OSC TestLab2022

OSC TestLab 2022

RegTech Innovation in Action

Exploring Technology-Driven Solutions for Ontario’s Capital Markets

Executive summary

OSC TestLab is a group testing environment for capital market innovations, enabling market participants and the OSC to experiment, learn, and improve, together.

TestLab’s inaugural test took place from June to December 2022 and explored the potential of RegTech to address challenges and opportunities in Ontario’s capital markets in response to two problem statements: 1) making product information more accessible; and 2) improving advisor-client interactions.

LockDocs, Wealthscope, Mako Fintech, Syntoniq, TMX, Morningstar, and Broadridge each tested solutions with Ontario registrants and investors as part of TestLab 2022. The OSC Innovation Office observed testing and facilitated dialogue and collaboration among test participants and subject matter experts from across the OSC. Through this report, the Innovation Office is sharing what was learned about the potential for RegTech in Ontario’s capital markets as part of TestLab 2022. Nothing in this report should be interpreted as an endorsement or recommendation for a particular solution or solution provider.

TestLab 2022 highlighted the significant and varied opportunities for RegTech solutions to support registrants and investors in Ontario's capital markets. From onboarding and risk assessments to product research and comparisons, the Innovation Office heard that RegTech has the potential to enhance client engagement and improve efficiency in key aspects of a registrant’s operations.

Ongoing feedback from the testing process helped test participants improve their solutions and helped the OSC gain insight into the challenges and opportunities for RegTech innovation and adoption in Ontario’s capital markets.

Key insights that emerged from TestLab 2022 were that:

RegTech can support registrants and their clients through improved information sharing, more accessible product information, and better advisor-client communications.
RegTech can empower investors through engaging risk assessments and knowledge building that contributes to more informed decision-making.
RegTech is about more than compliance, as it can drive efficiency, quality, and variety in our capital markets.
RegTech adoption faces a range of challenges, from development and testing hurdles to an evolving regulatory framework, requiring innovators to be agile in building solutions that support registrants with accurate, explainable, and interpretable results.

Reflecting and building on TestLab 2022, the OSC Innovation Office identified four ways to better support RegTech innovation, through:

Supporting the RegTech ecosystem by expanding its RegTech network through regular meetings, events, and information sessions to enhance regulatory knowledge and facilitate collaboration within the industry.
Making regulation more accessible by assessing opportunities for machine-readable regulation to support automation in developing and updating solutions to respond to regulatory change.
Building support for capital markets testing among market participants by building a broad community of potential test partners to foster collaboration and enhance networks to help support future testing.
Shaping and sharing RegTech standards by being an active contributor within domestic and global networks.

TestLab 2022 has ended, but the next OSC TestLab test is just getting started. With new themes in Ontario’s evolving capital markets shaping each test, the next one will look quite different, but will have an important thing in common with TestLab 2022: striving to create more innovative, competitive, and prosperous capital markets for all Ontarians.