The Alberta Securities Commission is reviewing its fee structure after it recorded a loss of more than $6 million in fiscal 2015, with expectations of a similar loss in the year ahead.
The regulator lost $6.2 million in the year ended Mar. 31, according to the ASC’s 2015 annual report. That’s up from a $500,000 loss in fiscal 2014, but the ASC did beat its budgeted deficit of $8.0 million.
Looking ahead to fiscal 2016, the ASC is forecasting an operating loss of $6.8 million that assumes full use of its $0.6 million contingency. However, “actual experience over the last several years has consistently resulted in under-expenditure, primarily due to professional staff vacancies and unused budget contingency,” the regulator notes.
The report also indicates that the ASC is currently reviewing its fee structure. “A thorough review of the ASC fee structure was initiated in [fiscal 2015] that will result in recommendations to be made in the current year for changes intended to ensure the financial viability of the ASC in the coming years,” the report states.
Total revenues came in slightly under budget during fiscal 2015, and decreased by $3.0 million from fiscal 2014, the ASC reports. Investment income decreased by about $400,000 year over year, primarily due to a weaker stock market.
The regulator actually paid back a net $700,000 in enforcement penalties during fiscal 2015, compared with the $3.1 million that was collected in fiscal 2014. In fiscal 2015, the ASC paid back $1 million that was booked in 2014, following a court of appeal decision that overturned sanctions previously ordered by the regulator in an alleged insider trading case.
Expenses came in almost $1 million under budget in fiscal 2015, but were still $2.7 million higher than fiscal 2014, the commission reports. Although salary costs continued to rise, expenses came in under budget due to operational cost reductions, primarily in travel, member fees and contract services, the report states.
In terms of enforcement, the ASC concluded fewer cases in fiscal 2015, according to the report, reaching five settlements, down from 10 in the previous year. The regulator commenced six contested hearings, down from 13 in fiscal 2014. It also imposed just $2.8 million in administrative penalties, down from $6.9 million in fiscal 2014.
The budget for 2016 assumes that revenues will rise slightly to $33.4 million from 2015’s $32.25 million and expenses will decrease slightly to $40.2 million from 2015 actual expenses of $40.4 million.
In addition, the systemic risk committee created by the Canadian Securities Administrators (CSA), and led by the ASC, has found no major systemic risk concerns for Canada, the report notes. “The committee delivered its latest annual report at the end of calendar 2014 without identifying areas for alarm,” it states.
The CSA is working on a possible interface mechanism between the regulators that are participating in the ongoing federal initiative to restructure securities regulation, and those that are not expected to join the planned new cooperative regulator, the report adds.