The Ontario government has set an ambitious timeline for a new task force charged with reviewing the rules that govern the province’s capital markets. The government states that the need to remove barriers that limit investors and businesses from accessing capital — and to keep Ontario competitive — has become urgent.
“This is an issue that’s on the front burner, from my perspective,” says Rod Phillips, Ontario’s Minister of Finance.
In February, Ontario established its Capital Markets Modernization Taskforce, a five-member group with the mandate of undertaking the first full review of Ontario’s securities legislation since the Crawford Committee, chaired by Purdy Crawford. The then-government named the committee members in March 2000; the committee released a draft report in May 2002 and a final report in March 2003.
The task force, which will be aided by an advisory panel of experts, will publish a consultation document this summer and a final report this autumn with recommendations for reducing regulatory burden, ensuring a level playing field for market participants and improving investor experience and protection.
“The evolution of the capital markets is happening so quickly,” says Walied Soliman, chair of the task force, “that we need to listen to stakeholders and come up with recommendations very quickly for the minister [of finance] in order to make sure we’re not falling behind.” Soliman is a securities lawyer with Norton Rose Fulbright Canada LLP in Toronto, for which he serves as chair.
Investment industry stakeholders welcome the launch of the task force, saying that capital markets have undergone significant change in the past 17 years, including the rise of fintech and increased interest in the private capital markets.
“There’s a need to do a more comprehensive review,” says Ian Russell, president and CEO of the Investment Industry Association of Canada in Toronto. Recent initiatives to reduce regulatory burden and increase market efficiency have been positive, but piecemeal, he says.
Says Rebecca Cowdery, a partner and securities lawyer with Borden Ladner Gervais LLP in Toronto: “We really need to look at the impact of regulation, good or bad, on financial services to help Canadians plan their retirement. It’s not just regulatory burden; it’s everything.”
The Ontario Securities Act requires a review of securities legislation be undertaken every five years, a key reason for establishing the task force, says Phillips: “From the investment and securities community, I was getting very direct feedback that [the task force] was long overdue.”
However, Russell doubts the task force can undertake a full review within the timeline given: “Either they’re going to have to truncate [the process] or they’re going to have to change the timeline.”
Phillips says the task force’s mandate will be “a full review of the [Securities] Act.” However, he expects the group to focus on identifying priority areas: “I am confident that there will be some [of the task force’s recommendations] that can be more immediately implemented, and there may well be more detailed review that is also recommended.” If some recommendations take longer to implement, “that will be fine,” he adds.
Says Soliman: “You can do a comprehensive, stakeholderbased review of the entire capital markets in Ontario without going through a page-by-page flip of the Securities Act. They’re actually two different exercises.”
The task force will work closely with the Ontario Securities Commission (OSC), which has indicated that it fully supports the review. In mid-February, the task force members met with OSC chair and CEO Maureen Jensen, who is stepping down in April, and the OSC’s vice chairs, board and senior staff to discuss how the regulator and the task force can collaborate.
“Our dialogues and discussions with the OSC have been excellent,” Soliman says.
When Phillips was asked whether the leadership transition at the OSC will affect the review process, he said no, adding that he asked the task force to meet with Jensen and OSC staff as its first action. “The OSC will be a full participant in the work that’s ongoing,” Phillips says.
Phillips did not provide a timeline for appointing a permanent replacement OSC chair, saying that the province will undertake a proper search: “We want to make sure that the leadership reflects the vision that we have for making sure that we have the most transparent and effective capital markets that we can have.”
Grant Vingoe, vice chair of the OSC, will take over as acting chair when Jensen steps down.
Phillips also doesn’t foresee any conflict between the provincial government’s review of the Ontario Securities Act and continued support of the Capital Markets Regulatory Authority (CMRA) project. (Kevan Cowan, CEO of the Capital Markets Authority Implementation Organization, is a member of the task force’s advisory group.)
“There are going to be some best practices that we can learn from the extensive work of the national project,” Phillips says.
How a co-operative regulator will fit in with the broader capital markets regulatory structure in Canada isn’t clear, says Russell: “Seems to me you’re adding a lot more complexity [with a co-operative regulator].”
Soliman says he views the CMRA project, plus other current regulatory initiatives, such as the Canadian Securities Administrators’ review of the role of investment industry self-regulatory organizations, as “important inputs to the recommendation work we’re doing for Minister Phillips.”
Soliman says he and the task force’s other members are meeting with industry stakeholders, contacting the task force’s advisory group and receiving calls from market participants already. “At this stage, we’re listening, which is the right thing for us to be doing,” Soliman says.
After accepting the role of task force chair, Soliman, who has ties to the Ontario Progressive Conservative party, stepped aside from his role as chair of the campaign to elect Erin O’Toole, who is running for the leadership of the federal Conservative Party. However, Soliman will continue to play a role in O’Toole’s campaign.
The other task force members are Cindy Tripp, founding partner and co-head, institutional trading, at GMP Securities LP; Melissa Kennedy, executive vice president, chief legal officer and public affairs at Sun Life Financial Inc.; Wes Hall, founder and executive chair of Kingsdale Advisors; and Rupert Duchesne, former CEO and director of Aimia Inc. (All firms are based in Toronto.)