Aligned in Principle, Nuanced in Practice: Navigating OSC and CIRO Priorities
As the Ontario Securities Commission ("OSC") and the Canadian Investment Regulatory Organization ("CIRO") finalize their strategic priorities for the upcoming fiscal years (OSC 2026–2027 and CIRO Fiscal 2027), an analysis of their respective roadmaps reveals significant collaborative alignment, and nuanced variances in emphasis. While both regulators are committed to market integrity, technological innovation, and investor protection, where their distinct organizational mandates overlap, differentiated approaches to oversight may result. The OSC and CIRO’s strategic roadmaps offer actionable insights for compliance and legal departments who must navigate the subtle divergences between these regulator’s priorities.
1. Harmonization and the Shifting Locus of Registration
A central pillar of alignment lies in the goal of reducing regulatory burden and harmonizing requirements across jurisdictions. CIRO is entering the final year of its 2025–2027 Strategic Plan following the amalgamation of IIROC and the MFDA. A critical Fiscal 2027 deliverable is a final harmonized rulebook consolidating investment dealer and mutual fund dealer rules. CIRO also intends to retire the dual registration construct and propose rule amendments to codify exemptive relief conditions for existing dual-registered firms. The OSC, in turn, has been delegating additional registration responsibilities to CIRO in coordination with other CSA jurisdictions.
Variances in Emphasis: While the delegation of registration signals high-level alignment, the OSC has explicitly stated its intention to conduct direct examinations of CIRO member firms. This dual-track oversight means front-end registration may streamline under CIRO, while back-end compliance and examination processes may subject firms to concurrent scrutiny from both regulators.
The Dual-Track Examination Reality
OSC Staff Notice 33-758 from June 2025 sets out the expanded mandate of the Registration, Inspections and Examinations Division (“RIE”) to perform risk-based direct compliance examinations of CIRO member firms, potentially including co-reviews with CIRO, thematic sweeps, desk reviews, and comprehensive assessments. The OSC's 2026–2027 Statement of Priorities lists delegation and direct examination side-by-side, making clear they are complementary rather than mutually exclusive tools.
CIRO's rulebook is a more prescriptive, rule-based framework, while NI 31-103 operates under a principles-based model that prioritizes outcomes over procedural checklists. Without close co-operation, a firm could be fully compliant with every applicable CIRO rule and still be found deficient by OSC examining staff applying a different institutional lens. The dual-track model creates three compounding risks: (1) resource burden from managing simultaneous examination processes; (2) interpretive risk from conflicting deficiency findings; and (3) reputational and enforcement risk if OSC examiners characterize CIRO-compliant practices as inadequate under the provincial standard.
2. Investor Redress and Client-Focused Reforms (“CFRs”)
The OSC is advancing structural changes to the investor redress landscape, including a regulatory framework that would grant an independent dispute resolution service — anticipated to be OBSI — binding authority to make compensation decisions. The OSC is also operationalizing its disgorgement framework, which came into force in late 2025. CIRO's approach is more focused at the member-firm level: reviewing complaint handling resolution timelines and implementing "Reasonable Safeguards" through bulletins to support firms demonstrating good-faith CFR compliance.
Variances in Emphasis: On CFRs, the regulators exhibit complementary but distinct focal points. CIRO is deploying practical guidance to reduce regulatory uncertainty, while the OSC is assessing whether CFRs are achieving their intended outcomes — specifically questioning whether KYP standards are inadvertently contributing to limited product shelves. Following its review of bank-owned dealer sales practices, the OSC is also scrutinizing how compensation, incentives, and scorecards impact the behaviour of mutual fund dealing representatives, signalling a focus on conflict of interest management.
3. Technological Innovation, Digital Assets, and Retail Access
There is strong alignment on integrating Crypto Asset Trading Platforms ("CTPs") into the traditional regulatory perimeter, with both regulators collaborating to transition CTPs toward an investment dealer registration model and CIRO membership. Both are also focused on the gamification of retail investing: CIRO plans to publish research on behavioural "speed bumps" to prompt DIY investors to pause before engaging in high-risk strategies, while the OSC is monitoring order-execution-only firms for the need for further intervention.
For more analysis on potential solutions to the conflicts of interest created by gamified retail platforms, please see our recent article on gamification and retail investing. Balancing Gamification and Conflicts of Interest: What Retail Investing Can Learn from the Ontario Gaming Player Safety Approach
Variances in Emphasis: CIRO's technological focus is largely pragmatic and member-centric — enabling firms through its "InnovateSafe" regulatory sandbox, building internal operational efficiencies using automation, and reviewing the framework for tailored online advice. The OSC takes a broader macro-prudential posture, engaging on AI-related risks and governance, monitoring financial asset tokenization and Value-Referenced Crypto Assets ("VRCAs"), and tracking the influence of "finfluencers" on retail investors. Compliance departments at larger institutions will need to satisfy CIRO's practical mandates while anticipating the OSC's broader, policy-driven standards.
4. Enforcement Strategy and Market Integrity
The OSC has declared a goal to implement a "tougher and more visible response" to misconduct, including strategically allocating resources to enable fraud cases to be addressed through criminal charges against individuals and expanding its AI capabilities to support complex investigations, disrupt online investment fraud, and improve its collection rates. While CIRO shares the objective of market integrity — evidenced by collaborative work with the CSA on fraudulent website disruption — its priorities reflect its SRO role. CIRO intends to publish its first annual report on Market Regulation operations and review the Universal Market Integrity Rules ("UMIR") to identify modifications that could better support small dealers and junior issuers.
5. Capital Formation and Structural Policy
The OSC is dedicating resources to right-sizing regulation for issuers: harmonizing prospectus exemptions (including the self-certified investor exemption), testing the waters for prospectus offerings, supporting companies maintaining public listings, and exploring an expanded interval fund regime through its LaunchPad initiative. One notable initiative that remains absent from the OSC’s priority list is the harmonization of National Instrument 45-106. As we have written recently, the path is open to carry out the important work to support capital formation at this critical national moment. The Proposed Self-Certified Investor Exemption, and the Potential to Harmonize National Instrument 45-106
CIRO's structural policies remain appropriately tethered to advisor and member frameworks, with key priorities including consulting on an incorporated advisor compensation option and proposing phase 2 amendments to fully harmonize Continuing Education requirements.
Strategic Takeaways
The alignment between the OSC and CIRO on CTP integration, delegation of registration, and disruption of online fraud signals a maturing, unified front that will reduce certain operational frictions. However, nuanced divergences require careful navigation. Firms should not rely solely on SRO compliance to satisfy provincial statutory expectations — the OSC's willingness to conduct direct exams of CIRO members and scrutinize KYP product shelves under CFRs makes this clear. Firms that recognize this as a structural shift in the Canadian regulatory landscape, rather than a single-regulator compliance problem, will be better positioned to manage examination risk and protect their clients and businesses.
Recommended Next Steps for Registered Firms
1. Map Your Compliance Program Against Both Regulatory Frameworks
Conduct a gap analysis comparing your firm's current compliance framework against both CIRO's rules and guidance (including the forthcoming harmonized rulebook) and OSC Staff Notices, National Instruments, and examination findings. Where your program meets CIRO's prescriptive requirements but may not satisfy the OSC's principles-based expectations — particularly in AI governance, KYP product shelf construction, and compensation conflict management — document your rationale and consider supplementary controls.
2. Prepare for OSC Examination Readiness as a Distinct Exercise
Do not treat an OSC examination as an extension of your CIRO compliance cycle. Assume the OSC's examination team will assess your firm against its own standards and current enforcement priorities. Review OSC Staff Notice 33-758 to understand how RIE selects firms via the Risk Assessment Questionnaire ("RAQ"), what documentation is typically requested, and which themes are currently in focus. Consider conducting an internal simulated OSC desk review or thematic sweep as a preparatory exercise.
3. Strengthen Documentation to Support Principles-Based Scrutiny
A common OSC examination deficiency is inadequate documentation of the reasoning behind compliance decisions — particularly in KYP product approvals, suitability assessments, and conflict of interest management. Because the OSC's principles-based framework approaches compliance differently than CIRO's rule-based model, firms need to demonstrate the quality of their decision-making, not just the existence of a process. Revisit supervisory procedures, approval workflows, and compliance attestations with an eye toward articulating the "why" behind each step.
4. Establish a Regulatory Intelligence Function
Given the pace of regulatory change — the OSC's shifting examination priorities, CIRO's harmonized rulebook implementation, and evolving CFR compliance expectations — firms need a systematic process for tracking and interpreting regulatory developments. Compliance departments should assign ownership for monitoring OSC Staff Notices, CIRO Bulletins, and CSA publications, and maintain a living regulatory change log that maps each development to relevant internal policies and procedures.
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How North Star Can Help
Choose the North Star Group as your partner for legal and regulatory compliance support. The North Star Group (including North Star Legal and North Star Consultants) is led by lawyers and former chief compliance officers with deep experience advising CIRO member firms as well as OSC-supervised firms. North Star’s team understands both the prescriptive world that CIRO member firms operate in every day and the principles-based expectations that OSC examiners bring to the table. We offer the following services specifically designed to help firms manage the dual-oversight environment described in this article.
Dual-Framework Gap Analysis. We map your compliance program against CIRO’s prescriptive rulebook, the OSC’s principles-based examination standards, and current publications and experience, identifying gaps and conflict zones before a regulator does.
OSC Examination Readiness Reviews. North Star conducts simulated OSC desk reviews and thematic sweeps, evaluating your firm’s documentation against OSC expectations, testing your policies and procedures against current OSC examination priorities, and providing a prioritized remediation roadmap. Firms without OSC audit experience will find this review revealing.
CFR and KYP Compliance Program Enhancement. Given the OSC’s specific concerns about KYP standards, product shelf construction, and the influence of compensation structures on dealing representatives, North Star provides targeted assessments of your CFR compliance program.
Regulatory Intelligence and Monitoring. North Star provides ongoing regulatory intelligence services, tracking and interpreting developments from the OSC, CIRO, and all CSA jurisdictions as they emerge. Our team translates regulatory publications into plain-language compliance implications and maps each development to your firm’s specific business model and risk profile. For firms that cannot maintain a dedicated regulatory affairs function internally, North Star serves as a cost-effective extension of your compliance team.
Strategic Compliance Advisory. For firms facing a live OSC or CIRO examination, or responding to a compliance deficiency report, North Star provides experienced counsel to help you navigate the process, craft your written responses, and develop credible remediation plans. Our team has advised firms through examinations conducted by both CIRO and the OSC, and we understand how to communicate effectively with each regulator in the language and framework they use.
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About the Authors
Michael Holder (B.A. Western, LL.B. Windsor, MBA, Western) is the Managing Partner of North Star Legal, bringing more than 20 years of wealth management, legal, and compliance experience in Canada’s financial services sector. Having acted as Associate General Counsel and Chief Compliance Officer of Wealthsimple, Senior Legal Counsel at BMO Financial Group and a partner of one of Canada’s largest firms, Michael combines his practice and advisory work with teaching Fintech and Disruption of Banking at Ivey Business School.
Read Michael’s full bio here.
Martha Rafuse (B.A. Western, LL.B. Osgoode, LL.M London School of Economics), Counsel at North Star Legal, brings more than two decades of securities regulatory experience across the financial industry, private practice, and government. Before joining North Star Legal, Martha led large compliance teams for both Canadian and U.S. firms, including RBC Phillips, Hager & North Investment Counsel Inc., RBC Dominion Securities Inc. (Retail), and RBC Royal Mutual Funds. As Legal Counsel at the Ontario Securities Commission, Martha developed legal solutions for novel regulatory issues and led significant policy initiatives.
Read Martha’s full bio here.