The Ontario Securities Commission expects to incur a deficit for the next three years, the commission reveals in its latest statement of priorities for the year ended March 31, 2011.

Typically, this planning process occurs in the spring, as the commission’s priorities must be delivered to the minister of finance for approval by June 30. Holding the exercise earlier this year will allow the OSC to receive feedback earlier, which can then be better integrated into the planning and budgeting procession, the commission said.

Comments are due by February 15, 2010.

The OSC has identified five main priorities for 2010-11, including: a deeper focus on investor protection; responding to market developments; addressing the adequacy of regulatory coverage; enforcement; and improving its operations.

Specific initiatives include: improving disclosure at point-of-sale; implementing the order protection rule; adopting registration reform measures; and defining guidelines or standards for performance and cost reporting information, including electronic delivery.

It also plans to review: protections for shareholders rights and corporate governance; the regulation of over-the-counter derivatives; the regulation of credit rating agencies; exempt market risks; the implementation of International Financial Reporting Standards in 2011; new market structures and methods of trading (such as direct market access); and the regulation of alternative trading systems.

And, the OSC says that it plans to improve operational performance, including: making changes to case management processes to accelerate the adjudication process; making greater use of e-delivery; and developing more comprehensive internal performance reporting and measurement.

In terms of its financial picture, the OSC is forecasting an operating deficit in each of the next three years. For the three years ending March 2013, it projects that its operating costs will exceed revenues by $25.4 million. This deficit will be offset by applying the expected March 2010 surplus of $24.8 million and $600,000 of its operating reserve.

This shortfall is expected notwithstanding a proposed fee increase. In October, the OSC published proposed fee rule revisions for public comment. The comment period closes December 31. That proposal would see activity fees unchanged but participation fees rise by a weighted average of 12.2% per year (approximately 9% per year for registrants and 17% per year for issuers).