Securities rule-making in Ontario
As a regulator, the Ontario Securities Commission (OSC) administers and enforces compliance with the provisions of Ontario’s Securities Act and Commodity Futures Act. These statutes, along with their regulations, set out legally binding requirements that market participants must comply with.
The Ontario Legislature has given the OSC authority to make legally binding rules under the Securities Act and Commodity Futures Act. Market participants must also comply with these rules.
Because securities regulation is provincial, rules are made under each province or territory's Securities Act or equivalent. In the rare instance where only the OSC makes a rule, this is called a local rule and identified as “OSC Rule”. More commonly, Canadian securities regulators make rules on a coordinated basis. Rules that are adopted by all or some Canadian securities regulators are known as “National Instruments” or “Multilateral Instruments”.
When making rules, the OSC must follow two distinct steps:
1. Publish proposed rules for public comment
Unless an exception to the notice requirement applies, the OSC is required to publish proposed rules for public comment. The public is generally provided at least 90 days to consider a proposed rule and submit comments to the OSC.
2. Make a proposed rule into a law
For a proposed rule to come into force, the OSC must make the rule in its final form and deliver it to the Minister of Finance for review, as well as publish it in the OSC Bulletin. The Minister then has 60 days to approve or reject the rule, or return it to the Commission for further consideration.
Policies & Staff Notices
In addition to rule-making, the OSC may issue guidance of a non-binding nature. The OSC produces two types of non-binding guidance: Commission policies and staff notices. These are intended to be instructive and to provide regulated persons and entities with insight into how the requirements are applied.
Policies are generally used to address issues that occur frequently or have a broad impact on market participants. Policies may also address the Commission’s interpretation of a given rule. Unlike rules however, policies may not be prohibitive or mandatory in character.
The OSC must publish proposed policies for public comment. Once the Commission is satisfied with the proposed policy, it may adopt it without Ministerial approval to become effective.
Staff notices are documents issued by the Commission that communicate OSC Staff's views and expectations of operational reviews, emerging issues and trends, and market participant conduct. These views are subject to change as OSC Staff are confronted with different factual circumstances. Accordingly, views expressed in a staff notice do not necessarily represent the views of the Commission.
Staff notices are not approved by the Commission and need not be published for public comment. However, Staff notices are often discussed with the Commission and may incorporate feedback from Commissioners. Like policies, staff notices do not require Ministerial approval.