OSC launches first wave of TestLab experiments focused on KYC, KYP

The Ontario Securities Commission (OSC) is opening the window on its first innovation experiments, which will look at ways to enhance know-your-client and know-your-product processes.

“With OSC Testlab, we are proactively identifying areas where innovative solutions can drive progress in Ontario’s capital markets,” said Grant Vingoe, chair and CEO of the OSC, in a statement.

“Market participants and technology providers have a unique opportunity to test solutions that benefit Ontario businesses and investors,” he added.

The regulator’s new Office of Economic Growth and Innovation is launching the OSC TestLab to enable firms to engage in group testing of solutions to certain “problem statements” that address industry issues.

Its first round of experiments will look at approaches to enhancing the accessibility and utility of investment product information and improving client information sharing.

“The first problem statement focuses on making product information more accessible for registered firms as well as their clients,” the office said in a post outlining the planned test.

“Advisors and dealers told us directly that they’re finding it difficult to identify, understand, and compare the different financial products that are available,” it noted.

Additionally, investors are looking for greater transparency and more insight into alternative strategies, it said.

“If clients are asking for more targeted or detailed product information, how do registrants gain a deeper understanding of their client’s needs to share the right information?”

The second statement will look at harnessing technology, or other innovative solutions, to help firms collect and analyze client information to improve their service to, and communications with, clients.

“We’ve heard from advisors and dealers that it is sometimes a challenge to collect basic information about their clients,” it said.

At the same time, clients may be open to sharing more information in exchange for receiving more personalized tools and advice, it suggested.

“Potential solutions could include ones that aggregate product information in a standardized format, automate the collection of investor information, or incorporate new ways to assess such information,” the regulator suggested.

The OSC is seeking applications by Jan. 31 for its first tests in the spring of 2022.

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.