OSC launches task force to lighten regulation

Creation of internal group reflects shift in approach toward securities regulation by OSC and the provincial government

The Ontario Securities Commission (OSC) today announced the launch of a new internal task force focused on reducing the regulatory burden.

OSC Chairwoman Maureen Jensen made the announcement at the OSC’s annual policy conference, OSC Dialogue, in Toronto on Thursday. Jensen said that the OSC has created a new internal group dedicated to looking for ways to make regulation less prescriptive, and to “lighten the load” on the industry. At the same time, she suggested, there are ways to make regulatory compliance less of a chore for the industry without curbing investor protection.

The move, which signals a shift in approach for the OSC, comes in the wake of a sharp change in approach toward securities regulation by the provincial government. The Ontario government came out against a long-running initiative of the Canadian Securities Administrators to enhance retail investor protection by outlawing deferred sales charge mutual fund structures.

Jensen noted that the change in government position represented an overnight shift in the regulatory environment. She stressed that the OSC aims to abide by the wishes of its government overseers, adding that the government’s support of the regulator is “critical.”

Jensen suggested that the dramatic change in the government’s approach also represents an opportunity for the OSC to review its rules and the regulatory framework.

During a separate panel discussion at the conference, Jay Clayton, chairman of the U.S. Securities and Exchange Commission, argued that a regulatory burden and investor protection are not necessarily positively correlated. He suggested that there are ways to reduce regulatory loads on the industry while actually increasing investor protection.

For example, he said, efforts to eliminate unproductive paperwork could draw certain market participants out of private markets and into the regulated world. Investors would benefit from dealing with firms that are within the regulatory perimeter, while the regulation that firms face within that perimeter are less oppressive.

In that same discussion, Christopher Giancarlo, chairman of the U.S. Commodity Futures Trading Commission, indicated that as regulators improve the data they use to help craft policy, the simple binary notion that regulation is either being rolled back or ramped up can be replaced with the idea of reforming regulation to make it more effective.

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