Ontario budget promises little in the way of capital markets reform

After several years of upheaval, the Ontario government is largely leaving the securities regulatory environment alone in the latest provincial budget.

In today’s budget, the province signalled it will proceed with its planned restructuring of the Ontario Securities Commission (OSC) — separating the combined chair and CEO roles and splitting out the regulator’s tribunal under a new chief adjudicator. These moves are already well underway, with the government having named the new chair (Heather Zordel) and CEO (Grant Vingoe) for the OSC, and the tribunal’s first chief adjudicator (Tim Moseley).

Those moves are just awaiting the proclamation of legislation (the new Securities Commission Act, 2021), which is imminent and was confirmed in the budget.

Beyond that, there were no other definitive commitments to further changes coming out of the recommendations from the Capital Markets Modernization Taskforce.

The government said it will “continue to consider” the taskforce’s recommendations, including its proposals on tied selling and improving access to bank shelf space for independent investment products. The government directed the OSC to study both issues last year, although the results of that exercise have yet to see the light of day.

The budget also indicated it will consider the taskforce’s proposals on improving corporate diversity, facilitating electronic communication, and enhancing ESG disclosure — but again, it didn’t promise decisive policy action in any of those areas.

Similarly, the government noted that it has consulted on the adoption of new platform-style securities legislation — the draft Capital Markets Act — but stopped short of promising to adopt that controversial approach.

The proposed new legislation was condemned by some in the investment and legal communities as unnecessary, and potentially damaging to the government’s objective of reducing regulatory burdens.

In today’s budget, the government said only that it “will carefully consider stakeholder submissions prior to determining next steps” on the proposed new legislation.

Beyond that, the government said it is “committed to protecting investors and ensuring that Ontario continues to be an attractive jurisdiction to invest and raise capital.”

It also highlighted its belief in “improving consumer choice” when it comes to investment products, without making specific policy pledges.

Additionally, the budget indicated that the government’s venture capital agency, Ontario Capital Growth Corp., will be rebranded as Venture Ontario, and its funding expanded to $300 million from $100 million.

“This will enable the agency to make an additional $200 million in investments under the Venture Ontario Fund II, focusing on building Ontario’s competitive advantages in key sectors, including life sciences, clean technology, information technology and artificial intelligence,” the budget noted.

The added seed capital is expected to translate into an additional $1.8 billion for the province’s VC fund managers, the government said. “Ontario will also consult with the angel investment community to explore opportunities to grow this important source of capital and bring its benefits to communities across the province.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.