The Form 13-502F4 Capital Markets Participation Fee Calculation (F4) must be filed on December 1 each year by all registered firms, unregistered investment fund managers, and firms operating under the exemptions available in sections 8.18 and 8.26 of NI 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.  This form is used to calculate your firm’s annual fee, which is based on revenues earned through your firm’s capital market activities in Ontario.

For the first time, Staff of the Compliance and Registrant Regulation Branch (CRR Staff) of the OSC reviewed a number of Form 13-502F4 Capital Markets Participation Fee Calculation filings submitted in 2012, to ensure they had been completed correctly.  CRR Staff reviewed almost 500 filings and found that firms had incorrectly calculated their Ontario revenues for a variety of reasons.  Some of the errors found include the following:

  1. On Line 1 of the F4, firms are required to use their gross global revenues for the firm, as reported on their audited annual financial statements.  Firms were found to include only their Ontario gross revenues on Line 1, when the firm had other revenue outside Ontario.
  2. On Line 2 of the F4, firms are required to include deductions for activities not earned through their global capital markets activities.  Firms were deducting revenues earned that were attributable to capital markets activities outside Ontario.
  3. Firms are required to report the percentage of revenues earned from their clients in Ontario.  Some firms were using the number of clients in Ontario in comparison to the number of clients outside Ontario for determining their Ontario percentage.  In other cases, firms having the same fiscal and taxation year end, were found to have included an Ontario percentage that was significantly different than the firm’s Ontario corporate income tax return.

CRR Staff reminded firms, required to file the F4, that it is important that they have the UDP and CFO sign the F4.  Firms should also ensure these forms are readily available in the event they are requested by the OSC, as they  intend to review the F4 filings on a more regular basis.

For further information, please refer to OSC Staff Notice 33-741