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Fee adjustments, as well as fee increases introduced in 2013, have returned the commission to strong profitability after it recorded deficits from 2009 to 2013.Fred Lum/The Globe and Mail

The Ontario Securities Commission says its revenues will rise almost 14 per cent in its current fiscal year, leaving the regulator with a surplus of $6.6-million for the year.

The commission published details of its financial outlook Thursday for the fiscal year ending March 31, saying revenue has climbed due to fee changes introduced last year. Those fee adjustments, as well as fee increases introduced in 2013, have returned the commission to strong profitability after it recorded deficits from 2009 to 2013.

The OSC said it expects to take in revenue of $115.8-million in fiscal 2016, a 14-per-cent increase from $101.6-million in fiscal 2015. Expenses are expected to climb sharply to $109-million in the current year from $96.9-million in fiscal 2015, leaving the OSC with an anticipated surplus of $6.6-million this year, up from $4.7-million last year.

Market participants – including listed companies, investment firms and other registrants – pay participation and activity fees to the OSC, which account for more than 99 per cent of its revenue. The OSC adjusted its fee structure last year to base its participation fees on a firm's most recent annual financial results so they closely track current market conditions.

When it introduced the changes last year, the OSC said they were expected to be relatively revenue neutral. While the commission will record a significant surplus in the current fiscal year, it said it expects to have a smaller surplus in fiscal 2017 and a deficit in fiscal 2018 as revenues remain "relatively flat" while expenses continue to rise.

The OSC raised fees in 2013 because it was drawing down on its general surplus to cover annual deficits even though it is supposed to operate on a cost-recovery basis. The commission's general surplus stood at $14.3-million at the end of fiscal 2015, up from a recent low of $5.3-million at the end of 2013. The regulator also has a $20-million reserve.

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