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Originally published: April 7, 2016
Susan Greenglass is the Director of the Ontario Securities Commission’s (OSC) Market Regulation Branch, the operating branch that’s responsible for regulating market infrastructure entities (such as the Toronto Stock Exchange and the Investment Industry Regulatory Organization of Canada) and developing policy relating to market structure and clearing and settlement. Susan recently spoke with the Investor Office to discuss the role of the Market Regulation Branch and how its approach to oversight has grown in response to Ontario’s changing markets.
Meet Susan
I came to the OSC in 1997 as legal counsel, and have been with the Market Regulation Branch since it formed in 1998. In that time, I’ve had the opportunity to see the market shift from being a single-exchange environment to one with multiple marketplaces and added complexity. The policy that’s developed around that change has evolved as well, and so has the number of entities that we oversee. So, the issues that our Branch looks at have grown to be much more complex over time. Fortunately, these changes have really required our team to come together and use different approaches to brainstorm and analyze key areas in a way that ensures all perspectives are covered.
On the role of the Market Regulation Branch…
One of our key roles is to provide regulatory oversight of market infrastructure entities, which includes exchanges and alternative trading systems, self-regulatory organizations (SROs), clearing agencies, investor protection funds, information processors and trade repositories. The structure of the Market Regulation Branch has grown to combine a mix of skills that have shaped the way that we do oversight. We have a mix of lawyers, accountants and a lot of specialists in areas such as trading, clearing and risk. Our team members have experience in a lot of different areas of the industry, and bringing their knowledge and expertise together has been really important for both our oversight and the policy development process.
On the ongoing oversight of SROs…
The provincial and territorial securities regulators that make up the Canadian Securities Administrators (CSA) oversee Canada’s SROs, such as Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). CSA members jointly identify issues to address with the SROs, with one jurisdiction acting as the “principal regulator” that is responsible for coordinating these matters with the SRO. The OSC is the principal regulator for IIROC and the British Columbia Securities Commission is the principal regulator for MFDA.
This is a different model for oversight than what’s used to oversee exchanges, which uses a “lead regulator model.” This means that one jurisdiction generally recognizes the exchange and acts as the lead regulator, while other jurisdictions may exempt that exchange from recognition and rely on the lead regulator for oversight. The OSC is the lead regulator for the Toronto Stock Exchange (TSX), Alpha Exchange, the Canadian Stock Exchange (CSE) and Aequitas NEO Exchange, and it exempts the TSX Venture Exchange and the Bourse de Montréal.
The issues that we look at, and the way that we conduct oversight activities, is something that is constantly evolving. We used to visit an entity for a full-scale review every few years, and that’s grown to a more annualized process, where we examine things from a risk-based perspective and focus on particular issues that are of a concern to us. So, rather than doing the full review over a longer period of time, we now have an approach based on examining smaller matters in shorter periods of time. This gives us the opportunity to devote more time to key risk or critical areas and provide more focused oversight of the entities.
On what she wants investors to know…
As market structures and products continue to evolve and grow increasingly complex, it’s important that we maintain a responsive regulatory framework that promotes investor confidence in the markets. One of our priorities for the coming year is to support investor protection by closely monitoring market structure changes and determining if additional regulatory responses are needed.