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On Wednesday, Sino-Forest disclosed it had received a second enforcement notice from the OSC.Peter Power/The Globe and Mail

Editor's note: This story has been updated to include comment from the OSC.

Spending at the Ontario Securities Commission is soaring, and the brokerages that help fund the regulator are drawing together to fight the resulting fee increases.

The rate of spending growth at the OSC is drawing close scrutiny in the investment industry, as many firms are struggling to remain profitable in quiet markets and will have trouble shouldering extra levies from the commission.

The Investment Industry Association of Canada is studying the OSC's plan to raise charges, resulting in increases to most brokerages that do business in Ontario that would total 16 per cent over the next three years. That comes after having boosted them by about 19 per cent since 210. And the industry association is worried that the fee increases won't stop there.

The comments come in a letter sent this week by IIAC head Ian Russell to chief executives in the industry, and obtained by Streetwise, in which he signals the association is looking at ways of combating the increase.

"We are concerned that the proposed OSC fees may have a negative impact on mid-sized and small IIROC registrants, many of which are this year losing money on a net basis as a result of weak business conditions and rising costs," he wrote. "We are also concerned that the escalation of OSC fees will continue after 2015, as suggested by its projected expenses, and we are considering ways to address this phenomenon in light of the OSC's regulatory responsibilities."

Costs at the commission are rising faster than at other big provincial securities regulators, and are higher than at the U.S. Securities and Exchange Commission when adjusted for market size, IIAC argued in the letter.

With a national securities regulator nowhere in sight, the OSC is growing to fill the void. The OSC has been ramping up a number of regulatory initiatives, including its understanding of the derivatives market. The commission also has to increase its heft to supervise the TMX Group after it was bought by a group of big banks and pension funds, a deal that came with a long list of regulatory conditions.

IIAC points out that in the past five years, the commission's expenses have risen a total of almost 32 per cent. By 2016, the OSC expects expenses to have jumped more than 44 per cent since 2010.

OSC spokeswoman Carolyn Shaw-Rimmington said "the OSC has made every effort to consider the current market environment." She pointed out that the new fee plan will split the lowest fee tier in two, resulting in 55 per cent of securities firms paying "the same or lower participant fees."

She also pointed out that after a fee freeze in 2009, and surpluses in recent years, the total amount of fees collected in the recent fiscal year was only about 3 per cent higher than that collected in the year ending in 2006.

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