An investor’s guide to the Ontario Securities Commission (OSC)

The best way to protect your money is to be a well-informed investor. Whether you already have a financial adviser or you invest on your own, it is highly advisable to study and research more about an investment before buying.

Protecting your investment is a top priority, and you want to ensure you meet all the necessary legalities to make sure that your rights are covered and well-exercised. When you see that your investment is well taken care of, you also have the peace of mind that your money is safe and makes you feel more confident.

You shouldn’t invest in any businesses unless you are fully aware of its financial history, management, and potential growth. This is why capital markets have a specific governing body which reviews and imposes laws for investors, dealers, and as well as protecting the capital market itself.

Whether you are investing locally or at a global scale, you should be familiar with the given investment protection that the issuing market provides.

Investors should consider provincial rules, especially when looking for potential opportunities in Canada, particularly in Ontario where the majority of companies are listed on the Toronto Stock Exchange.

What is the OSC?

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The Ontario Securities Commission (OSC) is an independent body that protects investor rights by creating and enforcing regulations that govern the securities market in Ontario. The OSC adheres to the laws imposed by the Securities Act (Ontario), the Commodity Futures Act (Ontario), and specific rules given by the Business Corporations Act.

The OSC is a regulatory agency of the Ontario government which works to “protect investors, foster fair and efficient markets, and contribute to the stability of the financial system by making and monitoring compliance with rules governing the securities industry in Ontario.”

The OSC makes rules that aim to prevent misconduct and maintain the integrity of the markets. Rule and policy development is a public process, and the OSC publishes proposed rules for public comment on their website and in the OSC Bulletin.

OSC Dual Mandate

The OSC performs a dual mandate, to protect investors from fraudulent investments and to ensure fair and efficient capital markets that will boost confidence and further growth.

All capital investments in Ontario are under the provision of the OSC. The OSC makes rules, enforces them, and monitors compliance from the securities market.

While protecting investors, they too need to balance out the situation to avoid adversely affecting the capital markets. The OSC adheres to specific rules as well, and a few of them include:

  • They set or define requirements for information disclosure so investors can make informed decisions.
  • Monitors fraudulent market practices.
  • Impose transparent, efficient and fair market structures.
  • Provide the public with a transparent administration and release necessary reports.

The OSC is directly accountable to the Ministry of Finance, who reports all the mandates and compliance to the Legislator who in turn oversees all the regulations and compliance reports.

How is the OSC adapting to new market products?

Recently, there are new market trends that seem to spark interests from investors. New categories of investment finance are gaining traction, including crowdfunding investment opportunities and financial technology solutions—also known as fintech. To answer the demands of these sectors, the OSC is ensuring that these firms fulfill all requirements and remain compliant.

To monitor these demands and changes, the OSC espouses flexibility because they are aware that a single solution will unlikely work with every business model. They need to assess all the changes in the market structure, product and technology innovations and how these changes affect the capital markets.

How does the OSC govern the securities in Ontario to ensure investor safety?

Investing is a two way street for capital markets. Apart from creating a regulatory board of members, to manage the market activities, the OSC has also created an Investor Office where they conduct meetings and consult with investors and other stakeholders to identify and address certain issues that concern investors.

In this office, they perform research, strategic plans, healthy discussions, and creative insights to guide investors on the type of investment they can potentially invest and relevant market trends.

Cease Trade Orders—CTOs

To protect investors from fraudulent firms, the OSC is authorized to issue temporary cease trade orders (CTOs) against individual and companies from trading in their securities over a specified period. This also prohibits any trading activities within the companies.

By creating these platforms, both the investors and the industry will benefit from gaining public confidence in the financial system. Thus making room for more investment and business opportunities. The economy’s success dramatically lies in the competitiveness, fairness, and efficiency of the capital markets.

The OSC is your first line of defence

Regulatory governing bodies that oversee the investment sector act as an investor’s first line of defence. However, you should be prudent to not solely rely on these governing bodies but instead, do your part conducting your own due diligence.

As there are many factors to consider when evaluating an investment, investors should understand the relationship between risk and reward and adopt their own investment values before taking out their chequebook. The OSC gives investors another set of tools and protections to safely invest their hard earned income.