Speaking at the Toronto Region Board of Trade this week, Maureen Jensen, Ontario Securities Commission (OSC) Chair and CEO, delivered a wide-ranging keynote address that tackled the topic of Fintech, regulations and announced a forthcoming regulatory Sandbox for entrepreneurs.
Jensen acknowledged the rise of Fintech and the disruption to established financial firms and operations. While change has always occurred in the financial sector, she said, “now we are seeing something different.”
“Some of the new fintech businesses and platforms don’t fit neatly into our regulatory framework. And some of our requirements may not make any sense in the context of their business,” said Jensen. “We recognize that we have to keep pace with the changes brought on by fintech and not prevent promising business models from coming to market. Our objectives of investor protection and fair and efficient markets are unchanged, but the approach we take needs to evolve.”
While re-affirming the OSC’s commitment to investor protection and supporting market participants in their regulatory obligations, Jensen announced the launch of the OSC Launchpad – a new entity, or Sandbox, to help foster Fintech innovation;
“I am pleased to announce OSC LaunchPad, the first innovation hub by a Canadian securities regulator,” said Jensen. “This pilot project will be unveiled in a few weeks with a team dedicated to working directly with fintech companies to help them navigate our regulatory framework … we have worked with 40 firms that are registered or are seeking registration, including online advising, peer-to-peer lending, crowdfunding platforms and angel investor organizations. With OSC LaunchPad, we will work to tailor regulation and oversight to their unique business models, as long as investor protections are in place.”
Jensen said they are accepting applications now and invited Fintech entrepreneurs to submit their business proposals.
Alixe Cormick, a Securities Attorney active in the Canadian Fintech sector, told Crowdfund Insider the OSC announcement was a good sign;
“I believe this new initiative by the OSC will be a positive for groups that are looking at providing a new Fintech solution. Investor protection is still key, but there is now some flexibility for all parties concerned to create something outside the existing rules that is a win for investors, SMEs and Fintech entrepreneurs.”
Another important topic of Jensen’s speech was regarding the regulatory burden financial firms must manage. She said the “tsunami of regulation” that hit following the financial crisis was intended to diminish systemic risk but may also have caused a negative impact on companies and economies.
Encouragingly, Jensen said;
“We are committed to re-examining our rules to ensure they are appropriate, necessary and relevant. In short, we are looking to reduce regulatory burden, where possible. This means finding opportunities to streamline requirements for market participants—as long as investors are protected.” [emphasis added]
A bold statement in the regulatory world.
Change is never easy – even more so in the highly regulated environment of financial services. Jensen has taken a stand to support Fintech innovation and to question established compliance norms. But as she aptly stated at the beginning of her speech; “the status quo is not an option.”
You may read the speech in its entirety below.