proposed regs for exempt market a mistake: Mintz

Professor Jack Mintz, director of The School of Public Policy at the University of Calgary, wrote in a report, “Much more data and study of the exempt market is needed before we rush into the kinds of regulations that Quebec, Ontario, Alberta and Saskatchewan are considering—[such as] a lower investment limit.”

Mintz says OSC doesn’t understand the market’s size and scope, and outlines several other reasons to reconsider the proposals. Read more.

Today, OSC vice-chair James Turner released an open letter to Mintz, saying, “You suggested that in implementing proposals to facilitate raising capital in Ontario’s exempt market [that] we are ‘shooting in the dark’ and doing harm to markets.”

To counter that claim, Turner states, “Corporate issuers, market intermediaries and […] advisors [have] told us that current exempt market rules should be enhanced to facilitate capital-raising for small- and medium-sized enterprises.” In fact, he says, “Many investors told us they would be interested in having more access to the exempt market, but [they] also cautioned that expanded access should be accompanied by appropriate protections, [and] we agree.”

Read: Is Ontario finally getting an OM exemption?

He adds OSC’s proposals “generally align” with those of other provinces.

He says OSC has already identified compliance problems at some exempt market dealers, and he’s concerned there will be more if the market expands. “In addition, the suitability obligations of […] registrants can be insufficient, particularly if conflicts of interest occur.”

Read: EMDs must fix regulatory deficiencies

Turner argues that “while some stakeholders would prefer that we completely throw open the exempt market, we are taking a more balanced approach that includes important investor protections.” He concludes by saying OSC’s regulation proposals will “enhance, not harm, Ontario’s capital markets,” and that they’ll help boost the economy.

To read the full letter, click here.

OSC has received more than 800 letters since publishing the proposals.

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