The Ontario Securities Commission (OSC) published its new strategic plan on May 3, setting how the OSC will approach its work over the next six years. Created following a strategic review of the organization, they say the plan, Strategic Plan 2024-2030, will help the organization manage competing priorities and make the regulator more efficient, responsive and proactive. They say the plan does not replace the OSC’s statement of priorities, published annually.
“Technological innovation, as well as changes in investor behaviours and demographics have led to a substantial shift in today’s capital markets landscape and the OSC must adapt in response,” says Kevan Cowan, chair of the OSC board of directors.
The report also notes that the report, the first of its kind developed for the OSC since 2011, also reflects massive changes the OSC has undergone since that time.
A very different regulator
The plan notes that the regulator’s role has evolved significantly since the global financial crisis of 2007-2008 when financial stability and reduction of systemic risk was added to its mandate.
More recently, the OSC’s mandate, structure and regulatory agenda changed again in 2021 and 2022 when the Ontario Government’s Capital Markets Modernization Taskforce recommendations were implemented resulting in the separation of the OSC’s adjudicative and regulatory functions. In addition to significant governance changes, the OSC’s mandate was expanded again at that time to include fostering competitive markets and capital formation.
Changing investor behaviour
Rapid technology development, changing demographics and shifting investor attitudes, meanwhile, are all creating an environment of accelerated change, they say. “Today’s capital markets look vastly different from a decade ago,” they write. “At the same time, there has been an erosion of trust in traditional authorities, institutions and information channels, and a more fragmented financial and media landscape.” Retail investors, they add, rely on information which may or may not be reliable, “but is certainly influential.”
More, they point out that novel financial products and services are being introduced that straddle traditional lines of regulatory jurisdiction. “Technological innovations are enabling the proliferation of new marketing techniques, novel business models and products that may not fit into traditional regulatory models but require rapid responses,” they write.
The report also discusses artificial intelligence (AI), decentralized finance, gamification and digital engagement which blurs advice lines. It also adds that environmental, social and governance (ESG) factors are influencing investors who are demanding greater transparency. “These issues are becoming increasingly polarizing,” they state.
Private finance excludes some
In a look at private finance, the report points out that “Canada and other developed economies have seen a steady increase in private financing and a growing tendency for issuers to stay private for longer or not go public at all,” they write. “These trends raise concerns related to the ability of average investors to participate in economic growth through compelling opportunities in our public capital markets.” They add that these opportunities are less transparent and have less regulatory oversight.
Six strategic goals
The OSC’s goals stated in the strategic plan include the following:
- To quickly deliver effective regulatory actions in anticipation of emerging trends.
- Enhance the experience of individual investors.
- Dynamically right-size regulation informed by changing needs, risks and practices in Ontario and globally.
- Implement a tougher and more visible response to capital markets misconduct.
- Foster connections for capital formation and innovation in both public and private markets.
- Strengthen the OSC’s position as a trusted and influential voice in Canadian capital markets.
“The OSC will continue to consult extensively with stakeholders to shape annual priorities and receive input on policy areas,” they write.
