Ontario regulator cuts surplus to $4 million

By Staff | July 7, 2005 | Last updated on July 7, 2005
2 min read

(July 7, 2005) The Ontario Securities Commission is reporting a $4.1 million surplus for fiscal 2005, down from $21.6 million the previous year. The surplus issue has been a focal point for critics in the past, who argue that a government agency should not be generating profits.

Still, the commission has been reducing fees in an effort to balance revenues and expenditures and expects to reach a break even position as soon as next year.

Fees generated $78.4 million for the commission in the year ending March 31, 2005, up slightly from the previous fiscal year. Because fees exceeded expectations, the OSC issued a one-time rebate of nearly $15 million “to expedite the return of surplus to market participants who funded it.”

The OSC’s fee model, introduced in 2003, is intended to reduce overall fees to accurate reflect the commission’s cost of operations. The model will be adjusted in 2006 for the next three-year cycle.

“The OSC remains committed to ensuring that fees paid by issuers and registrants reflect the projected costs to regulate each group. We are currently developing a proposed fee schedule for the three year period ending 2009. We are reviewing each service activity and its related cost in order to set new activity fees. Participation fees will be set at levels to generate a cumulative deficit equal to the surplus collected from market participants as at March 31, 2006.”

Expenses totaled $60.7 million in fiscal 2005, mostly in the form of salaries and benefits which rose about 10% to $44.3 million.

The commission added $787,000 to its coffers last year from settlement agreements arising from enforcement proceedings. The total balance of designated settlements now stands at $2.5 million, held in a segregated bank account.

The OSC also has a $20 million reserve fund, which has been invested in six month and one-year treasury bills. A further $12 million has been retained for a proposed merger between the OSC and the Financial Services Commission of Ontario. However, that proposal, first introduced in 2000, appears to have lost its momentum. Five years later, the legislation has yet to be introduced, superseded by other issues, such as the passport system and efforts aimed at establishing a national securities regulator.

Looking ahead, the commission expects to balance its books in fiscal 2006, with revenues and expenses each projected at around $67 million. The budget does not anticipate a material change in the level of market activity next year.


Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.