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Originally published: April 7, 2016
Susan Greenglass is the Director of the Ontario Securities CommissionOntario Securities Commission An independent Crown corporation that is responsible for regulating the capital markets in Ontario. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in capital markets, and to contribute to the stability of the financial system and the reduction of systemic…+ read full definition’s (OSCOSC See Ontario Securities Commission.+ read full definition) Market Regulation Branch, the operating branch that’s responsible for regulating market infrastructure entities (such as the Toronto Stock ExchangeStock exchange A market in which securities are bought and sold.+ read full definition and the InvestmentInvestment An item of value you buy to get income or to grow in value.+ read full definition 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.
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 tradeTrade The process where one person or party buys an investment from another.+ read full definition 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)Canadian Securities Administrators (CSA) The Canadian Securities Administrators (CSA) is an umbrella organization of Canada’s provincial and territorial securities regulators whose objective is to improve, coordinate and harmonize regulation of the Canadian capital markets+ read full definition oversee Canada’s SROs, such as Investment Industry Regulatory Organization of Canada (IIROC)Investment Industry Regulatory Organization of Canada (IIROC) National self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.+ read full definition and the Mutual FundMutual fund An investment that pools money from many people and invests it in a mix of investments such as stocks and bonds. A professional manager chooses investments that match the fund’s goals for risk and return. You can redeem your fund units at any time.+ read full definition Dealers Association of Canada (MFDA). CSA members jointly identify issues to address with the SROs, with one jurisdiction acting as the “principalPrincipal The total amount of money that you invest, or the total amount of money you owe on a debt.+ read full definition 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)Toronto Stock Exchange (TSX) Canada’s largest stock exchange, North America’s third largest stock exchange, and the sixth largest in the world.+ read full definition, Alpha Exchange, the Canadian StockStock An investment that gives you part ownership or shares in a company. Often provides voting rights in some business decisions.+ read full definition 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.