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OSC Notice 11-791 – Statement of Priorities; Request for Comments Regarding Statement of Priorities for Financial Year to End March 31, 2022
Letter Summary:
The OSC has set out four strategic goals and the priority initiatives it will pursue in support of those goals for the April 2021- 2022 year. The first goal, promoting confidence in Ontario’s capital markets, will be supported by further work to implement projects such as the Client Focused Reforms, policies on DSCs, continued consultation on the SRO framework, more timely and impactful enforcement action, collaboration on financial literacy initiatives, strengthening OBSI and expansion of the OSC’s systemic risk oversight (focusing on derivatives and investment fund leverage and liquidity risks). The second goal of reducing regulatory burden will involve completing the actions identified in the OSC’s existing burden reduction plan. Under the goal of facilitating financial innovation, the OSC will implement their plan for the Office of Economic Growth and Innovation and continue the work of LaunchPad in engaging with fintech market participants. The fourth goal, strengthening the organizational foundation of the OSC, involves continuing to develop SEDAR+, modernizing OSC technologies and fostering a culture of inclusion and diversity. The OSC has indicated it will update its priorities to address the Covid-19 pandemic, as well as to accommodate any changes adopted by the Government of Ontario that has been recommended by the Capital Markets Modernization Taskforce.
Overview of the Council’s Comments:
The CAC is strongly supportive of several priorities set out in the Draft Statement with a view to meeting the OSC’s stated goals and strategic plans. We agree that an organizational goal of reducing regulatory burden while balancing the need to avoid any negative impact on investor protection is important and should continue to permeate and be considered in conjunction with any new regulatory initiatives. Key Priority 1.1, which relates to client-focused reforms can represent a watershed moment for the protection of investors by requiring registrants to put the client’s interest first when making a suitability determination and addressing material conflicts in the best interest of the client. Key Priority 1.2 indicates that the OSC will work with managers and dealers to streamline implementation issues and work to finalize the response to the use of the deferred sales charges option (DSC option). As the client-focused reforms continue to evolve and take on practical import, clear guidance is still required with respect to how registrants can meet the requirement to put clients interest first when recommending a DSC product, even if the availability of those products will be more circumscribed in future. Key Priority 1.6 relates to a consideration of ongoing SRO developments and feedback on the initial consultation paper. We are supportive of continued dialogue and study of this area. We also wish to reiterate prior comments that we support the strengthening of OBSI’s decision making authority, as indicated in Key Priority 1.7. We continue to support Key Priority 4.1, and the SEDAR+ project, and welcome any acceleration that could be initiated for this undertaking. The CAC is deeply supportive of new Key Priority 4.3, to foster inclusion and diversity in the OSC community, including by promoting opportunities for learning and dialogue and specific steps to end systemic racism. We look forward to continuing to work with all relevant stakeholders as the recommendations from the Capital Markets Modernization Taskforce are finalized.