The annual report of the Ontario Securities Commission for fiscal 2004 shows a large jump in the regulator’s operating surplus.

For the year ended March 31, 2004, the OSC enjoyed an excess of revenue over expenditures of $21.6 million, up from $14.6 million in 2003. The general operating surplus was $28.7 million, up from $7.0 million.

The OSC had budgeted for an excess of revenue over expenditures of $7.2 million in 2004. It says that the $14.4 million variance occurred because actual expenses were $2.8 million lower than budget and revenues were $11.6 million higher than forecast.

The key areas where actual expenditures were below budget were training ($424,000), commission expenses ($367,000) and professional services ($933,000). The regulator also recovered $685,000 more in enforcement costs than expected.

In the past, the OSC was required to pay its surplus into provincial coffers. It paid $14.5 million owing from fiscal 2003. However, OSC reports that the Ontario finance minister has confirmed that the OSC is no longer required to remit its surpluses. Any deficits will be funded either through surpluses previously generated or generated in the future, or from the OSC’s reserve.

Fees collected under the Securities Act and the Commodity Futures Act in fiscal 2004 increased by $6.1 million or 8.7% to $76.6 million. Total expenses decreased 1.6% to $55.0 million from $55.9 million, against a budget of $57.8 million.

Salaries and benefits costs increased by 6.3% to $40.7 million, accounting for 74.0% of the OSC’s total expenditures. Spending on administration fell by 31.1% to $4.6 million. Administrative costs were higher in 2003 as they included a one-time payment to CDS Inc. of $2.0 million. Also, professional services costs decreased by 54.7% to $1.4 million

In 2004, the OSC contributed $38,000 to the cost of the Canadian Securities Administrators project office and $119,000 to the cost of the CSA systems office. Total CSA spending on projects was $1.8 million in 2004, down from $1.9 million in 2003, of which the OSC contributed $854,000.

Key initiatives funded through this process included:

  • Uniform Securities Legislation, $148,000;
  • investor education initiatives, $143,000;
  • Uniform Securities Transfer Act $108,000;
  • National Registration Database, $96,000;
  • Mutual Fund Financial Disclosure Reform $82,000;
  • and, SEDI implementation. $75,000.

In 2004, the OSC approved $2.0 million in settlements arising from enforcement proceedings, up from just $150,000 in 2003. To date $1.6 million has been collected.

As for fiscal 2005, the OSC revenue forecast is $67.3 million, 12.1% lower than actual 2004 revenues. Net operating expenditures are budgeted to increase 5.7% to $61.1 million for 2005.

The budget increase is explained by: a 8.7% rise in salaries and benefits to $44.2 million, including an increase in approved staffing to 386; a 2.5% increase in 2005 occupancy costs to $4.1 million; and a 6.7% decrease in professional services costs to $2.8 million for 2005.

The 2005 capital budget is $1.7 million, 21.4% higher than the $1.4 million spent in 2004. More than 90.0% of the planned capital expenditures are information technology-related.

http://www.osc.gov.on.ca/About/AnnualRpt/rpt_index.jsp