financial instruments chart, derivaties

The Ontario Securities Commission (OSC) is adopting a new fee model that will lower regulatory levies on many firms, while introducing a hefty new charge on large players in the over-the-counter derivatives market.

The new fee model, which requires final approval from the provincial finance minister, is due to take effect for the upcoming fiscal year (starting April 3, 2023).

According to the OSC, the new structure will cut fees by a cumulative $5.6 million from most market players due to reductions in certain market participation fees and the elimination of certain activity fees and late charges.

At the same time, it will also collect an additional $13.5 million in participation fees from firms (primarily the large banks) that are active in OTC derivative markets to help finance enhanced oversight of that market.

“The updated fee structure reflects the growth and complexity of capital market activities and the OSC’s systemic risk-related mandate. The rule changes also consider burden reduction and fair allocation of costs across market segments,” the regulator said in a release.

The new model was published for comment back in January. In response to the comments it received, the OSC made a couple of changes to the new participation fee for derivatives market players to ease implementation and limit the regulatory burden in how those fees are initially calculated.