The Ontario Securities Commission is planning to study the cost of mutual fund ownership in Canada, publish a paper on fiduciary duty, and address a variety of shareholder issues, among a host of other things promised in its new statement of priorities.
The OSC has published a draft of its statement of priorities for the coming year in Friday’s OSC Bulletin, the final version is due by June 30.
In the draft, the commission sets out some of the initiatives it plans to take on in the coming year. This year, the OSC is also adopting a new strategic plan, which sets its vision for the next few years and takes effect April 1, will involve setting up a new branch focused on investor issues, and a new research department, among other things. The statement of priorities is focused on the immediate year ahead.
Among the initiatives highlighted in the statement of priorities, the OSC promises to research, and publish a discussion paper on, the cost of ownership of mutual funds in Canada, which will identify investor protection and public interest issues. It is also studying whether an explicit statutory fiduciary duty, or other standards, should apply to all advisors and dealers in Ontario.
The OSC promised a paper on fiduciary duty in its last statement of priorities. In the new draft, it says that the research underway will be completed, and a paper on the advisor’s duty to clients will be prepared and published in consultation with the rest of the Canadian Securities Administrators.
Additionally, it notes that it will re-examine risk disclosure in the new Fund Facts documents, and develop similar disclosure documents for other types of investment funds and scholarship plans; along with publishing rules (first proposed last year) regarding investment cost and performance reporting.
In terms of the Ombudsman for Banking Services and Investments, the OSC says that it will continue to work with OBSI and the CSA “to support a sustainable and robust system of informal dispute resolution for investors”.
The commission also says that it will: study the exempt market; re-consider the current regulatory requirements governing shareholders’ rights plans; improve the adjudicative process by moving to electronic hearings; advocate for the elimination of slate voting, the adoption of majority voting policies for director elections, and enhanced disclosure of voting results for shareholder meetings; improve the proxy voting system; and, publish a consultation paper addressing issues associated with market data in a multi-marketplace environment.
This year, the OSC is also adding the issue of systemic risk to its list of goals, in the wake of the financial crisis and G20 commitments on regulatory reform. The focus there is largely on developing a new regulatory regime for the over-the-counter derivatives market.
“The greatest challenge facing regulators will not merely be the effective implementation of new rules, but also the development of the regulatory capacity to keep current with new market developments that will emerge over time as a result of financial innovation, or as unforeseen consequences of the implementation of the current proposed rules,” it notes.
And, it says that, in light of the recent Supreme Court of Canada decision on the national securities regulator, the OSC will focus on its mandate “by working in the best interests of investors and market participants of Ontario”; while also working cooperatively with the rest of the CSA and other regulators “to make the regulatory system more efficient”.
On the financial front, the OSC is forecasting revenues to increase by 12.5% in the year ahead, due to fee increases in place for the coming year and a market growth assumption of 5%, but it still expects to operate at a deficit in 2012-2013. And, forecasts its accumulated surplus will be less than $2 million by March 31, 2013.