The Ontario Securities Commission (“OSC”) announced on January 14, 2019, that its Burden Reduction Task Force (“Task Force”), in coordination with the Ministry of Finance, has undertaken to lessen regulatory burdens and enhance competitiveness for Ontario businesses.
The Task Force is seeking public comment on measures for reducing unnecessary regulatory burden. The OSC will hold an initial roundtable on March 27, 2019, to discuss issues and proposals being considered.
The OSC’s efforts to reduce regulatory burden fall in step with Ontario’s plan to cut regulatory red tape and promote business in Ontario, and is an effort which supports the Government of Ontario’s Open for Business Action Plan.
In its most recent budget, the Province announced that it will be working with the public to help identify and improve regulations that are unclear, outdated, redundant, or unnecessarily costly. The Government aims to cut regulatory red tape by 25% in the next three years.
The Province is also inviting public input on solutions for minimizing red tape in various industries. It has already finalized consultation on automotive manufacturing, food processing, financial services, mining, chemical manufacturing, and tourism. It will begin consultation on the forestry industry in spring of 2019.
Reducing burden to promote fair and proportionate regulations
The public consultation process forms a part of the OSC’s efforts to fulfill its statutory mandate under the Securities Act to protect investors, foster fair and efficient capital markets, and help stabilize the financial system and reduce systemic risk. Often these imperatives compete for priority, and this initiative is a response to those who challenge the notion that investor protection necessarily increases costs and efficiencies for regulated parties.
The OSC emphasized in its announcement that reducing regulatory burden is rooted in one of the OSC’s fundamental principles that regulatory costs and restrictions on market participants should be proportionate to the significance of the regulatory objective.
From public input to roundtable discussions – How stakeholders can get involved
The OSC is inviting interested stakeholders to submit suggestions on ways to lessen regulatory burdens. The areas of focus include (i) operational changes, (ii) rules changes, (iii) enhancing investor experience and outcomes, (iv) Ontario-specific improvements, and (v) existing policy initiatives.
In particular, the Task Force is asking the following questions:
- Are there operational or procedural changes that would make market participants’ day-to-day interaction with the OSC easier or less costly?
- Are there ways in which we can provide greater certainty regarding regulatory requirements or outcomes to market participants?
- Are there forms and filings that issuers, registrants or other market participants are required to submit that should be streamlined or required less frequently?
- Are there particular filings with the OSC that are unnecessary or unduly burdensome?
- Is there information that the OSC provides to market participants that could be provided more efficiently?
- Are there requirements under OSC rules that are inconsistent with the rules of other jurisdictions and that could be harmonized?
- Are there specific requirements that no longer serve a valid purpose?
- Are there ways to enhance how investors experience disclosure provided: (i) before they invest; (ii) as part of ongoing public disclosure; and (iii) by registrants as required?
- Any other general issues relating to the reduction of regulatory burdens on market participants.
The Task Force has been mandated to consider and act on any suggestions to eliminate unnecessary rules and processes while protecting investors and the integrity of our markets.
Comments may be sent via a Burden Reduction Survey, by mail, or email until March 1, 2019. The OSC will identify a series of short, medium, and long-term actions to reduce unnecessary burden to be discussed at the roundtable. Stakeholders wishing to participate in the roundtable discussion may submit a comment letter in response to the OSC’s notice and indicate an express desire to participate.
Regulatory reduction efforts in foreign jurisdictions
Similar regulatory reduction initiatives have been implemented in other jurisdictions. The U.K.’s Financial Conduct Authority, for example, no longer requires public companies to release interim management statements, which were formerly issued once every quarter. The European Commission has implemented a better regulation agenda that includes the promotion of a more simplified disclosure regime. The Securities and Exchange Commission has also recently implemented amendments to simplify and update certain disclosure requirements.All of these initiatives reflect the winds that are blowing from governmental imperatives of the day. We will continue to monitor these trends and evaluate whether and how these ultimately result in changes to regulation.
By Lawrence E. Ritchie and Jessica Habib, Osler