TASK FORCE SEEKS TO EXPAND OSC ROLE

`It's very difficult to be a regulator and a partner'

TORONTO • A key recommendation to expand the mandate of the Ontario Securities Commission to encourage capital raising and competition will be delivered to the provincial government in December in the final report of a task force formed to overhaul capital markets activity and regulation.

“I expect that this recommendation will proceed to our final report,” Walied Soliman, chair of the Capital Markets Modernization Taskforce, told the audience at an online conference held by the OSC on Wednesday.

He said the task force concluded easily that Canada's largest capital markets regulator should “not only (be) playing a policing role but playing a role in the growth of the capital markets” as well.

However, the proposal drew a note of caution from Maureen Jensen, who was chair of the OSC until April, and who participated in a panel discussion at the conference along with four other former commission chairs whose combined terms covered most of the past 30 years.

Jensen said she is concerned that, if adopted by the government, the new mandate would turn the regulator into a “partner” with companies and funds, which would create a conflict when it comes to policing them.

“It's very difficult to be a regulator and a partner … at the same time,” she said. “You're really not independent.”

Jensen added that the regulator's current mandate to promote fair and efficient markets allows it to set the stage for innovation and then get out of the way.

Howard Wetston, chair of the OSC before Jensen, said he agreed with her to an extent, but added he understood the push to expand the regulator's mandate, given the rapid evolution of markets and the importance of staying competitive domestically and globally.

Soliman, also the Canadian chair of law firm Norton Rose Fulbright LLP, noted expansion of the OSC's mandate would not be groundbreaking or novel, given regulators in other jurisdictions such as Australia and Singapore have mandates to promote economic growth and competition, with the power to remove obstacles including fees and tackle anti-competitive behaviour.

The Conservative government that formed the task force and appointed Soliman as its chair has proved to be one of the most handson in recent years when it comes to the OSC. In 2018, for instance, then finance minister Vic Fedeli issued a public statement opposing a planned OSC ban on certain mutual fund fees. The government then pushed the regulator to overhaul its rules and processes with an eye to reducing the regulatory “burden” on companies and individuals.

Jensen, who resigned this year several months before her term expired, sounded another note of “concern” at Wednesday's conference regarding the government's role in oversight of the independent regulator. While the government “has interest in certain types of policy items,” she said its participation “shouldn't be so deep into the weeds that it prescribes the outcome.”

Wetston agreed there are

IN ONTARIO THE MINISTER APPROVES THE RULES.

aspects of the OSC's operations that are “sacrosanct” and should not be touched. This includes adjudicative hearings where the OSC is enforcing the rules that govern the capital markets and ensure they are fair.

However, he said the finance minister has some powers in the statutes that govern the market watchdog that have been rarely used only because of relationships and trust developed between the government and the regulator.

“Independence is not absolute, and we must not think it's absolute,” Wetston told conference participants. “Remember, in Ontario, the minister approves the rules.”