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The OSC’s New Innovation Charter: Is this really a ‘new model’?

NCFA | Jan 21, 2021

OSC new innovation charter - The OSC’s New Innovation Charter: Is this really a ‘new model’?

The OSC has recently announced a Charter for a new Office of Economic Growth & Innovation (Innovation Office):  release and innovation office charter.

The NCFA welcomes the announcement but remains skeptical. Is this really a "new model" or merely window dressing

1. An Innovation Office alone will not make the OSC more "innovative". Innovation requires a lot more than a mere reference to these words. The Charter points towards "fostering a culture that encourages experimentation, embraces failures as necessary learning steps and allows for a quick pivot to the next idea" and playing a role in the "OSC’s ongoing modernization, which includes adopting a more flexible regulatory approach, making investments in technology and simplifying our rules and processes".

Do the OSC leaders (and the Ontario Government) understand how difficult this essential culture change will be? 

What does "modernize how we formulate policy and new regulations" mean? Does it involve, for example, more disciplined decision making, better analysis and use of data (including collecting or enabling much better capital markets data generally in Canada), extensive staff training, learning to better manage risk?   We need more information so that industry participants can have greater comfort about what the OSC proposes and what is likely actually to be achieved.

See:  Big Changes In Financial Regulation: Dialogue With The OSC 2020

Related to this, the vision for the Innovation Office seems odd. "To be recognized as a catalyst in innovative regulation that promotes confidence and economic growth." Why would the OSC want the Office only to be "recognized"? Normally one would expect to see a vision for a more cost-effective regulator in a dynamic regulatory ecosystem supporting a healthy economy, eg, 'OSC is a world class regulator in a dynamic, innovative economic environment', or 'OSC is a key partner in building a healthy Ontario economy that enables innovation and provides jobs'. The vision would be followed by a mission statement that sets out how the Office/OSC itself would work towards the vision (perhaps by "accelerating innovation, bolstering capital formation and reducing regulatory burden"?), followed by the strategic priorities to achieve the mission as set out in the Charter.

2. There appears to be a willingness to "deepen engagement" with stakeholders, which may not have existed in the past. This is always positive, but will the OSC really listen? The NCFA has been very clear for years about what is needed. See https://ncfacanada.org/advocacy/. Our views are well supported by the fintech sector, academia, investors, and others. Little has changed. What does the OSC want from stakeholders?

3. Overlapping issues like data and privacy protection, competition, and IP, while perhaps not directly within the OSC's jurisdiction, are becoming increasingly urgent. And yet there is nothing in the announcement about collaboration with other regulators and entities like the Standards Council. There is no mention of the Canadian Securities Administrators (CSA) who must be involved if the OSC is to become a cost-effective, world class regulator and a key partner in building a healthy Ontario economy. Does the OSC view the CSA as a mere "stakeholder" to which the OSC may listen, or as a partner?

 

Conclusion

The NCFA looks forward to further details on this project which we hope will address some of our concerns. There are many barriers to innovation in Ontario, and elsewhere in Canada. Many stakeholders think that the main barrier is the regulatory culture of the OSC itself. To the extent that this is so, the OSC faces a big challenge - one that the incoming OSC Chair must tackle full on for impactful regulatory change .

Links to recent NCFA advocacy on behalf of the Fintech & Funding industry

Fintech Confidential issue 3 cover 1 - The OSC’s New Innovation Charter: Is this really a ‘new model’?

This article appears as a featured article in NCFA's digital magazine, Fintech Confidential (Issue 3 Dec 2020). Click to read the latest thought leadership, insights and trends about Fintech in Canada:

Checkout NCFA's digital magazine, Fintech Confidential (Issue 3, Dec 2020) --> here

 

NCFA Jan 2018 resize - The OSC’s New Innovation Charter: Is this really a ‘new model’? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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