The Regulatory Burden Task Force is recommending sweeping changes to the regulatory structure in a report making 107 recommendations to the Ontario Securities Commission.

The OSC had mandated the RBTF in October 2001 to hold informal consultations on how the OSC could reduce regulatory burdens for market participants, without requiring legislative changes or involving regulators in other jurisdictions.

Among the recommendations, the task force calls for:

  • legal delegation in the absence of the ideal of a national regulator;
  • dividing the Investment Dealers Association of Canada’s regulatory and lobby group functions;
  • overhauling the registration system; and
  • reforming the IDA’s governance and disciplinary panels.

It also calls for the OSC to consider whether it makes sense to merge the self-regulatory organizations into a single body, and to consider changes to its own governance structure.

The report says that 50% of the members of the IDA’s board should be independent of the members of the IDA. As well, it says the IDA’s three member disciplinary panels should be restructured and composed of an independent lawyer as chair, an independent IDA director and a representative of an IDA member. It adds that the IDA’s arbitration procedure should be improved, with the maximum amount of claims increased to at least $350,000 and that arbitration decisions should be published.

The report also makes numerous recommendations about improving OSC communications, service, and organizational culture. It says that the OSC’s board should examine the manner in which it currently exercises oversight of the management and operations of the commission with a view to determining whether there is a need for improvement, and that the board should appoint commissioners with business expertise to a new Operations Committee of the board.

The report says that the OSC should encourage the establishment of an independent entity (similar to the Dominion Bond Rating Service) to rate the investment quality of stocks.

It calls for improved disclosure concerning the use of leverage and better use of know-your-client forms.

It says that the OSC should consider simplifying the detailed disclosure requirements for prospectuses or eliminating the prospectus requirement except for IPOs.

The report also recommends that the OSC should seek an appropriate legislative framework to protect whistleblowers similar to that recently established by the Financial Services Authority in the U.K.