OSC will continue to focus on DSCs, client-focused reforms

By James Langton | March 28, 2019 | Last updated on March 28, 2019
2 min read
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Client-focused reforms and investment fund fee structures will get a second look in the year ahead, according to the Ontario Securities Commission’s (OSC) draft statement of priorities.

The OSC set out its policy agenda on Thursday for the year ending March 31, 2020. Alongside its chief challenge of reducing the regulatory burden, the paper details the regulator’s plans for critical ongoing policy initiatives.

The client-focused reforms were first proposed by the Canadian Securities Administrators (CSA) last June. The commission said it intends to work with the CSA to determine the next steps for that project, and to draft a second version of the proposals addressing comments received on the initial publication.

At the same time, the OSC said it will work with the rest of the CSA to develop responses to its proposed reforms to mutual fund fee structures, which were proposed last September, and to publish those proposals again for comment.

The CSA’s proposals sought to outlaw deferred sales charge (DSC) structures and to prohibit funds from paying trailers to discount brokers for advice that they don’t provide. However, Ontario’s Progressive Conservative government immediately voiced its opposition to the proposals, throwing the whole project into question.

Since then, the OSC has launched an initiative to find ways to reduce the so-called “regulatory burden,” and that features prominently in its new statement of priorities as well.

On March 27, the OSC held the first of three roundtables on the subject (the other two will be held in May). OSC chair and CEO Maureen Jensen indicated that the regulator will be tackling that challenge in stages, with short-, medium-, and long-term measures.

“Our agenda is centred on streamlining regulations to enhance the experience of those who invest and do business in Ontario,”Jensen said in a statement. “The OSC will continue to seek opportunities to make regulation easier and less costly for market participants while protecting investors.”

Some of the regulator’s other agenda items include continuing its work on stepping up oversight of the derivatives markets; preparing for the potential launch of the Capital Markets Regulatory Authority (CMRA); and enhancing oversight of actively managed exchange-traded funds (ETFs).

On the financial front, the OSC is budgeting for revenues of $126.8 million in fiscal 2020, although this may be impacted by the efforts to reduce regulatory burdens. “As plans crystallize, the impact to revenues will be determined,” it said.

The commission’s operating expenses are expected to increase by $5.1 million in the year ahead, primarily due to an additional $2.9 million in salary and benefit expenses, and increased IT maintenance costs of $2 million.

The draft priorities are out for comment until May 27. Read the document here.

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.