The Ontario Securities Commission has published its proposed statement of priorities for the coming year, setting out the goals the commission is setting itself for the coming year, including some of the specific initiatives it has in mind.

In terms of some of the big issues hanging over the capital markets right now, the OSC says that it plans to play a leading role in reviewing the issues, and developing a response, to any elements of the credit market disruption and asset-backed commercial paper debacle that fall within the jurisdiction of securities regulators.

It also pledges to work with the other provincial regulators and the U.S. Securities and Exchange Commission “to develop a proposed framework for discussions on mutual recognition that would exempt Canadian exchanges and possibly dealers from registration in the U.S. by complying with Canadian securities regulatory requirements.”

Additionally, the OSC intends to complete a review of the regulation of non-conventional investment funds and begin to develop proposals for a framework for the regulation of all investment funds, starting by codifying frequently-granted relief given under the national mutual fund rules.

It acknowledges that enforcement remains an ongoing issue, and pledges to continue improving it, by, among other things: focusing on activities seen as posing the greatest risk; focusing compliance efforts on new and high-risk market participants; improving the integration of investigation and litigation processes; increasing the speed to, and number of, enforcement proceedings; expanding its anti-scam unit, particularly focusing on illegal distributions and other scams which target seniors; developing a new approach to insider trading investigations, including tools to target “recidivist” insider traders; and helping to redevelop the CSA enforcement report. .

For retail investors, the OSC indicates that its priorities include: finalizing the framework for point-of-sale disclosure for both mutual funds and segregated funds; helping enhance the effectiveness of the Financial Services OmbudsNetwork; monitor compliance issues with the new investment fund prospectus rules; develop proposals to modernize securities regulation of scholarship plans; establish a standing committee with the self-regulators and Ombudservice to discuss and coordinate work on investor initiatives.

Among assorted other plans, the OSC says it will also adopt an updated conflict of interest policy.

In the coming year, the commission is budgeting for a loss, with revenues forecast to increase just 0.6% due to market forces, but expenses slated to jump 14.2% to $86.2 million. The result would be a $7.1 million deficit, down from a $3.2 million surplus last year. “This is consistent with our plan to reduce our surplus and return the surplus to market participants by way of fees that are lower than would otherwise be the case,” the OSC says.

Higher salary costs are the biggest driver of the expense increase. They comprise 72% of the budget, and account for over 60% of the proposed $10.7 million budgetary increase. “Most of the increase in salaries and benefits reflects cost momentum from prior staffing decisions including the full year costs for staff hired during 2007/08, the planned filling of previously approved positions and the impact of performance-based salary increases,” the regulator says.

The OSC is also planning one-time increases in its capital budget of $3 million for leasehold improvements and $1.9 for IT infrastructure. It says it needs expanded hearing room facilities and additional working space for commissioners. The initiatives driving higher IT spending are: improving and increasing storage for document management processes, an OSC-wide document management system and business continuity; information security; and, redevelopment of the OSC Web site.

The statement of priorities is out for comment until June 3, and is due to be delivered to the minister by June 30.