OSC reports $7.6 million deficiency in 2013

The OSC has released its 2013 annual report.

The document outlines its current mandates and activities, as well as the commission’s financial standing. The regulator had a deficiency of $7.6 million throughout the year ended March 31, 2013, compared to a loss of $4.4 million in the previous year.

In his opening statement, OSC chair Howard Wetston says, “The OSC is facing three key challenges: globalization, structural changes in our markets, and financial innovation…[These factors have] given rise to new areas of focus such as derivatives, algorithmic trading, social media and cyber security.”

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While he says the OSC traditionally aims to “set the rules of the game” by focusing on “registration, enforcement, compliance and oversight,” he concedes, “[We] need to consider new approaches…to meet the needs of today’s investors and…markets.

“For example, companies raising capital through online social media networks—[this includes crowd funding initiatives like Kickstarter]—would have been inconceivable to securities regulators just a few years ago. Today, it is our role to examine whether innovations like these are in the best interests of investors and the markets, and to determine whether any restrictions or additional investor protection measures are warranted.”

He adds the OSC has to start working with international regulators to ensure they’re both helping Canadians to invest safely abroad.

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Throughout the report, the OSC discusses its efforts to protect retail investors using education programs and enacting disclosure and suitability rules.

The commission also mentions its ongoing work to boost the advisor best interest standard, along with its focus on exempt markets.

Regarding the latter, the report says, “The total amount of capital raised in Ontario through exempt distributions in 2011 was approximately $86.5 billion. This capital was raised…using a variety of instruments, including debt, equity, asset backed securities, investment fund securities and derivatives.

“Of the $27.7 billion raised in Ontario (by issuers other than investment funds), approximately 23% was raised by the financial services industry, with 14% raised by the mining sector and 5% by the technology industry.”

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The report says the OSC’s enforcement branch assessed 238 matters in the year ended March 31, 2013. That compared to 210 in the previous year. It also completed 36 investigations and transferred 25 to litigation over 2012 and 2013, compared to 39 and 29 in the previous year.

For more on the OSC’s earnings and activities, read the full report.

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