OSC Staff Notice 11-784 Burden Reduction and
PCMA Suggestions to Reduce Regulatory Burden
he Unique Business
Model of Exempt
The private capital markets
are unique and distinct in many ways from
the public capital markets but they are just
as vital and important. PCMA members
vary in size, industry specialization and
geographic scope. Some are issuers. Some
may represent a significant number of
issuers at a time. Exempt market dealers
are transaction based. Clients typically seek
to access private capital market invest-
ments through an exempt market dealer.
A ‘one-size fits’ all approach taken in many
rules fails to recognize these differences
resulting in excess regulatory burden on
exempt market dealers and their clients.
The PCMA supports the OSC and Ministry
of Finance initiative to establish a Burden
Reduction Task Force. In particular, we
appreciate the recognition that regulatory
burden applies to registrants as well as
issuers and that disharmony of regulations
is identified as a burden to market
participants. Regulatory burden has a cost
that is ultimately paid by investors and so
any effort to reduce regulatory burden
ultimately benefits investors.
The PCMA recognizes that the OSC can only
change its own rules and practices but that it
will work with the CSA where a collaborative
response is needed. Similarly, while the OSC
does not have the ability to change Self
Regulatory Organization rules and practices,
it has influence with the other regulators. In
the case of IIROC, the OSC is its principal
regulator, and approves IIROC rules.
We have grouped our suggestions under
the consultation questions. In some cases,
our suggestions will apply to more than
one question and we cross reference where
appropriate. We also offer some commentary on some negative or unintended
effects of certain practices and rules.
1. Are there operational or procedural
changes that would make market
participants’ day-to-day interaction
with the OSC easier or less costly?
Late Filing Fees
Late filing fees are costly for market
participants and there is a belief that there
should be a materiality filter especially
when it comes to outside business activities. PCMA members have experienced late
filing fees for the discontinuance of an
outside business activity (OBA) where that
activity was an idle holding company. We
believe there are two unintended consequences of this practice. Firstly, some
dealing representatives have left the
industry where they do not wish to pay a
$5,000 per year fine for omitting to file a
notice for activities such as, participating in
a volunteer organization. Secondly, some
market participants have not filed information where the OSC is the principle
regulator as they know there will be a large
late filing fee. This does not happen in
jurisdictions that do not levy late filing fees.
Materiality and Timelines
While we recognize the issue of filings
related to the registration forms is a CSA
matter, we suggest the OSC raise the issue
of materiality and timelines with the CSA.
In particular, we recommend that some
changes should only be done annually. For
example, OBAs relating to volunteer and
recreational activities where a registrant is
not on the board or hold a treasury type
OSC service standards can be found on the
OSC website after some labourious
searching. We would suggest that the
service standards should be linked with the
various services. The OSC should publish
its record of meeting its service standards.
Many of our members have provided the
PCMA with anecdotal evidence of the
service standards not being met.
Certain service standards have a financial
impact on registrants such as the time to
review an application for registration.
Every day that an application sits with the
OSC costs the registrant in terms of lost
income and opportunity costs. Delays in
reviewing applications for registration is
seen by potential registrants as a lack of
understanding or appreciation for their
The OSC should also provide a service
standard for providing Reports from
Compliance Field Reviews. Some PCMA
members have experienced delays of 12
months in receiving the exit letter.
Although there is an exit interview identifying some deficiencies, waiting months and
months for a report leads to a registrant
assuming things are fine. The lack of
timeliness of the report often results in a
PCMA COMMENT LETTER
THE PRIVATE INVESTOR | FALL+WINTER 2019 23
The Private Capital Markets Association of Canada (PCMA) is pleased to provide our suggestions
relating to OSC Staff Notice 11-784 Burden Reduction.