Area of Law: Investments and Securities
Answer # 275
Regulation of securities marketsRegion: Ontario Answer # 275
In Canada, the regulation of securities markets is a provincial responsibility. The Ontario Securities Commission, commonly referred to as the OSC, oversees the securities industry and the capital markets in Ontario. It administers and enforces the Securities Act and the Commodity Futures Act as well as certain parts of the Business Corporations Act.
Ontario Securities Commission (OSC)
The OSC’s mandate is to protect investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets in Ontario and confidence in the integrity of the markets. It does this by:
- Registering and supervising those in the business of advising on or trading in securities,
- Supporting self-regulation of the securities markets and overseeing the self-regulatory organizations,
- Ensuring that investors have access to the information they need to make informed investment decisions, and
- Conducting investigations and bringing enforcement actions for serious infractions of securities law.
Anyone who sells securities or gives advice about securities in Ontario must be registered with the Ontario Securities Commission. Different types of registration can be held by an investment representative or the sponsoring firm. Individuals or firms that are registered are called “registrants.” The type of registration determines what kinds of products investment representatives are licensed to sell or the types of services they can provide.
The OSC sets competence standards for registrants and makes and enforces rules for operation of the securities markets. The securities commission oversees self-regulatory organizations, called SROs, that have responsibility for direct regulation of registrants or other market participants in specific areas of market activity. These SROs have their own rules and by-laws that their members must follow. Currently the OSC oversees the operation of the following two SROs: the Investment Industry Regulatory Organization of Canada or IIROC (formerly, the Investment Dealers Association of Canada) and the Mutual Fund Dealers Association of Canada.
The Mutual Fund Dealers Association of Canada (MFDA) is an SRO that regulates mutual fund dealers and representatives in the following provinces: Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan.
If you would like to find out whether a person or firm you are, or will be, dealing with is registered, you can contact the Ontario Securities Commission. Inquiries Officers can tell you if a person is registered and the category in which they are registered.
They can also tell you which regulatory organization has responsibility, the Investment Industry Regulatory Organization of Canada, or the OSC, and where to send a complaint. The OSC does not give an opinion on whether a registered company or individual broker is reputable. You can, however, find out whether there are any current or past formal proceedings against an individual or company. Information is not given out about complaints that are in progress.
In Ontario, a small group of licensed securities dealers are engaged primarily in selling speculative stocks, often called penny stocks. While it is legal to sell penny stocks, in some cases the OSC has expressed concerns about high-pressure or unfair sales practices. For information about enforcement proceedings that have been taken by the OSC against securities dealers, contact the OSC.
In addition to registering people and firms who sell securities, the OSC also regulates the activities of public companies related to issuing and selling their securities.
Some life insurance products, such as “segregated funds” are investment products but are regulated in Ontario by the Financial Services Commission of Ontario. Banks and banking products are regulated by the federal Office of the Superintendent of Financial Institutions (OSFI).
Available resources for investors
The OSC has many tools and resources available to investors, including the following publications:
- Investing Basics
- Understanding Mutual Funds
- Borrowing to Invest
- Working With a Financial Advisor
- Investment Fraud on the Internet
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