The Ontario Securities Commission (OSC) has released its annual summary report for dealers, advisers, and investment fund managers, aimed at helping registrants comply with Ontario securities law.
Prepared by the OSC’s Registration, Inspections, and Examinations Division (RIE), the report offered insights into registration matters, compliance review outcomes, and future areas of focus. It is particularly relevant for registrants directly regulated by the OSC, including investment fund managers (IFMs), portfolio managers (PMs), exempt market dealers (EMDs), and scholarship plan dealers (SPDs).
Key highlights from the past year include compliance reviews focused on implementing Client-Focused Reforms (CFRs) and overseeing crypto asset trading platforms registered as restricted dealers. The report also provided guidance on various compliance topics, such as what constitutes registerable activity and how to account for related party receivables over working capital calculations.
The report emphasized the need for full disclosure in registration forms, particularly regarding criminal charges or solvency events. It also stressed the importance of clear documentation when an individual leaves a sponsoring firm. The report reiterated that submissions undergoing further examination are not subject to standard service timelines and identified significant deficiencies among unregistered firms engaging in activities requiring registration, particularly when PMs, rather than IFMs, direct the investment fund's affairs.
The OSC described an enhanced process for firms with late financial filings or unresolved capital deficiencies, highlighting the necessity of timely and adequate financial reporting. Additionally, the report discussed the impact of the higher interest rate environment on real estate or mortgage issuers, which has led to halted or suspended redemptions. Consequently, the OSC will closely scrutinize EMDs distributing real estate and mortgage products.
The report also underscored an ongoing focus on high-risk, high-impact, and specialized firms, including derivative dealers, as part of the "registration as the first compliance review" program.
“This coming year, guided by insights from our Risk Assessment Questionnaire, we plan to prioritize reviews of firms identified as high-risk, large firms with significant assets under management, and specialized dealers,” said Sonny Randhawa, executive vice president of regulatory operations.