The OSC's proposed priorities put AI, compensation and redress front and center for advisors
The Ontario Securities Commission (OSC) has released its proposed Statement of Priorities for fiscal year 2026-2027, setting out key regulatory initiatives it plans to undertake alongside its core capital markets operations. The proposed priorities are open for stakeholder comment until January 12, 2026.
The plan addresses multiple areas across Ontario's capital markets. From AI in advice and sales practices at bank-affiliated dealers to binding investor compensation and tougher crypto enforcement, the plan signals where the regulator will focus its attention over the next fiscal year.
The plan is tied to the OSC's six-year Strategic Plan running through 2030 and reflects its mandate to protect investors, foster fair and competitive markets, encourage capital formation and contribute to financial system stability. After reviewing stakeholder feedback, the OSC will publish final priorities in its Business Plan for the fiscal years ending 2027–2029.
The regulator frames its work against a backdrop of modest growth, heightened uncertainty, trade tensions, the 2026 review of the Canada-United States-Mexico Agreement, changing borrowing costs and vulnerabilities in highly leveraged firms and households. The rise of artificial intelligence and blockchain features prominently, along with risks around privacy, accountability and cybersecurity. Crypto-related complaints make up a significant share of what the OSC hears from investors, and the regulator flags the dominance of U.S. dollar-denominated digital assets as a potential drag on Canadian competitiveness.
On emerging trends, the regulator is taking an OSC-wide approach to artificial intelligence. It plans to hold workshops with stakeholders to explore whether new rules might support innovation and responsible AI use, building on responses to a staff consultation on how securities laws apply when AI is used in capital markets, including in advice. The OSC will also collaborate with domestic and international counterparts on disclosure and governance standards for AI. For crypto asset trading platforms, the commission will continue working with the Canadian Investment Regulatory Organization as platforms transition to investment dealer registration and CIRO membership. It will assess crypto businesses based on the functions they perform, examine lending models backed by crypto assets and monitor tokenization of financial assets. Social media and finfluencers are also on the radar, with focus on risks such as misleading information, promotion of complex products, undisclosed conflicts and unregistered advising.
On the investor experience, the commission plans to finalize a framework for an independent dispute resolution service, expected to be the Ombudsman for Banking Services and Investments, that would make binding compensation decisions, subject to government approval and enhanced oversight. The OSC will operationalize a disgorgement framework that took effect in September 2025 and adapt programs around education and outreach based on investor segmentation research. The regulator is reviewing sales practices at certain bank-affiliated mutual fund dealers, looking at compensation, incentives, scorecards and sales pressure. It will consider whether new rules or guidance are needed, including on the use of titles and how dealing representatives describe themselves to clients.
On right-sizing regulation, the OSC is exploring harmonization of prospectus exemptions across provinces, including a self-certified investor exemption tested through OSC TestLab, and streamlining internal processes while aligning with the Canadian Securities Administrators. It will secure agreements with jurisdictions outside North America to improve market access and capital formation for Canadian companies, monitor a semi-annual reporting pilot for certain venture issuers, publish final amendments to streamline periodic disclosure for non-investment fund issuers and review criteria distinguishing venture from non-venture issuers. The OSC plans to delegate more registration responsibilities to CIRO while conducting direct examinations of CIRO member firms, assess compliance with existing climate-related disclosure requirements and consider feedback on liability protections, weigh possible changes to the exchange-traded fund framework and advance work on access-based disclosure models.
The OSC plans to implement a tougher and more visible response to capital markets misconduct. The OSC will prioritize fraud, crypto-related violations, insider trading and tipping, repeat offenders, property schemes, misleading disclosures and registrant misconduct. It intends to structure investigations so that more fraud cases can proceed as criminal charges, refine how it handles investor complaints to respond faster, sharpen its focus on online investment fraud and scams, work more closely with law enforcement and raise awareness of its whistleblower program.
On capital formation, the OSC will continue running TestLab initiatives such as self-certified and angel investor pilots and early-stage registration, seek stakeholder input on capital-raising initiatives, report on research into priority growth sectors, propose harmonized rules that may codify coordinated blanket orders supporting companies going public and maintaining listings, and consult on modernizing regulation for non-investment fund issuers, including reducing hold periods for securities issued under prospectus exemptions. The commission will assess ways to support investors seeking to invest in Canadian public companies, develop a final rule for the self-certified investor prospectus exemption, advance work on real-time market data access, execute a long-term asset fund initiative and finalize amendments to stop short sellers from covering positions with new stock issued in offerings.
The OSC also plans to share more information with federal authorities, maintain leadership roles within the International Organization of Securities Commissions and publish papers on emerging trends.
