Email Blast – 2023 Capital Markets Participation Fees and Related Matters (including a new Fee Form filing deadline) – Action Items

This email relates to the upcoming filing of 2023 Fee Forms and payment of capital markets participation fees.

 

Please note that there have been changes to the OSC Fee Rules related to the calculation and payment of capital markets participation fees, and the filing deadline for the related Fee Forms. Changes that have been reflected in the below instructions are summarized in section 6 of this email.

 

1. WHO IS REQUIRED TO FILE THE 2023 FEE FORMS AND PAY CAPITAL MARKETS PARTICIPATION FEES

  • Firms registered in Ontario under the Securities Act or the Commodity Futures Act, will be required as a “registrant firm” to pay a capital markets participation fee under the corresponding fee rules referred to below
  • Firms relying on certain exemptions from registration requirements in Ontario under the Securities Act or the Commodity Futures Act will be required as an “unregistered capital markets participant” to pay a capital markets participation fee under the corresponding fee rules referred to below
  • Agents for service identified by firms on our National Registration Database, or NRD will be notified of these changes.  

2. Fee Forms used to calculate the capital market participation fees are available on the OSC’s website in the Participation Fees section of https://www.osc.ca/en/Dealers_forms_index.htm

  • Form 13-502F4 Capital Markets Participation Fee Calculation under Ontario Securities Commission Rule 13-502 Fees (OSC Rule 13-502)
  • Form 13-503F1 (Commodity Futures Act) Participation Fee Calculation under Ontario Securities Commission Rule 13-503 (Commodity Futures Act) Fees (OSC Rule 13-503)

3. ACTION ITEM – DEADLINE FOR FILING OF FEE FORMS (NEW) and DEADLINE FOR PAYING CAPITAL MARKETS PARTICIPATION FEE

Please forward this email to the individuals who will be responsible for completing and filing the Fee Forms on behalf of your firm.

Please note the following upcoming filing deadlines:

  • November 1, 2023 – Deadline to file Form 13-502F4
  • November 1 2023 – Deadline to file Form 13-503F1
  • January 2, 2024 – Deadline to pay the capital markets participation fee

Note: Under OSC Rules 13-502 and 13-503, firms that do not meet the above deadlines for filing or paying will also be subject to late fees.

Moreover, the registration of a firm will be (automatically) suspended if the capital markets participation fee required to be paid by the firm under OSC Rule 13-502 remains unpaid for more than 30 days after its January 2, 2024 due date, pursuant to subsection 29(1) of the Securities Act (Ontario).  

Designated Financial Year (New)

In completing the applicable Fee Form, each firm must use gross revenues from its designated financial year to calculate its capital markets participation fee.

"designated financial year" in connection with the filing at any time of a completed Form 13-502F4 means,

  1. if the filing is by a registrant firm, the most recently completed financial year of the registrant firm, determined at the time of the filing, for which audited financial statements are available, and
  2. if the filing is by an unregistered capital market participant, the most recent completed financial year of the unregistered capital market participant, determined at the time of the filing, for which
    1. audited annual financial statements are available; or
    2. unaudited annual financial statements are available, if the unregistered capital market participant does not ordinarily have its annual financial statements audited

CERTIFICATION OF FEE FORMS

Forms 13-502F4 and 13-503F1 include a certification requirement. Information reported in these Fee Forms must be certified as to its completeness and accuracy.  The Fee Forms may be certified by one of the following:

  1. the chief compliance officer of the registrant or the unregistered capital markets participant;
  2. in the case of an unregistered capital markets participant without a chief compliance officer, an individual acting in a similar capacity;
  3. a specified officer of the registrant or the unregistered capital markets participant, or an individual acting in a similar capacity;
  4. a director of the registrant or unregistered capital markets participant.

The term “specified officer” of a registrant or an unregistered capital markets participant is defined to mean an individual with any one or more of the following positions in relation to the registrant or the unregistered capital market participant:

  1. chief executive officer;
  2. chief financial officer;(c) chief operating officer

4. ACTION ITEM – PAYMENT OF FEE

For registrant firms and unregistered capital markets participants with bank account information recorded on NRD, capital markets participation fees will be automatically withdrawn from the firm’s bank account (unless otherwise notified by the Ontario Securities Commission).

For all other firms, payment must be made by wire transfer. See the link contained in Item 4e. below for wire transfer payment instructions, along with details that must be provided with the payment. Note that the firm’s NRD number must be provided in the notes to the wire transfer to allow for the firm’s payment to be accurately accounted for.

REMINDER: Please avoid submitting double payments and remember that if your bank account information is recorded on NRD, you should not make payment by wire transfer (which would involve the unnecessary processing of refunds and associated administrative burden).

 5. IF YOUR FIRM IS CONSIDERING:

 

  • Voluntarily surrendering its registration

  • Consenting to the suspension of its registration

  • Notifying the OSC that it is no longer relying on an exemption from registration requirements

 

We recommend that your firm submit its application or notification by December 8, 2023 for review and processing prior to the January 2, 2024 deadline for payment of its capital markets participation fees.  If we receive its application or notification after December 8, 2023, we may not be able to process it in time for it to be reflected in the capital markets participation fee that is due on January 2, 2024.

 

Application or Notification Process

Registrant firms that wish to apply for a voluntary surrender or consent to the suspension of their registration must complete and file an application letter (which should be attached as a pdf to the online portal form, prepared in accordance with the template set out in the instructions found in the link contained in Item 4.f., below).

Unregistered capital markets participants who no longer wish to rely on an exemption from a registration requirement under section 8.18 [International dealer] or section 8.26 [International adviser] of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, or under section 4 [Permitted clients] of Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers, must complete and file a notification of non-reliance on the exemption through the OSC’s online portal and file a notification letter (which should be attached as a pdf to the online portal form and include the information set out in the instructions found in the link contained in Item 4.g., below).

 

6. SUMMARY OF RELEVANT CHANGES TO THE FEE RULES

The above instructions reflect amendments to OSC Rule 13-502 and OSC Rule 13-503, effective April 3, 2023 (the Rule Amendments) that included changes in the calculation, filing and payment of capital markets participation fees. This section summarizes the Rule Amendments.

 

Calculation

The Rule Amendments simplify the annual capital markets participation fee calculation procedure for registrant firms and unregistered capital markets participants. (They also simplify the language used in the definition of “unregistered investment fund manager” in OSC Rule 13-502 by referring directly to Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers.)

The previous procedure that had provided for estimates and subsequent adjustments based upon actual financial information has been eliminated. The calculation is now based upon the most recently audited financial statements of the firm or participant and is only filed once.  

The Rule Amendments:

  • made changes to filing and payment deadlines
  • introduced the new term “designated financial year” and simplified the term “previous financial year”
  • provided for minor clarifications to eliminate areas of potential confusion identified by filers (for instance: “revenues” in line 1 of Form 13-502F4 and Form 13-503F1 is now replaced by “gross revenues”; and figures on these Forms are now required to be expressed as whole numbers – and no longer in thousands)

Filing and Payment Deadlines
Under OSC Rule 13-502

  • registrant firms and unregistered markets participants must, in each year, file their completed Form 13-502F4 – after August 31 and before November 2. (The filing period reflects the elimination of the previous estimate process)
  • in each year, registrant firms and unregistered capital markets participants are, by December 31 (for this cycle, January 2, 2024 because December 31, 2023 is a Sunday), required to pay the capital markets participation fees identified in Appendix C (which replaces Appendix B in previous OSC Rule 13-502) for the specified Ontario revenues of the firm or participant in respect of their “designated financial year”

Similarly, under OSC Rule 13-503

  • registrant firms must, in each year, file their completed Form 13-503F1 – after August 31 and before November 2.
  • in each year, registrant firms are, by December 31 (for this cycle, January 2, 2024 because December 31, 2023 is a Sunday) required to pay the capital markets participation fees identified in Appendix A of OSC Rule 13-503 for the specified Ontario revenues of the firm in respect of their “designated financial year.”

Moreover, as in the case of the previous CFA Fee Rule, a registrant firm registered under both the Securities Act and the Commodity Futures Act, that has paid its participation fee under OSC Rule 13-502, is not subject to participation fees under OSC Rule 13-503.

“Fee Tiers”
Capital Markets Participation fees under OSC Rules 13-502 and 13-503 have been reduced for certain levels of specified Ontario revenues, as shown below: 

 

 Previous OSC Rules
13-502 and 13-503		New OSC Rules
13-502 and 13-503

Specified Ontario Revenues for the Designated Financial Year

Participation Fee

Participation Fee

under $250,000

$835

$700

$250,000 to under $500,000

$1,085

$975

$500,000 to under $1 million

$3,550

$3,200

$1 million to under $3 million

$7,950

$7,150

$3 million to under $5 million

$17,900

$16,100

$5 million to under $10 million

$36,175

$34,300

$10 million to under $25 million

$74,000

$70,000

$25 million to under $50 million

$110,750

$105,200

$50 million to under $100 million

$221,500

$217,000

$100 million to under $200 million

$367,700

$367,700

$200 million to under $500 million

$745,300

$745,300

$500 million to under $1 billion

$962,500

$962,500

$1 billion to under $2 billion

$1,213,800

$1,213,800

 

4. FOR MORE INFORMATION

 

Please see:

 

  1. OSC Rule 13-502 Fees
  2. OSC Rule 13-503 (Commodity Futures Act) Fees
  3. Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers
  4. Link to OSC’s Registrant Search to identify the firm’s National Registration Database (NRD) number
  5. Payment instructions
  6. Instructions for application for voluntary surrender or consent to suspension of a firm’s registration
  7. Instructions for notification that an unregistered capital markets participant is no longer relying on an exemption from registration

 

5. IF YOU HAVE ANY QUESTIONS

 

Please contact the OSC Contact Centre by e-mailing [email protected] or calling 1-877-785-1555 (toll-free).