The Ontario Securities Commission today announced a plan to improve its approach to monitoring advisors and fund managers, which it defines as market participants.

The OSC’s Compliance team is developing a risk-based model, where a market participant’s risk ranking will determine the frequency of its field reviews.

The primary purpose of the model is to ensure that compliance field reviews are focused on high-risk market participants and their activities, resulting in more effective and efficient reviews.

“The ultimate goal of this approach is to achieve a more consistent and progressive form of regulation,” said Marrianne Bridge, the OSC’s manager, Compliance, Capital Markets Branch.

A questionnaire is currently being distributed to a limited number of market participants, seeking detailed information about their business operations and risk management practices.

A revised questionnaire, incorporating any necessary modifications, will be sent to the remaining market participants in Spring 2002.

OSC staff will use the management-certified data to assign risk rankings to each market participant, in accordance with the risk assessment model it has developed.

“Without a detailed knowledge of the risks facing individual market participants, and how they manage and monitor those risks, our compliance activities have been limited to random field reviews,” said Bridge.

Implementation of the new approach is expected to begin by mid-2002, and will affect approximately 400 firms, which provide advisory/portfolio management and fund management services.