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OSC Statement of Priorities Includes Initiatives Relevant to Investment Fund Industry

Fasken
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Investment Products & Wealth Management Bulletin

On June 28, 2012, the Ontario Securities Commission released its Statement of Priorities (PDF) for its financial year ending March 31, 2013.

The OSC identified the following strategic goals in the Statement of Priorities:

  1. Deliver Responsive Regulation
  2. Deliver Effective Enforcement and Compliance 
  3. Deliver Strong Investor Protection 
  4. Run a Modern, Accountable and Efficient Organization 
  5. Support and Promote Financial Stability

In addition, the Statement of Priorities set out specific initiatives that will be pursued by the OSC in support of each of these goals. The following initiatives are particularly relevant to investment fund industry participants:

  • Conduct research and analysis and publish a discussion paper on the cost of ownership of mutual funds in Canada, identifying investor protection and public interest issues
  • Re-evaluate the regulatory and operational requirements associated with closed-end funds by assessing the rationale for rules that differ from the rules governing the more common open-end mutual funds with a view to publish new rules for comment
  • Undertake research and analysis of increasingly complex financial products and investment strategies and collaborate closely with other regulators and exchanges to ensure regulatory approaches toward investment products are consistent and opportunities for regulatory arbitrage minimized 
  • Conduct more targeted compliance reviews (ie. “sweeps”) and desk reviews of registrants by focusing on high risk areas, know your client and suitability obligations, new registrants and on major issues of concern that have been identified through compliance reviews 
  • Create an “Office of the Investor” to establish a stronger investor focus and understanding 
  • Re-evaluate the adviser-client relationship to consider whether an explicit statutory fiduciary duty or other standards should apply to all advisers and dealers in Ontario, complete the research underway and publish a paper on adviser’s duty to clients in consultation with the Canadian Securities Authorities 
  • Re-examine risk disclosure in the Fund Facts document and develop similar disclosure documents for other types of investment funds and scholarship plans 
  • Publish rules that ensure investors receive from their dealers and advisors reports on the ongoing costs of performance on their investments 
  • Continue the work on the creation of a framework to regulate OTC derivative participants in order to meet G20 requirements including with respect to rules regarding oversight of trade repositories 
  • Work with IOSCO and the CSA Systemic Risk Committee to implement IOSCO Principle 6 regarding systemic risk and Principle 7 regarding perimeter of regulation. 
  • Review the role of proxy advisors and facilitate discussions on improving the functioning of the proxy system.

Please see the complete Statement of Priorities for more information and the full list of the initiatives of the OSC.

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