Regulator's annual summary highlights targeted reviews, new fund structures and evolving regulation
The regulatory landscape for investment management firms is evolving from broad oversight to focused examination of new asset types and fund structures, according to the latest report from a provincial regulator.
The Ontario Securities Commission report for the year ending March 31, 2025, from its Investment Management Division sets the tone for investment fund managers, portfolio advisers, and related service providers.
It outlines three major themes: operational stability, regulatory change, and emerging product risks.
Operationally, the volume of prospectus reviews stayed steady, while applications for exemptive relief and targeted disclosure reviews increased.
On regulation, the IM Division has finalized rules modernizing the prospectus filing model, begun consultations on the principal-distributor and charge-back models, and continues work to update continuous disclosure requirements. It is also exploring ways to improve investor access to long-term assets through new fund products and enhancing the Investment Fund Survey to monitor industry trends.
“As the industry continues to evolve, we remain committed to agile, balanced regulation that protects investors and supports innovation,” says IM Division senior vice president Raymond Chan, adding that the team has “broadened our scope to include regulatory policy matters related to both investment fund managers and portfolio advisers and are better positioned to respond to market trends and deliver on our strategic priorities.”
The report highlights how continuous disclosure risk is shifting toward nuanced matters such as marketing materials and fund communications. The consultation on new fund products suggests advisors will soon need to evaluate emerging fund vehicles with appropriate oversight on suitability and disclosure.
The report also signals that innovation and oversight will increasingly intersect, especially as new asset classes gain attention. Advisors should expect greater regulatory focus on funds tied to AI, crypto-related strategies, and alternative investments, ensuring their marketing materials and suitability assessments meet heightened expectations.
Advisors should confirm that the funds they recommend comply with the updated prospectus-filing rules, disclosure standards, and exemptive-relief processes. They may also be called on to demonstrate that fund managers’ marketing and product-development practices align with evolving OSC expectations.
Key takeaways include:
- Strengthening due diligence beyond performance and fees to include fund-manager communication and emerging-risk monitoring.
- Crafting suitability narratives that anticipate regulatory scrutiny for innovative fund products.
- Maintaining clear documentation of fund selection, marketing reviews, and client assessments.
- Adopting a forward-looking approach by tracking consultations and aligning with fund-manager readiness.
The full IM Division Annual Summary Report is available on the OSC website.
