OSC adopts amendments to fee model

The Ontario Securities Commission (OSC) today published final amendments to OSC Rules 13-502 and 13-503, as well as their companion policies.

This means it’s set its funding model for the next three fiscal years.

The amendments follows careful consideration of the public feedback received on the proposal published in August 2012. In response to all comments, the OSC revised its proposal while also ensuring fees help the committee meet evolving regulatory responsibilities.

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It’s reduced the percentage increases in participation fees for both reporting issuers and registrants, and has removed the component of these increases designed to build a surplus.

“The OSC’s new funding model strikes the right balance between feedback from market participants and the commission’s responsibility to respond to evolving capital market demands,” says Maureen Jensen, the OSC’s executive director and chief administrative officer.

She adds, “We have responded appropriately with a funding model that will enable us to continue to carry out our important regulatory work for the benefit of investors, while recognizing the difficult environment for market participants.”

The new fee model better aligns the fees paid by market participants with the resources employed by the OSC in regulating their activities. Under the new fee model, fees will remain unchanged, or decrease for 45% of issuers and 55% of registrants.

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Although the committee concedes many of the entities under its jurisdiction face difficult economic conditions, it has become increasingly more costly for securities regulators to oversee the capital markets.

Additionally, enforcement actions have grown rapidly in scope and complexity, requiring more resources in order to investigate and prosecute.

The rule amendments have been delivered for approval to the Minister of Finance. If approved by the Minister of Finance by February 19, 2013, they come into force on April 1, 2013.

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The new model is expected to be in effect for a three-year period, starting April 1, 2013.

Copies of the proposed amendments and the OSC’s response to the comments received are available on the OSC website.

IIAC responds

The IIAC is pleased the OSC has recognized the very difficult market conditions under which industry participants have been operating since 2008.

The reduced OSC fee increases from 15.55% to 11.65% for issuers and from 7.9% to 4.7% for registrants should help soften the impact for market participants.

The IIAC is disappointed with the OSC’s decision to utilize a fixed reference year in connection with the calculation of its participation fees. The industry had recommended the OSC use a rolling average to provide a closer link to recent performance and amount of fees paid to the OSC.

Also, the IIAC acknowledges the accountability framework highlighted by the OSC. But the industry continues to believe a more accountable regime is needed to promote vigorous dialogue on the methods and approaches to improve rule-making and compliance standards that contribute to more competitive and efficient markets.

Read:

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