The Ontario Securities Commission (OSC) recently published that an email was sent to stakeholders who the OSC identified as likely being impacted by the transfer of regulatory oversight of certain syndicated mortgage investment (SMI) activity to the OSC. The OSC posted the e-mail that was sent to certain stakeholders regarding the transfer and the registration process for firms and individuals affected. If you will be impacted by the transfer of regulatory oversight, the OSC has asked that you provide answers to the questions from the e-blast below to the OSC at your earliest convenience. If you are not impacted then there is no need to provide responses. The OSC encourages all firms and individuals to review the information below to see if they may be impacted and contact the registration email address below with any further questions. The following is email that the OSC sent to affected stakeholders by the new SMI rules:
EMAIL FROM THE OSC TO STAKEHOLDERS
“We are contacting you about changes to the regulation of syndicated mortgage investment (SMI) activity, as we understand that your firm may be engaged in SMI activity. We hope that our outreach will provide information to your firm to assist it in evaluating the securities regulatory options relating to its SMI activity after March 1, 2021.
On August 6, 2020, the Ontario Securities Commission (OSC) published proposed amendments to Ontario securities legislation, and the Canadian Securities Administrators (CSA) published final amendments (the Amendments), that would, among other things, subject SMI trading activity in Ontario to the registration requirements under Ontario securities legislation as of March 1, 2021 (registrable activity). Under the OSC’s proposed amendments, the following SMI activity would continue to be subject to oversight from the Financial Services Regulatory Authority of Ontario (FSRA):
- transactions in mortgages, other than syndicated mortgages, with any purchaser;
- transactions in “qualified syndicated mortgages,” which is defined in the Amendments;
- transactions in any type of syndicated mortgages where the purchaser is a “permitted client”.
Further information about the Amendments can be found at the following link: https://www.osc.gov.on.ca/documents/en/Securities-Category4/csa_20200806_45-106_prospectus-exemptions.pdf. If you have specific questions regarding the Amendments, please contact Adam Braun, Legal Counsel in the OSC’s Compliance and Registrant Regulation Branch at firstname.lastname@example.org.
Firms (and their individuals) that engage in SMI registrable activity in Ontario on or after March 1, 2021, will need to:
- be registered as dealers in Ontario, or
- rely on an exemption from registration in Ontario as a dealer.
Please ensure you discuss the potential impact of the Amendments on your firm with your advisors, including legal counsel, as soon as possible.
We note that, should registration be required, the OSC’s service standard for routine firm registration applications is 90 working days from the date of a complete application. Novel, complex or incomplete applications, or applications where fitness for registration requires additional analysis, typically take longer to process. In light of the expected volume of new registration applications resulting from the Amendments, we strongly encourage firms that will require registration with the OSC by March 1, 2021, to apply for registration as soon as possible.
For more information about:
- the OSC registration process generally, see https://www.osc.gov.on.ca/en/Dealers_getting-registered_index.htm;
- the OSC process for initial and firm applications, see https://www.osc.gov.on.ca/en/Dealers_applying_index.htm; and
- completing and filing your initial firm application form with the OSC, see https://www.osc.gov.on.ca/documents/en/Dealers/form-registration-guide.pdf.
We will also be providing more information about these registration requirements in the future, which could include e-mails, notices or information sessions. We encourage you to subscribe for e-mails and notifications from the OSC CRR Branch, at https://www.osc.gov.on.ca/en/subscribe.htm#roc.
In order for us to assist your firm with any OSC registration-related questions it may have and, if applicable, facilitate its registration with us, please respond to this email with answers to the following questions:
- Do you expect to engage in SMI trading activity on or after March 1, 2021?
- If the answer to #1 is
yes, do you expect to:
- apply for registration with the OSC (or have an affiliate apply for registration) as a dealer with a view to being registered with the OSC by March 1, 2021, or
- rely on an exemption from registration with the OSC.
Your responses to these questions by August 20, 2020, would be greatly appreciated and will assist your firm should registration with the OSC be required.”
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403.4606.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.