As part of its Capital Markets Modernization Review, and as promised in its 2021 Budget, the Government of Ontario has released a consultation draft of the Capital Markets Act (CMA).
The introduction of the CMA was the first recommendation of the Capital Markets Modernization Taskforce, whose final Report was released in January 2021. The Report contained 74 recommendations intended to modernize the capital markets regulatory framework, assist companies in raising capital, and level the playing field between large and small players, all while continuing to enhance investor protection.
Among the more important recommendations included in the Taskforce Report were:
Expanding the mandate of the Ontario Securities Commission (OSC) to include fostering capital formation and competition in the markets;
Separating the regulatory and adjudicative functions at the OSC; and
Separating the current combined OSC Chair and Chief Executive Officer position into two distinct positions
Some of these recommendations have already been included in the Securities Commission Act, 2021, introduced in March 2021.
The Taskforce Report, and the broader question of the future of Canada’s capital markets, was the subject of a panel discussion convened in May 2021 by Campbell Strategies. Experts from across the country, including (former Bank of England and Bank of Canada Governor) Mark Carney, discussed steps needed to maintain Canada as a place to invest and raise capital. The Capital Markets Act is another step in that direction.
The CMA is intended to replace the Securities Act and the Commodity Futures Act and, if it comes into force, would:
Set out the regulatory framework for capital markets participants;
Outline the Ontario Securities Commission’s regulatory and enforcement powers, including the authority to make rules; and
Provide for the Capital Markets Tribunal’s adjudicative powers.
The CMA will not become law unless/until it is introduced and passed in the legislature. Comments received on the draft CMA during the consultation period will be considered in drafting the final legislation. The deadline to provide comments on the draft CMA is January 21, 2022.
More information on the CMA and how to participate in the consultation process can be found in the following documents:
Backgrounder: Modernizing Capital Markets in Ontario : includes background information on the Taskforce as well as a link to the Taskforce Report)
Capital Markets Act – Consultation Documents includes links to: CMA – Consultation Draft; CMA – Consultation Commentary; and CMA – Table of Concordance