CFR implementation and crypto enforcement among proposed priorities for OSC

The provincial regulator is seeking feedback on its proposed Statement of Priorities

CFR implementation and crypto enforcement among proposed priorities for OSC
Steve Randall

The Ontario Securities Commission is considering its priorities for fiscal year 2024-2025 and wants stakeholder feedback on its proposals.

The regulator’s proposed Statement of Priorities will shape its business planning for the coming year and ensure that resources and actions are focused on the best interests of investors in Canada’s largest capital market.

Among the key proposals are assessing the implementation of Client Focused Reforms and considering the impact of limited product shelves. If it concludes that the CFRs are not achieving the desired outcomes for investors, then the OSC says it will consider additional measures.

It also says that it is “concerned about what impact predominantly proprietary products shelves may have on client outcomes (e.g., higher fees and inferior performance) and other possible negative outcomes may result if financial institutions offer predominantly proprietary products and independent products are not readily available for investors and their advisors to consider.”

The OSC plans to conduct additional CFR sweeps and conduct further investigation alongside CIRO to consider shelf formulation approaches and to ensure that Know Your Client and other requirements are understood and correctly applied.

The provision of non-tailored advice for self-directed investors in the Order-Execution Only channel will also be considered along with CIRO, given the rise of DIY investors who are seeking advice online and often finding misleading or incomplete information on social media, for example.

The OSC proposes whether OEO firms can provide advice without creating confusion with established advice channels.

Investor education remains an important pillar of the OSC’s focus on protecting investors and it will look to improve access to programs, continue to implement and improve the OSC Seniors Strategy, and respond to investing trends such as gamification and digitalization.

Complaints and cryptos

Complaints and disputes handling is another priority, and the regulator will continue to work with other CSA members on matters such as the proposal to give binding authority on compensation decisions to OBSI or another body.  

This will include considering stakeholder feedback in the development of a final framework and proposed legislative amendments to provide an independent dispute resolution service.

The regulator also proposes strengthening oversight and enforcement in the cryptocurrency sector in light of recent insolvencies in the industry which highlight the high level of risk in these investments. The OSC wants crypto trading platforms to be brought into compliance with securities laws and bring enforcement actions against those that do not stick to the rules.

"The proposed priorities build on the OSC's ongoing work to deliver on our mandate to modernize regulation and respond quickly to market changes," said Grant Vingoe, CEO of the OSC. "As we consider our work through the lens of evolving macroeconomic conditions and investor attitudes, we are taking a long-term view to ensure our capital markets continue to deliver compelling investment opportunities and strong investor protection."