For years the Ontario Securities Commission (OSC), Canadas largest regulator, has had a dismal record of catching industry troublemakers. The reason, according to numerous commissioners, past and present, was that the agency just didnt have the resources to get the job done.

That changed earlier this year when the Ontario Ministry of Finance, after years of negotiations with the OSC, agreed to allow the regulator to become self-funding.

This means that instead of apologizing for not being able to deal with some industry problems, we have put ourselves in the position to get the job done, says David Brown, chairman of the OSC.

The move to self-funding has already allowed the OSC to increase its budget from $20 million (Canadian) for 1998 to $28 million for the next fiscal year.

The next step, Brown says, will be the immediate addition of 60 new employees, primarily in compliance and enforcement. After that, he says, another 100 employees will be added in the next two years, with about half of those in compliance and enforcement as well. To assist staff, much of the additional revenue will be used for technology upgrades.

Throughout most of its history, the OSC has been a line item on the Ontario Ministry of Finance budget. Revenue raised by the regulator, beyond its operating costs, went directly to the Ministrys coffers to be used as general revenue in the province.

OSC directors have complained that as the province grew in importance as Canadas financial center, the commissions resources didnt keep pace. As an example, they point to the fact that 75% to 80% of all Canadian capital markets business takes place in Ontario, but the OSC only has 235 employees. By comparison, in the much smaller jurisdiction of British Columbia, the British Columbia Securities Commission has 175 people.

Although most industry participants say that a properly staffed regulator will be beneficial to industry operations, some are privately concerned about the concept of self-funding in general.

You dont want it to become like those towns on the way to Florida whose budgets depended on catching speeders, says one brokerage executive in Toronto. I hope we arent going to see an industry equivalent of a motorcycle cop behind every billboard.