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BCSC Proposes New Rules for Stock Promoters

 150 150 Enoch Wealth Management

BCSC Proposes New Rules for Stock Promoters

May 28th 2021

BCSC proposes new rules for stock promoters

Regulators in British Columbia, long a haven for stock touts and pump-and-dump schemes, are proposing new disclosure requirements for stock promotion activity.

The new rules from the British Columbia Securities Commission (BCSC), which are out for a 60-day comment period, would apply to popular new avenues for touting stocks, such as Reddit, Twitter and TikTok, along with more traditional investment newsletters. The rules would also cover emails, verbal statements and other kinds of communications.

Under the proposed new rules, anyone promoting companies that have connections to B.C. would have to disclose any compensation they’re getting for their efforts, whether they have a stake in the company (both securities and derivatives), and other facts that could conceivably influence their objectivity.

The rules would not apply to investment funds, dealers engaging in activity that requires registration (such as selling a stock offering) or corporate executives and employees that identify themselves as promoting their own companies’ stock.

The BCSC said the objective of the proposals is to give investors “improved transparency about the source and reliability of promotional activity, enabling them to make more informed investment decisions.”

The commission also noted that the added disclosure requirements would help it root out “problematic promotional activity [that] undermines the integrity of the capital markets and puts investors at risk of harm from making misinformed investment decisions.”

The regulator said its proposals are “the first of their kind in Canada” and were enabled by amendments to the province’s securities legislation that took effect last year, which give the BCSC greater power to regulate promotional activity. With the growth of social media as a venue for hyping up stocks regulators are increasingly challenged to address this sort of activity.

“People should know if someone promoting a stock has a financial or other interest, because that would help them decide how much weight to give the promotion and make better informed investment decisions,” said Peter Brady, executive director of the BCSC, in a release.

Earlier this year, a provincial task force in Ontario recommended that the government specifically prohibit misleading, or untrue statements about public companies to make it easier for the Ontario Securities Commission (OSC) to combat both abusive “pump-and-dump” and “short-and-distort” campaigns in its market too.

The BCSC’s proposals also carry a couple of additional requirements for venture issuers, including that they would have to issue news releases disclosing outsourced promotional activity, and they’d have to disclose promotional spending that exceeds 10% of overall operating expenses in their financial statements.

“Some companies have a legitimate need to engage in promotional activities and they should have no trouble complying with the proposed rules,” Brady said. “But abusive stock promotions are a scourge that go hand in hand with abusive trading, and the new rules would give us one more tool to tackle them.”

Comments on the proposed rules are due by July 26.

BCSC Proposes New Rules for Stock Promoters

May 28th 2021

BCSC proposes new rules for stock promoters

Regulators in British Columbia, long a haven for stock touts and pump-and-dump schemes, are proposing new disclosure requirements for stock promotion activity.

The new rules from the British Columbia Securities Commission (BCSC), which are out for a 60-day comment period, would apply to popular new avenues for touting stocks, such as Reddit, Twitter and TikTok, along with more traditional investment newsletters. The rules would also cover emails, verbal statements and other kinds of communications.

Under the proposed new rules, anyone promoting companies that have connections to B.C. would have to disclose any compensation they’re getting for their efforts, whether they have a stake in the company (both securities and derivatives), and other facts that could conceivably influence their objectivity.

The rules would not apply to investment funds, dealers engaging in activity that requires registration (such as selling a stock offering) or corporate executives and employees that identify themselves as promoting their own companies’ stock.

The BCSC said the objective of the proposals is to give investors “improved transparency about the source and reliability of promotional activity, enabling them to make more informed investment decisions.”

The commission also noted that the added disclosure requirements would help it root out “problematic promotional activity [that] undermines the integrity of the capital markets and puts investors at risk of harm from making misinformed investment decisions.”

The regulator said its proposals are “the first of their kind in Canada” and were enabled by amendments to the province’s securities legislation that took effect last year, which give the BCSC greater power to regulate promotional activity. With the growth of social media as a venue for hyping up stocks regulators are increasingly challenged to address this sort of activity.

“People should know if someone promoting a stock has a financial or other interest, because that would help them decide how much weight to give the promotion and make better informed investment decisions,” said Peter Brady, executive director of the BCSC, in a release.

Earlier this year, a provincial task force in Ontario recommended that the government specifically prohibit misleading, or untrue statements about public companies to make it easier for the Ontario Securities Commission (OSC) to combat both abusive “pump-and-dump” and “short-and-distort” campaigns in its market too.

The BCSC’s proposals also carry a couple of additional requirements for venture issuers, including that they would have to issue news releases disclosing outsourced promotional activity, and they’d have to disclose promotional spending that exceeds 10% of overall operating expenses in their financial statements.

“Some companies have a legitimate need to engage in promotional activities and they should have no trouble complying with the proposed rules,” Brady said. “But abusive stock promotions are a scourge that go hand in hand with abusive trading, and the new rules would give us one more tool to tackle them.”

Comments on the proposed rules are due by July 26.

BCSC Proposes New Rules for Stock Promoters

May 28th 2021

BCSC proposes new rules for stock promoters

Regulators in British Columbia, long a haven for stock touts and pump-and-dump schemes, are proposing new disclosure requirements for stock promotion activity.

The new rules from the British Columbia Securities Commission (BCSC), which are out for a 60-day comment period, would apply to popular new avenues for touting stocks, such as Reddit, Twitter and TikTok, along with more traditional investment newsletters. The rules would also cover emails, verbal statements and other kinds of communications.

Under the proposed new rules, anyone promoting companies that have connections to B.C. would have to disclose any compensation they’re getting for their efforts, whether they have a stake in the company (both securities and derivatives), and other facts that could conceivably influence their objectivity.

The rules would not apply to investment funds, dealers engaging in activity that requires registration (such as selling a stock offering) or corporate executives and employees that identify themselves as promoting their own companies’ stock.

The BCSC said the objective of the proposals is to give investors “improved transparency about the source and reliability of promotional activity, enabling them to make more informed investment decisions.”

The commission also noted that the added disclosure requirements would help it root out “problematic promotional activity [that] undermines the integrity of the capital markets and puts investors at risk of harm from making misinformed investment decisions.”

The regulator said its proposals are “the first of their kind in Canada” and were enabled by amendments to the province’s securities legislation that took effect last year, which give the BCSC greater power to regulate promotional activity. With the growth of social media as a venue for hyping up stocks regulators are increasingly challenged to address this sort of activity.

“People should know if someone promoting a stock has a financial or other interest, because that would help them decide how much weight to give the promotion and make better informed investment decisions,” said Peter Brady, executive director of the BCSC, in a release.

Earlier this year, a provincial task force in Ontario recommended that the government specifically prohibit misleading, or untrue statements about public companies to make it easier for the Ontario Securities Commission (OSC) to combat both abusive “pump-and-dump” and “short-and-distort” campaigns in its market too.

The BCSC’s proposals also carry a couple of additional requirements for venture issuers, including that they would have to issue news releases disclosing outsourced promotional activity, and they’d have to disclose promotional spending that exceeds 10% of overall operating expenses in their financial statements.

“Some companies have a legitimate need to engage in promotional activities and they should have no trouble complying with the proposed rules,” Brady said. “But abusive stock promotions are a scourge that go hand in hand with abusive trading, and the new rules would give us one more tool to tackle them.”

Comments on the proposed rules are due by July 26.

Ontario Joins DSC Ban

 150 150 Enoch Wealth Management

Ontario Joins DSC Ban

May 10th 2021

The province changed its position based on “overwhelming” support for a harmonized ban.

Ending a two-and-a-half-year stalemate, Ontario has decided to join the rest of the Canadian Securities Administrators (CSA) in eliminating deferred sales charge (DSC) mutual funds.

The volte-face on DSCs comes in the wake of a consultation by the Ontario Securities Commission (OSC) on a series of possible restrictions on the use of DSCs instead of an outright ban. According to the regulator, the majority of responses to that consultation called for Ontario to go along with the rest of the CSA and get rid of DSCs altogether.

In a staff notice outlining the policy pivot, the OSC said the comments on its proposals “overwhelmingly expressed support for a harmonized DSC ban.”

Those calls to scrap the fund structure came from both investors and parts of the investment industry. Investor advocates argued that preserving DSCs would perpetuate a compensation structure that harms investor interests.

Those in the industry who supported a ban worried that adopting different rules in Ontario from the rest of the country “would create a two-tiered regulatory approach, which would create compliance issues, be costly and burdensome to implement and monitor, and cause market inefficiency,” the OSC stated in its notice.

About 25% of the comments received by the OSC supported retaining the DSC option. That group of DSC defenders included industry heavyweights such as Invesco Canada Ltd., Fidelity Investments Canada ULC, AGF Investments Inc. and Mackenzie Financial Corp., along with industry trade groups.

A common theme in those comments was the idea that retaining the DSC option would preserve choice for smaller investors and ensure that they have access to the investment market and accompanying advice.

While that argument has long been used in defence of DSC funds, the OSC pointed out in its notice that cheap investment options have emerged in recent years and smaller investors are less likely to be priced out of the market if DSCs are eliminated.

“Industry innovation over the past few years has opened significant new avenues for investors with smaller accounts at an affordable cost,” the OSC stated.

This suggests regulators are counting on cost-effective alternatives — such as robo-advisors, low-cost portfolio ETFs and no-load funds — to fill the void created by the elimination of DSCs.

Ontario is expected to join the rest of the provinces in banning the DSC on June 1, 2022. As of that date, no new DSC funds will be sold, but the redemption schedules for existing DSC funds will continue. That means several years will pass before the final DSC-sold fund is gone for good.

Already, the size and share of industry assets sold under the DSC option is dwindling. According to the OSC, the category has been in net redemptions since 2016; last year, DSC funds saw $3.34 billion in net redemptions.

Even so, eliminating the DSC structure is a significant event for a fund industry that had its early growth fuelled by the development of the DSC in the late 1980s.

Thirty years ago, the entire investment industry had around $10 billion in assets under management (AUM). Today, mutual funds are approaching $2 trillion in AUM. While a variety of factors drove that growth, the development of the DSC removed a key impediment for retail investors: hefty upfront sales commissions (as high as 9%) that immediately slashed fund buyers’ investments.

The DSC structure was the brainchild of Mackenzie Financial Corp.’s trailblazing president at the time, James O’Donnell, and was conceived as a way to allow fund buyers to put their full investment to work immediately by eliminating the upfront commission in exchange for locking the investor into a fund for several years.

At the time, the DSC structure was viewed as a stroke of genius that benefited all sides. Buyers saw all their dollars invested. Fund companies got more money to manage. And fund dealers didn’t give up any revenues — the source of their compensation simply shifted from the investor to the fund companies, effectively turning dealers into the manufacturers’ target market.

For years, the DSC structure helped drive strong fund sales growth. Over time, however, it fell out of favour. Investor advocates and regulators grew concerned about the fact that investors could effectively be “locked in” to a poorly performing asset. Concerns also arose over the hefty redemption fees investors would face when struck by a sudden event — such as a job loss, business failure, divorce, market crash or pandemic — that sparks an urgent need for liquidity.

Additionally, some argued that the cost of financing the initial commissions paid by funds to dealers under the DSC structure increased fund management costs and acted as a drag on investors’ returns while also creating conflicts of interest for financial advisors.

The intuition that DSCs could be harmful to investors was confirmed in 2015 by a major CSA research project (led by York University finance professor Douglas Cumming), which concluded DSCs and trailer fees were associated with lower expected returns.

The flaws with the DSC structure became so apparent that, in 2018, the CSA decided to ban them. Ontario’s Progressive Conservative government, which was just a couple of months old at the time, rejected the regulators’ policy decision.

The Ontario government even took the unprecedented move of publicly declaring its opposition to the CSA before the public consultation process had played out. In a statement, then-¬finance minister Vic Fedeli said the ban would “discontinue a payment option for purchasing mutual funds that has enabled Ontario families and investors to save toward retirement and other financial goals.” The government promised to explore alternatives to an outright ban on the premise that DSCs were needed to preserve access to investing and advice for smaller investors.

That approach left the OSC to develop ways to preserve DSCs while addressing the regulatory concerns with the structure. To that end, the OSC recommended a series of proposed restrictions on DSC use that included limiting the size of investment, the age of the investor and the length of redemption schedules.

Ultimately, however, Ontario concluded that DSCs just aren’t worth the fight anymore.

Ontario Joins DSC Ban

May 10th 2021

The province changed its position based on “overwhelming” support for a harmonized ban.

Ending a two-and-a-half-year stalemate, Ontario has decided to join the rest of the Canadian Securities Administrators (CSA) in eliminating deferred sales charge (DSC) mutual funds.

The volte-face on DSCs comes in the wake of a consultation by the Ontario Securities Commission (OSC) on a series of possible restrictions on the use of DSCs instead of an outright ban. According to the regulator, the majority of responses to that consultation called for Ontario to go along with the rest of the CSA and get rid of DSCs altogether.

In a staff notice outlining the policy pivot, the OSC said the comments on its proposals “overwhelmingly expressed support for a harmonized DSC ban.”

Those calls to scrap the fund structure came from both investors and parts of the investment industry. Investor advocates argued that preserving DSCs would perpetuate a compensation structure that harms investor interests.

Those in the industry who supported a ban worried that adopting different rules in Ontario from the rest of the country “would create a two-tiered regulatory approach, which would create compliance issues, be costly and burdensome to implement and monitor, and cause market inefficiency,” the OSC stated in its notice.

About 25% of the comments received by the OSC supported retaining the DSC option. That group of DSC defenders included industry heavyweights such as Invesco Canada Ltd., Fidelity Investments Canada ULC, AGF Investments Inc. and Mackenzie Financial Corp., along with industry trade groups.

A common theme in those comments was the idea that retaining the DSC option would preserve choice for smaller investors and ensure that they have access to the investment market and accompanying advice.

While that argument has long been used in defence of DSC funds, the OSC pointed out in its notice that cheap investment options have emerged in recent years and smaller investors are less likely to be priced out of the market if DSCs are eliminated.

“Industry innovation over the past few years has opened significant new avenues for investors with smaller accounts at an affordable cost,” the OSC stated.

This suggests regulators are counting on cost-effective alternatives — such as robo-advisors, low-cost portfolio ETFs and no-load funds — to fill the void created by the elimination of DSCs.

Ontario is expected to join the rest of the provinces in banning the DSC on June 1, 2022. As of that date, no new DSC funds will be sold, but the redemption schedules for existing DSC funds will continue. That means several years will pass before the final DSC-sold fund is gone for good.

Already, the size and share of industry assets sold under the DSC option is dwindling. According to the OSC, the category has been in net redemptions since 2016; last year, DSC funds saw $3.34 billion in net redemptions.

Even so, eliminating the DSC structure is a significant event for a fund industry that had its early growth fuelled by the development of the DSC in the late 1980s.

Thirty years ago, the entire investment industry had around $10 billion in assets under management (AUM). Today, mutual funds are approaching $2 trillion in AUM. While a variety of factors drove that growth, the development of the DSC removed a key impediment for retail investors: hefty upfront sales commissions (as high as 9%) that immediately slashed fund buyers’ investments.

The DSC structure was the brainchild of Mackenzie Financial Corp.’s trailblazing president at the time, James O’Donnell, and was conceived as a way to allow fund buyers to put their full investment to work immediately by eliminating the upfront commission in exchange for locking the investor into a fund for several years.

At the time, the DSC structure was viewed as a stroke of genius that benefited all sides. Buyers saw all their dollars invested. Fund companies got more money to manage. And fund dealers didn’t give up any revenues — the source of their compensation simply shifted from the investor to the fund companies, effectively turning dealers into the manufacturers’ target market.

For years, the DSC structure helped drive strong fund sales growth. Over time, however, it fell out of favour. Investor advocates and regulators grew concerned about the fact that investors could effectively be “locked in” to a poorly performing asset. Concerns also arose over the hefty redemption fees investors would face when struck by a sudden event — such as a job loss, business failure, divorce, market crash or pandemic — that sparks an urgent need for liquidity.

Additionally, some argued that the cost of financing the initial commissions paid by funds to dealers under the DSC structure increased fund management costs and acted as a drag on investors’ returns while also creating conflicts of interest for financial advisors.

The intuition that DSCs could be harmful to investors was confirmed in 2015 by a major CSA research project (led by York University finance professor Douglas Cumming), which concluded DSCs and trailer fees were associated with lower expected returns.

The flaws with the DSC structure became so apparent that, in 2018, the CSA decided to ban them. Ontario’s Progressive Conservative government, which was just a couple of months old at the time, rejected the regulators’ policy decision.

The Ontario government even took the unprecedented move of publicly declaring its opposition to the CSA before the public consultation process had played out. In a statement, then-¬finance minister Vic Fedeli said the ban would “discontinue a payment option for purchasing mutual funds that has enabled Ontario families and investors to save toward retirement and other financial goals.” The government promised to explore alternatives to an outright ban on the premise that DSCs were needed to preserve access to investing and advice for smaller investors.

That approach left the OSC to develop ways to preserve DSCs while addressing the regulatory concerns with the structure. To that end, the OSC recommended a series of proposed restrictions on DSC use that included limiting the size of investment, the age of the investor and the length of redemption schedules.

Ultimately, however, Ontario concluded that DSCs just aren’t worth the fight anymore.

Ontario Joins DSC Ban

May 10th 2021

The province changed its position based on “overwhelming” support for a harmonized ban.

Ending a two-and-a-half-year stalemate, Ontario has decided to join the rest of the Canadian Securities Administrators (CSA) in eliminating deferred sales charge (DSC) mutual funds.

The volte-face on DSCs comes in the wake of a consultation by the Ontario Securities Commission (OSC) on a series of possible restrictions on the use of DSCs instead of an outright ban. According to the regulator, the majority of responses to that consultation called for Ontario to go along with the rest of the CSA and get rid of DSCs altogether.

In a staff notice outlining the policy pivot, the OSC said the comments on its proposals “overwhelmingly expressed support for a harmonized DSC ban.”

Those calls to scrap the fund structure came from both investors and parts of the investment industry. Investor advocates argued that preserving DSCs would perpetuate a compensation structure that harms investor interests.

Those in the industry who supported a ban worried that adopting different rules in Ontario from the rest of the country “would create a two-tiered regulatory approach, which would create compliance issues, be costly and burdensome to implement and monitor, and cause market inefficiency,” the OSC stated in its notice.

About 25% of the comments received by the OSC supported retaining the DSC option. That group of DSC defenders included industry heavyweights such as Invesco Canada Ltd., Fidelity Investments Canada ULC, AGF Investments Inc. and Mackenzie Financial Corp., along with industry trade groups.

A common theme in those comments was the idea that retaining the DSC option would preserve choice for smaller investors and ensure that they have access to the investment market and accompanying advice.

While that argument has long been used in defence of DSC funds, the OSC pointed out in its notice that cheap investment options have emerged in recent years and smaller investors are less likely to be priced out of the market if DSCs are eliminated.

“Industry innovation over the past few years has opened significant new avenues for investors with smaller accounts at an affordable cost,” the OSC stated.

This suggests regulators are counting on cost-effective alternatives — such as robo-advisors, low-cost portfolio ETFs and no-load funds — to fill the void created by the elimination of DSCs.

Ontario is expected to join the rest of the provinces in banning the DSC on June 1, 2022. As of that date, no new DSC funds will be sold, but the redemption schedules for existing DSC funds will continue. That means several years will pass before the final DSC-sold fund is gone for good.

Already, the size and share of industry assets sold under the DSC option is dwindling. According to the OSC, the category has been in net redemptions since 2016; last year, DSC funds saw $3.34 billion in net redemptions.

Even so, eliminating the DSC structure is a significant event for a fund industry that had its early growth fuelled by the development of the DSC in the late 1980s.

Thirty years ago, the entire investment industry had around $10 billion in assets under management (AUM). Today, mutual funds are approaching $2 trillion in AUM. While a variety of factors drove that growth, the development of the DSC removed a key impediment for retail investors: hefty upfront sales commissions (as high as 9%) that immediately slashed fund buyers’ investments.

The DSC structure was the brainchild of Mackenzie Financial Corp.’s trailblazing president at the time, James O’Donnell, and was conceived as a way to allow fund buyers to put their full investment to work immediately by eliminating the upfront commission in exchange for locking the investor into a fund for several years.

At the time, the DSC structure was viewed as a stroke of genius that benefited all sides. Buyers saw all their dollars invested. Fund companies got more money to manage. And fund dealers didn’t give up any revenues — the source of their compensation simply shifted from the investor to the fund companies, effectively turning dealers into the manufacturers’ target market.

For years, the DSC structure helped drive strong fund sales growth. Over time, however, it fell out of favour. Investor advocates and regulators grew concerned about the fact that investors could effectively be “locked in” to a poorly performing asset. Concerns also arose over the hefty redemption fees investors would face when struck by a sudden event — such as a job loss, business failure, divorce, market crash or pandemic — that sparks an urgent need for liquidity.

Additionally, some argued that the cost of financing the initial commissions paid by funds to dealers under the DSC structure increased fund management costs and acted as a drag on investors’ returns while also creating conflicts of interest for financial advisors.

The intuition that DSCs could be harmful to investors was confirmed in 2015 by a major CSA research project (led by York University finance professor Douglas Cumming), which concluded DSCs and trailer fees were associated with lower expected returns.

The flaws with the DSC structure became so apparent that, in 2018, the CSA decided to ban them. Ontario’s Progressive Conservative government, which was just a couple of months old at the time, rejected the regulators’ policy decision.

The Ontario government even took the unprecedented move of publicly declaring its opposition to the CSA before the public consultation process had played out. In a statement, then-¬finance minister Vic Fedeli said the ban would “discontinue a payment option for purchasing mutual funds that has enabled Ontario families and investors to save toward retirement and other financial goals.” The government promised to explore alternatives to an outright ban on the premise that DSCs were needed to preserve access to investing and advice for smaller investors.

That approach left the OSC to develop ways to preserve DSCs while addressing the regulatory concerns with the structure. To that end, the OSC recommended a series of proposed restrictions on DSC use that included limiting the size of investment, the age of the investor and the length of redemption schedules.

Ultimately, however, Ontario concluded that DSCs just aren’t worth the fight anymore.

CSA Finalizes Amendments to Syndicated Mortgages Regime

 150 150 Enoch Wealth Management

CSA Finalizes Amendments to Syndicated Mortgages Regime

February 26th 2021

BCSC proposes new rules for stock promoters

CSA Finalizes Amendments to Syndicated Mortgages Regime, while OSC and FSRA Publish Local Rules

On August 6, the Canadian Securities Administrators (CSA) published final amendments to national rules affecting the prospectus and registration exemptions for distributions of securities involving syndicated mortgages (National Amendments). In addition, some provinces including Ontario have proposed additional changes to their local prospectus and registration exemptions, and the Financial Services Regulatory Authority of Ontario (FSRA) is consulting on draft guidance (FSRA Guidance) for its supervision of mortgage brokers and administrators dealing in certain syndicated mortgages. The National Amendments, proposed FSRA Guidance, and proposed Ontario-specific amendments prospectus and registration exemptions (Ontario Rules) are expected to come into effect on March 1, 2021. Below, we highlight key features of the reforms.

The National Amendments will amend National Instrument 45-106 Prospectus Exemptions (NI 45-106), National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), and the related companion policies. Among other things:

• The existing prospectus and registration exemptions in Ontario, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island and the Yukon for securities that are syndicated mortgages (Mortgage Exemptions) will be removed. This will align the regulatory frameworks in these jurisdictions with the rest of Canada.

• The private issuer prospectus exemption (Private Issuer Exemption) will be removed for distributions of syndicated mortgages.

• Because of these changes, exempt distributions of syndicated mortgages in Canada will have to be effected under another prospectus exemption, such as the accredited investor exemption (AI Exemption), offering memorandum exemption (OM Exemption), or family, friends and business associates exemption (FFBA Exemption).

• Consistent with the current approach in British Columbia for syndicated mortgages distributed under the OM Exemption, the National Amendments will require supplemental disclosure tailored to syndicated mortgages.

• In Ontario and other jurisdictions where the Mortgage Exemptions currently apply to syndicated mortgages, market participants that are in the business of trading syndicated mortgages will need to determine whether the registration requirement applies to them.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

CSA Finalizes Amendments to Syndicated Mortgages Regime

February 26th 2021

BCSC proposes new rules for stock promoters

CSA Finalizes Amendments to Syndicated Mortgages Regime, while OSC and FSRA Publish Local Rules

On August 6, the Canadian Securities Administrators (CSA) published final amendments to national rules affecting the prospectus and registration exemptions for distributions of securities involving syndicated mortgages (National Amendments). In addition, some provinces including Ontario have proposed additional changes to their local prospectus and registration exemptions, and the Financial Services Regulatory Authority of Ontario (FSRA) is consulting on draft guidance (FSRA Guidance) for its supervision of mortgage brokers and administrators dealing in certain syndicated mortgages. The National Amendments, proposed FSRA Guidance, and proposed Ontario-specific amendments prospectus and registration exemptions (Ontario Rules) are expected to come into effect on March 1, 2021. Below, we highlight key features of the reforms.

The National Amendments will amend National Instrument 45-106 Prospectus Exemptions (NI 45-106), National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), and the related companion policies. Among other things:

• The existing prospectus and registration exemptions in Ontario, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island and the Yukon for securities that are syndicated mortgages (Mortgage Exemptions) will be removed. This will align the regulatory frameworks in these jurisdictions with the rest of Canada.

• The private issuer prospectus exemption (Private Issuer Exemption) will be removed for distributions of syndicated mortgages.

• Because of these changes, exempt distributions of syndicated mortgages in Canada will have to be effected under another prospectus exemption, such as the accredited investor exemption (AI Exemption), offering memorandum exemption (OM Exemption), or family, friends and business associates exemption (FFBA Exemption).

• Consistent with the current approach in British Columbia for syndicated mortgages distributed under the OM Exemption, the National Amendments will require supplemental disclosure tailored to syndicated mortgages.

• In Ontario and other jurisdictions where the Mortgage Exemptions currently apply to syndicated mortgages, market participants that are in the business of trading syndicated mortgages will need to determine whether the registration requirement applies to them.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

CSA Finalizes Amendments to Syndicated Mortgages Regime

February 26th 2021

BCSC proposes new rules for stock promoters

CSA Finalizes Amendments to Syndicated Mortgages Regime, while OSC and FSRA Publish Local Rules

On August 6, the Canadian Securities Administrators (CSA) published final amendments to national rules affecting the prospectus and registration exemptions for distributions of securities involving syndicated mortgages (National Amendments). In addition, some provinces including Ontario have proposed additional changes to their local prospectus and registration exemptions, and the Financial Services Regulatory Authority of Ontario (FSRA) is consulting on draft guidance (FSRA Guidance) for its supervision of mortgage brokers and administrators dealing in certain syndicated mortgages. The National Amendments, proposed FSRA Guidance, and proposed Ontario-specific amendments prospectus and registration exemptions (Ontario Rules) are expected to come into effect on March 1, 2021. Below, we highlight key features of the reforms.

The National Amendments will amend National Instrument 45-106 Prospectus Exemptions (NI 45-106), National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), and the related companion policies. Among other things:

• The existing prospectus and registration exemptions in Ontario, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island and the Yukon for securities that are syndicated mortgages (Mortgage Exemptions) will be removed. This will align the regulatory frameworks in these jurisdictions with the rest of Canada.

• The private issuer prospectus exemption (Private Issuer Exemption) will be removed for distributions of syndicated mortgages.

• Because of these changes, exempt distributions of syndicated mortgages in Canada will have to be effected under another prospectus exemption, such as the accredited investor exemption (AI Exemption), offering memorandum exemption (OM Exemption), or family, friends and business associates exemption (FFBA Exemption).

• Consistent with the current approach in British Columbia for syndicated mortgages distributed under the OM Exemption, the National Amendments will require supplemental disclosure tailored to syndicated mortgages.

• In Ontario and other jurisdictions where the Mortgage Exemptions currently apply to syndicated mortgages, market participants that are in the business of trading syndicated mortgages will need to determine whether the registration requirement applies to them.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

MFDA begins sketching map to new SRO

 150 150 Enoch Wealth Management

MFDA begins sketching map to new SRO

February 4th 2021

MFDA begins sketching map to new SRO

The MFDA is working on an “implementation roadmap” for its vision for the future of self-regulation

The ongoing battle over the future of self-regulation escalated on Tuesday when the Mutual Fund Dealers Association of Canada (MFDA) announced that it is developing a plan for implementing its proposed vision for a new SRO.

Last year, the MFDA published a paper setting out its proposed model for a new SRO that would oversee all registered firms, including exempt market dealers (EMDs) and portfolio managers, alongside fund dealers and investment dealers, while hiving off the responsibility of market regulation to the provincial securities regulators.

The MFDA proposal came amid a review of the SRO structure that’s being undertaken by the Canadian Securities Administrators (CSA). Ontario’s Capital Markets Modernization Taskforce has also recommended reforming self-regulation by merging the MFDA with the Investment Industry Regulatory Organization of Canada (IIROC) in the short-term, with the ultimate goal of expanding oversight to other registration categories over time.

The MFDA is now pushing ahead with the development of an “implementation roadmap” for its preferred model, which, it argued, is closely aligned with the recommendations of the Ontario task force.

“The task force’s recommendations to create a new single SRO to oversee all advisory firms, with a strengthened accountability framework, including its governance recommendation to include CSA nominees on the new SRO board, are very much aligned with the MFDA’s proposals,” the MFDA said in a notice.

In the meantime, the CSA is continuing to review the comments it received on its consultation on SRO reform, and has indicated that it will publish its conclusions later this year.

“The roadmap is intended to support the ongoing consultations on fundamental reform of securities industry self-regulation currently being conducted under the leadership and direction of the CSA,” the MFDA said in a release.

“Our goal is to empower and assist all stakeholders — investors, industry, regulators and governments — in envisioning a clear path toward a new SRO driven first and foremost by the public interest, and underpinned by sound governance, industry expertise and responsiveness to investor and market needs,” said Mark Gordon, president and CEO of the MFDA. “A clear implementation roadmap, which enables everyone to visualize how such change can be achieved, is a critical step in this effort.”

Notwithstanding the MFDA’s efforts, IIROC has advocated for a straightforward merger of the two existing SROs. Trade groups for the EMD sector and portfolio managers have opposed being drawn into an SRO altogether.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

MFDA begins sketching map to new SRO

February 4th 2021

MFDA begins sketching map to new SRO

The MFDA is working on an “implementation roadmap” for its vision for the future of self-regulation

The ongoing battle over the future of self-regulation escalated on Tuesday when the Mutual Fund Dealers Association of Canada (MFDA) announced that it is developing a plan for implementing its proposed vision for a new SRO.

Last year, the MFDA published a paper setting out its proposed model for a new SRO that would oversee all registered firms, including exempt market dealers (EMDs) and portfolio managers, alongside fund dealers and investment dealers, while hiving off the responsibility of market regulation to the provincial securities regulators.

The MFDA proposal came amid a review of the SRO structure that’s being undertaken by the Canadian Securities Administrators (CSA). Ontario’s Capital Markets Modernization Taskforce has also recommended reforming self-regulation by merging the MFDA with the Investment Industry Regulatory Organization of Canada (IIROC) in the short-term, with the ultimate goal of expanding oversight to other registration categories over time.

The MFDA is now pushing ahead with the development of an “implementation roadmap” for its preferred model, which, it argued, is closely aligned with the recommendations of the Ontario task force.

“The task force’s recommendations to create a new single SRO to oversee all advisory firms, with a strengthened accountability framework, including its governance recommendation to include CSA nominees on the new SRO board, are very much aligned with the MFDA’s proposals,” the MFDA said in a notice.

In the meantime, the CSA is continuing to review the comments it received on its consultation on SRO reform, and has indicated that it will publish its conclusions later this year.

“The roadmap is intended to support the ongoing consultations on fundamental reform of securities industry self-regulation currently being conducted under the leadership and direction of the CSA,” the MFDA said in a release.

“Our goal is to empower and assist all stakeholders — investors, industry, regulators and governments — in envisioning a clear path toward a new SRO driven first and foremost by the public interest, and underpinned by sound governance, industry expertise and responsiveness to investor and market needs,” said Mark Gordon, president and CEO of the MFDA. “A clear implementation roadmap, which enables everyone to visualize how such change can be achieved, is a critical step in this effort.”

Notwithstanding the MFDA’s efforts, IIROC has advocated for a straightforward merger of the two existing SROs. Trade groups for the EMD sector and portfolio managers have opposed being drawn into an SRO altogether.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

MFDA begins sketching map to new SRO

February 4th 2021

MFDA begins sketching map to new SRO

The MFDA is working on an “implementation roadmap” for its vision for the future of self-regulation

The ongoing battle over the future of self-regulation escalated on Tuesday when the Mutual Fund Dealers Association of Canada (MFDA) announced that it is developing a plan for implementing its proposed vision for a new SRO.

Last year, the MFDA published a paper setting out its proposed model for a new SRO that would oversee all registered firms, including exempt market dealers (EMDs) and portfolio managers, alongside fund dealers and investment dealers, while hiving off the responsibility of market regulation to the provincial securities regulators.

The MFDA proposal came amid a review of the SRO structure that’s being undertaken by the Canadian Securities Administrators (CSA). Ontario’s Capital Markets Modernization Taskforce has also recommended reforming self-regulation by merging the MFDA with the Investment Industry Regulatory Organization of Canada (IIROC) in the short-term, with the ultimate goal of expanding oversight to other registration categories over time.

The MFDA is now pushing ahead with the development of an “implementation roadmap” for its preferred model, which, it argued, is closely aligned with the recommendations of the Ontario task force.

“The task force’s recommendations to create a new single SRO to oversee all advisory firms, with a strengthened accountability framework, including its governance recommendation to include CSA nominees on the new SRO board, are very much aligned with the MFDA’s proposals,” the MFDA said in a notice.

In the meantime, the CSA is continuing to review the comments it received on its consultation on SRO reform, and has indicated that it will publish its conclusions later this year.

“The roadmap is intended to support the ongoing consultations on fundamental reform of securities industry self-regulation currently being conducted under the leadership and direction of the CSA,” the MFDA said in a release.

“Our goal is to empower and assist all stakeholders — investors, industry, regulators and governments — in envisioning a clear path toward a new SRO driven first and foremost by the public interest, and underpinned by sound governance, industry expertise and responsiveness to investor and market needs,” said Mark Gordon, president and CEO of the MFDA. “A clear implementation roadmap, which enables everyone to visualize how such change can be achieved, is a critical step in this effort.”

Notwithstanding the MFDA’s efforts, IIROC has advocated for a straightforward merger of the two existing SROs. Trade groups for the EMD sector and portfolio managers have opposed being drawn into an SRO altogether.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

Task force recommends changes to OSC

 150 150 Enoch Wealth Management

Task force recommends changes to OSC

January 25th 2021

Task force recommends sweeping changes to OSC

The proposals would radically alter securities regulation in Ontario

A government-appointed task force is recommending sweeping changes to the framework and content of securities regulation in Ontario.

The provincial government released the final report of its Capital Markets Modernization Taskforce on Friday. The report sets out a series of recommendations that, if adopted, would radically alter securities regulation in Ontario.

Among other things, the task force called for a restructuring of the Ontario Securities Commission (OSC), including spinning out its adjudicative function, separating the chair and CEO roles, expanding its mandate to include promoting growth and even changing its name — to the Ontario Capital Markets Authority.

Alongside the proposed restructuring of the commission, the task force recommended replacing the existing securities legislation with the Capital Markets Act, which was developed to facilitate the implementation of the cooperative capital markets regulator (CCMR) — a proposed federal-provincial body that would represent a step toward national regulation.

The task force recommended that the OSC and the Financial Services Regulatory Authority of Ontario (FSRA) explore ways to consolidate and share back-office resources and harmonize the regulation of similar products.

The report also proposed overhauling self-regulation by creating a single self-regulatory organization for all dealers and advisors, starting with a single SRO for investment dealers and fund dealers, which would be expanded to cover exempt market dealers, portfolio managers and other registered firms.

The new SRO structure would be under stricter oversight by the OSC that would give the commission veto power over rule proposals and the initial appointments of the SRO’s top executives.

Additionally, the report included a series of recommendations aimed at enhancing enforcement, including the introduction of an array of new investigative tools for the OSC, measures to enhance access to compensation for harmed investors and the designation of a dispute resolution body with binding decision-making power.

The report also included recommendations designed to foster growth in the number of independent dealers, with a view to increasing access to capital for small companies and a series of provisions that aim to facilitate access to independent investment products.

The task force proposed a wide range of other measures, including recommendations for enhancing corporate diversity, bolstering access to capital for issuers and streamlining regulatory requirements.

It remains to be seen whether the government will act on the task force’s recommendations. Previous task forces have made similarly transformative recommendations, but governments haven’t followed through with the actual changes.

In this case, the report comes in the midst of a global pandemic that has preoccupied the provincial government for the better part of the past year. It was also released following the resignation of Rod Phillips, Ontario’s former finance minister who commissioned the report.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

Task force recommends changes to OSC

January 25th 2021

Task force recommends sweeping changes to OSC

The proposals would radically alter securities regulation in Ontario

A government-appointed task force is recommending sweeping changes to the framework and content of securities regulation in Ontario.

The provincial government released the final report of its Capital Markets Modernization Taskforce on Friday. The report sets out a series of recommendations that, if adopted, would radically alter securities regulation in Ontario.

Among other things, the task force called for a restructuring of the Ontario Securities Commission (OSC), including spinning out its adjudicative function, separating the chair and CEO roles, expanding its mandate to include promoting growth and even changing its name — to the Ontario Capital Markets Authority.

Alongside the proposed restructuring of the commission, the task force recommended replacing the existing securities legislation with the Capital Markets Act, which was developed to facilitate the implementation of the cooperative capital markets regulator (CCMR) — a proposed federal-provincial body that would represent a step toward national regulation.

The task force recommended that the OSC and the Financial Services Regulatory Authority of Ontario (FSRA) explore ways to consolidate and share back-office resources and harmonize the regulation of similar products.

The report also proposed overhauling self-regulation by creating a single self-regulatory organization for all dealers and advisors, starting with a single SRO for investment dealers and fund dealers, which would be expanded to cover exempt market dealers, portfolio managers and other registered firms.

The new SRO structure would be under stricter oversight by the OSC that would give the commission veto power over rule proposals and the initial appointments of the SRO’s top executives.

Additionally, the report included a series of recommendations aimed at enhancing enforcement, including the introduction of an array of new investigative tools for the OSC, measures to enhance access to compensation for harmed investors and the designation of a dispute resolution body with binding decision-making power.

The report also included recommendations designed to foster growth in the number of independent dealers, with a view to increasing access to capital for small companies and a series of provisions that aim to facilitate access to independent investment products.

The task force proposed a wide range of other measures, including recommendations for enhancing corporate diversity, bolstering access to capital for issuers and streamlining regulatory requirements.

It remains to be seen whether the government will act on the task force’s recommendations. Previous task forces have made similarly transformative recommendations, but governments haven’t followed through with the actual changes.

In this case, the report comes in the midst of a global pandemic that has preoccupied the provincial government for the better part of the past year. It was also released following the resignation of Rod Phillips, Ontario’s former finance minister who commissioned the report.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

Task force recommends changes to OSC

January 25th 2021

Task force recommends sweeping changes to OSC

The proposals would radically alter securities regulation in Ontario

A government-appointed task force is recommending sweeping changes to the framework and content of securities regulation in Ontario.

The provincial government released the final report of its Capital Markets Modernization Taskforce on Friday. The report sets out a series of recommendations that, if adopted, would radically alter securities regulation in Ontario.

Among other things, the task force called for a restructuring of the Ontario Securities Commission (OSC), including spinning out its adjudicative function, separating the chair and CEO roles, expanding its mandate to include promoting growth and even changing its name — to the Ontario Capital Markets Authority.

Alongside the proposed restructuring of the commission, the task force recommended replacing the existing securities legislation with the Capital Markets Act, which was developed to facilitate the implementation of the cooperative capital markets regulator (CCMR) — a proposed federal-provincial body that would represent a step toward national regulation.

The task force recommended that the OSC and the Financial Services Regulatory Authority of Ontario (FSRA) explore ways to consolidate and share back-office resources and harmonize the regulation of similar products.

The report also proposed overhauling self-regulation by creating a single self-regulatory organization for all dealers and advisors, starting with a single SRO for investment dealers and fund dealers, which would be expanded to cover exempt market dealers, portfolio managers and other registered firms.

The new SRO structure would be under stricter oversight by the OSC that would give the commission veto power over rule proposals and the initial appointments of the SRO’s top executives.

Additionally, the report included a series of recommendations aimed at enhancing enforcement, including the introduction of an array of new investigative tools for the OSC, measures to enhance access to compensation for harmed investors and the designation of a dispute resolution body with binding decision-making power.

The report also included recommendations designed to foster growth in the number of independent dealers, with a view to increasing access to capital for small companies and a series of provisions that aim to facilitate access to independent investment products.

The task force proposed a wide range of other measures, including recommendations for enhancing corporate diversity, bolstering access to capital for issuers and streamlining regulatory requirements.

It remains to be seen whether the government will act on the task force’s recommendations. Previous task forces have made similarly transformative recommendations, but governments haven’t followed through with the actual changes.

In this case, the report comes in the midst of a global pandemic that has preoccupied the provincial government for the better part of the past year. It was also released following the resignation of Rod Phillips, Ontario’s former finance minister who commissioned the report.

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

IIROC drops rule proposals

 150 150 Enoch Wealth Management

IIROC drops rule proposals

January 18th 2021

IIROC drops rule proposals for identifying non-client accounts
Reforms developed for industry were rejected in a public consultation

Citing pushback from the industry, the Investment Industry Regulatory Organization of Canada (IIROC) has scrapped planned rule changes that sought to improve the process of identifying “pro” accounts.

In a notice, IIROC said that it has abandoned proposed rule changes and new guidance that were intended to clarify the self-regulatory organization’s requirements for pro accounts, and to harmonize the dealer rules and trading rules.

The proposals, which were published in September 2019, were developed with the input of a special industry working group in an effort to address industry confusion over how to mark orders or accounts as “non-client.”

“However, public commenters expressed concern with proceeding with the proposed amendments and proposed guidance due to their potential industry impact,” IIROC said in its notice.

As a result, it decided to withdraw the proposals, it said.

IIROC said it will consider issuing new guidance on the definition of “non-client orders” and “non-client accounts.”

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

IIROC drops rule proposals

January 18th 2021

IIROC drops rule proposals for identifying non-client accounts
Reforms developed for industry were rejected in a public consultation

Citing pushback from the industry, the Investment Industry Regulatory Organization of Canada (IIROC) has scrapped planned rule changes that sought to improve the process of identifying “pro” accounts.

In a notice, IIROC said that it has abandoned proposed rule changes and new guidance that were intended to clarify the self-regulatory organization’s requirements for pro accounts, and to harmonize the dealer rules and trading rules.

The proposals, which were published in September 2019, were developed with the input of a special industry working group in an effort to address industry confusion over how to mark orders or accounts as “non-client.”

“However, public commenters expressed concern with proceeding with the proposed amendments and proposed guidance due to their potential industry impact,” IIROC said in its notice.

As a result, it decided to withdraw the proposals, it said.

IIROC said it will consider issuing new guidance on the definition of “non-client orders” and “non-client accounts.”

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.

IIROC drops rule proposals

January 18th 2021

IIROC drops rule proposals for identifying non-client accounts
Reforms developed for industry were rejected in a public consultation

Citing pushback from the industry, the Investment Industry Regulatory Organization of Canada (IIROC) has scrapped planned rule changes that sought to improve the process of identifying “pro” accounts.

In a notice, IIROC said that it has abandoned proposed rule changes and new guidance that were intended to clarify the self-regulatory organization’s requirements for pro accounts, and to harmonize the dealer rules and trading rules.

The proposals, which were published in September 2019, were developed with the input of a special industry working group in an effort to address industry confusion over how to mark orders or accounts as “non-client.”

“However, public commenters expressed concern with proceeding with the proposed amendments and proposed guidance due to their potential industry impact,” IIROC said in its notice.

As a result, it decided to withdraw the proposals, it said.

IIROC said it will consider issuing new guidance on the definition of “non-client orders” and “non-client accounts.”

Changes since 2019: The National Amendments are substantially similar to the proposed amendments published by the CSA for comment in March 2019 (2019 Proposal). But there have been a few changes. For example, Form 45-106F18 Supplemental Disclosure for Syndicated Mortgages will require disclosure of the potential subordination of the syndicated mortgage, clarify the calculation of the loan-to-value ratio, and include additional examples of risk factors.

Some jurisdictions have proposed further changes to their exemptions:

• Qualified syndicated mortgages: Ontario and New Brunswick have published for comment prospectus and registration exemptions for “qualified syndicated mortgages” (QSMs), and we expect Nova Scotia to introduce a similar pair of exemptions. Alberta and Québec have proposed a prospectus-only exemption for trades in QSMs.

• Distributions of non-qualified syndicated mortgage investments (NQSMIs) to permitted investors: Ontario and New Brunswick also have proposed prospectus and registration exemptions for distributions of NQSMIs to permitted clients (i.e. institutional and high net worth investors). Alberta has proposed a prospectus-only exemption for trades in NQSMIs to permitted clients, while Québec is asking for feedback on whether such an exemption should be introduced.

• Reports of exempt distribution: Ontario and New Brunswick will not require a Form 45-106F1 Report of Exemption Distribution to be filed for distributions of QSMs under their new prospectus exemptions or for distributions of NQSMIs sold to permitted clients.

Who will regulate what in Ontario beginning in March 2021? FSRA currently regulates all syndicated mortgage investments in Ontario. When the new regime comes into effect, FSRA will continue to supervise transactions involving qualified, syndicated mortgage investments and the mortgage brokers and administrators involved in such transactions. Oversight of NQSMIs will be split between FSRA and the OSC, depending on the status of the investor/lender and the type of transaction. In particular, FSRA will supervise:

• NQSMI transactions with permitted clients;

• NQSMI transactions with permitted and non-permitted clients before March 1, 2021 (Legacy NQSMIs); and

• Administrators of NQSMIs.

Mortgage brokerages that deal in mortgages and syndicated mortgages only with permitted clients will not have to register with the OSC and the distributions of these products to permitted clients will be exempt from the prospectus requirement. There will be dual oversight however, in some circumstances. For example, FSRA will have oversight over mortgage brokers dealing in NQSMIs when they act on behalf of the borrower who is not a permitted client, with the OSC having oversight over the trades with respect to that investor/lender.

The proposed FSRA Guidance describes FSRA’s forward-looking, risk-based approach to supervision of the firms and transactions over which it will have authority and outlines the data it plans to collect from firms to inform its risk assessments.