OSC Investment Management Division Annual Report: Key Takeaways for PMs, IFMs and EMDs

On September 15, 2026, the Ontario Securities Commission (OSC) published its Investment Management Division Annual Summary Report for the fiscal year ended March 31, 2026. The report provides an overview of the Division’s operational activities, policy initiatives and emerging areas of focus affecting investment funds, investment fund managers and portfolio advisers.

For Portfolio Managers (PMs), Investment Fund Managers (IFMs) and Exempt Market Dealers (EMDs), the report is useful not only as a summary of the past year, but also as an indication of the areas regulators are monitoring more closely.

A few themes stand out.

1. Risk-Based and Data-Driven Reviews Continue to Expand

The OSC continues to emphasize a risk-based regulatory approach supported by data and analytics.

The Investment Management Division uses information from continuous disclosure reviews, the Investment Fund Survey and other regulatory sources to identify outliers, emerging risks and areas that may warrant additional review.

During the year, OSC staff analyzed fund data relating to liquidity, borrowing, short selling and derivatives exposure. Where funds appeared to be outliers, staff reviewed prospectuses, continuous disclosure documents and portfolio holdings to understand the reason. In some cases, the difference was legitimate; in others, it reflected classification or filing errors.

For registrants, this reinforces the importance of consistency across regulatory filings, books and records, portfolio activity and disclosure.

Firms should consider whether the information submitted to regulators accurately reflects the firm’s current business and can be readily supported if questions arise.

2. Marketing and Sales Communications Remain an Area of Focus

The OSC continued to review investment fund sales communications, including content distributed through firm websites and social media such as YouTube and LinkedIn. OSC Staff identified instances where performance ratings or rankings were used without required disclosure and where performance data was presented before a fund had the required performance history.

Where non-compliance was identified, materials were amended or removed. The OSC also notes that continued non-compliance may be referred for further regulatory action.

For PMs, IFMs and EMDs, this is a useful reminder that marketing supervision should extend beyond reviewing pitch books and presentations.

Websites, social media, newsletters, videos, fact sheets and performance materials should be reviewed regularly to ensure that:

• disclosures remain current;

• performance information is presented appropriately;

• statements are not misleading;

• the firm’s registration and services are described accurately; and

• required limitations or qualifications are included.

3. Ownership Changes Continue to Generate Filing Issues

The report includes a specific reminder regarding notices under sections 11.9 and 11.10 of NI 31-103.

The OSC received 84 notices relating to proposed ownership changes or asset acquisitions during the fiscal year.

OSC Staff continue to see filings that omit information needed to properly assess a proposed transaction. One example identified in the report is insufficient disclosure regarding how material conflicts arising from an ownership change will be addressed in the best interest of clients.

The OSC also reminds firms that missed notices may still need to be filed after the transaction has occurred and can result in filing fees, warning letters and, in limited circumstances, further regulatory action.

Firms considering a sale, ownership restructuring, new investor, merger, acquisition or strategic transaction should assess the registration implications early in the process.

4. IFMs: Operational Controls and Compliance Reporting Matter

The OSC reviewed compliance reports filed under NI 81-102 and noted that 42 fund managers reported issues or exceptions.

Most related to overdrafts caused by timing differences and delays in subscription or redemption settlement. More serious examples included commingling of cash and lapping issues.

The OSC notes that repeated deficiencies, significant numbers of issues or serious occurrences may lead to further regulatory action or a focused compliance review.

For IFMs, this is a reminder to review operational controls around:

• subscriptions and redemptions;

• settlement timing;

• trust accounts;

• cash controls;

• reconciliations;

• administrator oversight; and

• recurring exceptions.

The key is not only identifying an exception, but demonstrating that it has been investigated and appropriately remediated.

5. Liquidity Risk Management Remains a Priority

Liquidity risk continues to be a significant regulatory theme.

The CSA has proposed amendments to NI 81-102 that would formalize liquidity risk management frameworks, strengthen governance and oversight, and enhance operational practices including stress testing.

For IFMs, this is directly relevant to fund operations and portfolio management.

PMs may also want to consider the broader principles, particularly where portfolios include less liquid or alternative investments.

Firms should be able to explain how liquidity is considered in portfolio construction, concentration decisions, client cash needs and the use of less liquid securities.

6. Complex Products Continue to Increase KYP Expectations

The report highlights continued growth in more complex products, including CLO ETFs, crypto asset funds, leveraged ETFs and single-issuer ETFs.

The OSC also states that it will continue to monitor foreign-listed ETFs and compliance with marketing, KYC, KYP and suitability requirements.

For PMs and EMDs, the broader takeaway is that product complexity increases the importance of strong KYP documentation.

Firms should be able to demonstrate that they understand the product’s:

• structure;

• material risks;

• liquidity;

• costs;

• leverage;

• downside exposure;

• valuation;

• counterparty exposure; and

• reasonable alternatives.

That analysis should also connect back to the client’s KYC information, mandate and suitability assessment.

7. Separately Managed Accounts Are Receiving More Attention

One notable point for PMs is the OSC’s statement that it intends, together with the Registration, Inspection and Examination division, to gather more information regarding the use of managed solutions such as separately managed accounts (SMAs).

The objective is to better understand the distribution landscape and identify possible regulatory gaps or investor risks.

This does not necessarily indicate a new rule or review program, but it does suggest growing regulatory interest in how SMA models operate.

PMs using these structures may want to review whether their documentation clearly supports:

• client segmentation;

• investment mandates;

• KYC;

• portfolio construction;

• KYP;

• suitability;

• concentration decisions;

• fees; and

• ongoing monitoring.

8. IFMs: New Conflict Reporting Requirements

The report also highlights recent changes to NI 81-107 that came into effect on April 22, 2026.

IFMs are now required to use the new Form 81-107A Conflict Reporting Form for Related Issuer Purchases for applicable related-party transactions and prepare an annual Manager’s Report on Related Party Transactions for inclusion as an appendix to the IRC’s annual report to securityholders.

This is an area that should be reflected in the compliance calendar and related-party transaction procedures. For the Manager’s Report on Related Party Transactions, the practical application is:

• if the IRC report to securityholders was filed on or before April 21, 2026, the fund can rely on the transition period and the new requirements apply starting January 1, 2027;

• if the IRC report is filed on or after April 22, 2026, the new requirements apply to that filing.

9. Smaller and Mid-Sized Firms Remain Within Scope

The OSC also expanded a previous small-issuer review to include mid-sized managers with AUM below $1 billion.

OSC Staff reviewed financial statements, MRFPs, compliance reports, prospectuses, websites and marketing materials.

This is a useful reminder that regulatory reviews are not limited to the largest firms.

Smaller PMs, IFMs and EMDs should still expect to demonstrate that their policies, filings, disclosure and actual practices are current and consistent.

10. What Should Firms Review Now?

The report does not point to one single area of concern. Instead, it shows a regulator increasingly focused on whether a firm’s records, filings, disclosure and actual practices align.

PMs, IFMs and EMDs may want to consider whether:

• regulatory filings are consistent with books and records;

• websites and marketing materials remain current;

• KYP and suitability documentation is sufficient for the complexity of products used;

• liquidity and concentration risks are appropriately monitored;

• ownership changes have been assessed for NI 31-103 filing requirements;

• recurring operational exceptions have been remediated;

• compliance calendars reflect recent regulatory changes; and

• SMA documentation clearly supports the firm’s portfolio construction and monitoring process.

The broader message is straightforward: regulators are increasingly able to compare what firms say, what they file and what they actually do.

A strong compliance framework should be able to support all three.

How SGD Compliance Can Help

SGD Compliance Consulting works with Portfolio Managers, Investment Fund Managers and Exempt Market Dealers on compliance reviews, regulatory filings, policy updates, KYC/KYP and suitability frameworks, registration matters, regulatory examinations and ongoing compliance support.

A focused review against current regulatory expectations can help identify technical gaps before they become regulatory findings and confirm that a firm’s policies, documentation and filings continue to reflect its actual business.

This article is provided for general informational purposes only and does not constitute legal or regulatory advice.