Header graphic for print
Canadian Securities Regulatory Monitor News and Insight

Category Archives: CSA

Subscribe to CSA RSS Feed

Canadian securities regulators seek comment on director and audit committee member independence

Posted in CSA, Industry News, Uncategorized

On October 26, 2017, the Canadian Securities Administrators published for comment CSA Consultation Paper 52-404 – Approach to Director and Audit Committee Member Independence. The paper is intended to facilitate a broad discussion and solicit views on the current approach to determining director and audit committee member independence.

On October 26, 2017, the Canadian Securities Administrators (“CSA”) published CSA Consultation Paper 52-404 Approach to Director and Audit Committee Member Independence (the “Paper”). The Paper is intended to solicit views on the appropriateness of the CSA’s current approach to determining director and audit committee member independence. Interested … Continue Reading

The Canadian Securities Administrators Call For Clear and Meaningful Gender Diversity Disclosure

Posted in Continuous and Timely Disclosure, CSA

The Canadian Securities Administrators recently released the results of their third review of compliance with the new gender diversity disclosure rules.

In 2015, new rules were implemented pursuant to National Instrument 58-101 – Disclosure of Corporate Governance Practices which require Canadian public companies to disclose, on an annual basis, certain information regarding women in executive positions and on boards (the Gender Disclosure Rules). The Canadian Securities Administrators (CSA) have closely monitored compliance with the Gender Disclosure Rules since their coming into effect. On September 28, 2015, the CSA published a summary of the findings of their review … Continue Reading

UK Financial Conduct Authority Releases Guidance on Initial Coin Offerings

Posted in CSA, Fintech

On September 12, 2017 the UK Financial Conduct Authority (“FCA”) released brief guidance (“FCA Guidance”) on initial coin offerings (“ICOs”). This follows earlier guidance from the Canadian Securities Administrators (the “CSA”) in August on ICOs, a summary of which can be read here.

The FCA Guidance defines an ICO as a digital method of raising funds from the public using a virtual currency (cryptocurrency). An ICO can also be known as a “token sale” or a “coin sale”.

ICO Risk Factors

The FCA Guidance notes that ICOs are high-risk, speculative investments … Continue Reading

Getting Women on Corporate Boards: How Can Women Capitalize off of the Trend Toward Gender Diversity?

Posted in CSA, Industry News

In 2015, new rules were implemented which require Canadian public companies to disclose, on an annual basis, certain information regarding women in executive positions and on boards (the Gender Disclosure Rules). On September 28, 2016, the Canadian Securities Administrators published the results (the Results) of its second annual review of compliance with the Gender Disclosure Rules, which indicated, among other things, an increase in the representation of women on boards (see a previous article summarizing these results here).

Both the Results and the establishment of the Gender Disclosure Rules indicate a clear push towards improvement of gender … Continue Reading

Canadian Securities Administrators Weigh-in on the Applicability of Canadian Securities Laws to Cryptocurrencies, including Coins and Tokens

Posted in CSA, Fintech

On August 24, 2017, Staff of the Canadian Security Administrators (the “CSA”) released CSA Staff Notice 46-307 Cryptocurrency Offerings (the “CSA Notice”), published in all Canadian jurisdictions except Saskatchewan.[1]

The CSA Notice addresses a number of considerations of relevance to Fintechs, investors and their advisors, including the potential applicability of Canadian securities laws to initial coin offerings (“ICOs”) and initial token offerings (“ITOs”), cryptocurrency exchanges and cryptocurrency investment funds. It follows a press release issued by the Ontario Securities Commission earlier this year confirming that Ontario securities laws may apply to … Continue Reading

CSA Proposals Aim to Simplify Reports of Exempt Distribution

Posted in Amendments, CSA, Proposals

On June 8, 2017, the Canadian Securities Administrators (“CSA”) published for a 90-day comment period (ending on September 6, 2017), proposed amendments (the “Proposed Amendments”) to National Instrument 45-106 Prospectus Exemptions (“NI 45-106”) that would amend the report of exempt distribution (the “Report”) set out on Form 45-106F1 Report of Exemption Distribution that must be filed following a distribution of securities in reliance on certain prospectus exemptions under NI 45-106. The current version of the Report came into effect on June 30, 2016 and requires filers to provide substantially more information than … Continue Reading

Targeted Reforms Update – Most regulators abandon the “Best Interest Standard” but propose to proceed with refined “Targeted Reforms”

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, OSC, Registrants

The Canadian Securities Administrators (CSA) issued CSA Staff Notice 33-319 (the Notice) to provide an update on the “Best Interest Standard” and “Targeted Reforms” proposed last year in an important CSA Consultation Paper that we discussed in a previous post.

Most regulators have decided to abandon the Best Interest Standard which would have introduced a “client best interest” standard against which all registrant-client obligations would be interpreted.

The CSA will still proceed with a refined set of Targeted Reforms. Even in the absence of a Best Interest Standard in most jurisdictions, the Targeted Reforms would nonetheless … Continue Reading

Canadian Securities Administrators Publish Report and Guidelines on Social Media Use by Reporting Issuers

Posted in Continuous and Timely Disclosure, CSA, Industry News

On March 9, 2016, the Canadian Securities Administrators published CSA Staff Notice 51-348 (the “Notice”) which reports on a study of social media use by reporting issuers and provides guidance for public companies who engage with investors and other stakeholders using those channels.

Scope of Review

The review was conducted by securities regulatory authorities in Alberta, Ontario and Quebec and surveyed the social media activity of 111 reporting issuers of varying sizes and industries listed on the TSX, TSXV and CSE. The review included information on websites such as Facebook, Twitter, Instagram, LinkedIn, YouTube and others, as well … Continue Reading

CSA’s 2016 Enforcement Report: insights into securities regulatory activity

Posted in AMF, CSA, Enforcement, Litigation, OSC

The Canadian Securities Administrators (CSA) recently released its annual report on the enforcement activities of its members. The CSA is an umbrella group of Canada’s securities regulators.

Summary of 2016 Results[1]

Generally, enforcement and pre-enforcement activity, and monetary sanctions imposed by regulators decreased compared to 2015 but were higher than they were in 2014.

2016 2015 2014
Monetary Sanctions $62,148,866 $138,298,796 $58,239,156
 
Restitution, Compensation and Disgorgement $349,654,379 $111,651,429 $65,717,760
 
Commenced Cases (by notice of hearing, statement of allegations, or sworn Information) 56 108 105
 
Individual Respondents 72 165 189
 
Company Respondents 72 101 92
 
Most prevalent violations Illegal Distributions
Continue Reading

Initiatives des Autorités canadiennes en valeurs mobilières sur les Fintech : bac à sable réglementaire et coopération

Posted in CSA, OSC

Le 23 février 2017, les Autorités canadiennes en valeurs mobilières (ACVM) ont annoncé le lancement d’un bac à sable réglementaire. L’objectif du bac à sable réglementaire est d’appuyer les Fintech en leur permettant de faire une demande à l’organisme de réglementation compétent afin de bénéficier d’une approche plus adaptée en matière de réglementation. Cette approche doit faciliter l’utilisation d’applications, de produits et de services novateurs chez les entreprises au Canada, tout en protégeant adéquatement les investisseurs.

Par conséquent, les ACVM évalueront au cas par cas le bien-fondé de chaque modèle et autoriseront les entreprises innovantes à s’inscrire, ou leur accorderont … Continue Reading

Canadian Securities Administrators Fintech Initiatives: Regulatory Sandbox and Co-Operation

Posted in CSA, OSC

On February 23, 2017, the Canadian Securities Administrators (CSA) announced the launch of a regulatory sandbox. A regulatory sandbox aims at supporting Fintech businesses by allowing them to apply to the regulator to benefit from a more tailored approach to regulation that balances the need to facilitate the use of innovative products, services and applications all across Canada with appropriate investor protection.

As a result, the CSA will assess the merits of each business model, on a case-by-case basis, and allow innovative businesses to register or grant them relief from certain requirements to permit them to test their products and … Continue Reading

Compensation obligatoire des dérivés de gré à gré par contrepartie centrale au Canada – Mise à jour

Posted in AMF, CSA

En 2015, les Autorités canadiennes en valeurs mobilières (ACVM) ont proposé de rendre obligatoire la compensation par contrepartie centrale de certaines transactions normalisées de dérivés de gré à gré en vue d’accroître la transparence sur le marché des dérivés de gré à gré et d’atténuer davantage le risque systémique avec le Règlement 94-101 sur la compensation obligatoire des dérivés par contrepartie centrale et l’Instruction générale relative au Règlement 94-101 (Règlement 94-101) ainsi que le Règlement 94-102 sur la compensation des dérivés et la protection des sûretés et des positions des clients et l’Instruction générale Continue Reading

Mandatory Central Counterparty Clearing of OTC Derivatives in Canada – Update

Posted in AMF, CSA

In 2015, the Canadian Securities Administrators (CSA) proposed mandatory central counterparty clearing of certain standardized over-the-counter (“OTC”) derivatives transactions consistent with its goal to improve transparency in the OTC derivatives market and enhance the overall mitigation of systemic risk: National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives and its related Companion Policy 94-101CP (NI 94-101) and National Instrument 94-102 Derivatives: Customer Clearing and Protection of Customer Collateral and Positions and its related Companion Policy 94-102CP (NI 94-102).

NI 94-101 requires certain counterparties to clear specified standardized OTC derivatives through a central … Continue Reading

The Finish Line: CSA Publishes Proposed Amendments in Final Phase of Modernization of Investment Fund Product Regulation

Posted in Amendments, Closed-End Funds, CSA, Investment Funds, Mutual Funds

On September 22, 2016, the Canadian Securities Administrators (the “CSA”) published CSA Notice and Request for Comment – Modernization of Investment Fund Product Regulation – Alternative Funds (the “Proposed Amendments”).  The Proposed Amendments represent the final phase of the CSA’s ongoing policy work to modernize investment fund product regulation in Canada (the “Modernization Project”).  While primarily aimed at the development of a more comprehensive regulatory framework for commodity pool mutual funds that are currently governed by National Instrument 81-104 – Commodity Pools (“NI 81-104”), if adopted, the Proposed Amendments will also have a meaningful impact on other types of mutual … Continue Reading

Revised CSA Staff Notice gives further guidance on preparing and filing reports of exemption distribution

Posted in CSA

On September 29, 2016, the Canadian Securities Administrators published a further revised version of CSA Staff Notice 45-308 (Revised) – Guidance for Preparing and Filing Reports of Exempt Distribution under National Instrument 45-106 Prospectus Exemptions.

On September 29, 2016, the Canadian Securities Administrators (“CSA”) published a further revised verison of CSA Staff Notice 45-308 (Revised) – Guidance for Preparing and Filing Reports of Exempt Distribution under National Instrument 45-106 Prospectus Exemptions (the “Notice”). The Notice amends and restates a previous amended and restated version of the Notice, which was published on April 7, 2016. The purpose … Continue Reading

IIROC issues cybersecurity report cards to dealer firms

Posted in Broker-Dealers, CSA, IIROC

IIROC is providing all dealer member firms it regulates (Firms) with a confidential cybersecurity “report card” that will include:

  • an individual assessment of the Firm’s cybersecurity preparedness program
  • a comparison of the Firm’s cybersecurity practices against the industry and other Firms of similar size and business model
  • a list of cybersecurity areas to which the Firm should be giving priority attention.

The report cards were generated based on the results of an extensive assessment survey that Firms completed in June 2016. The survey responses were benchmarked against a National Institute of Standards and Technology cybersecurity framework that … Continue Reading

Preparing for the Implementation of T+2 Settlement

Posted in Amendments, CSA, Proposals

In August 2016, the Canadian Securities Administrators (“CSA”) published for comment Proposed Amendments to National Instrument 24-101 (“NI 24-101”) – Institutional Trade Matching and Settlement, Proposed Changes to Companion Policy 24-101 (“CP 24-101”) – Institutional Trade Matching and Settlement and CSA Consultation Paper 24-402 – Policy Considerations for Enhancing Settlement Discipline in a T+2 Settlement Cycle Environment (the “Consultation Paper”).

The proposed amendments to NI 24-101 and CP 24-101 (the “Proposed Amendments”) are intended to assist in a successful migration to T+2 settlement from the current T+3 regime. The … Continue Reading

The Canadian Securities Administrators are closely monitoring compliance with gender diversity disclosure rules

Posted in Continuous and Timely Disclosure, CSA

The Canadian Securities Administrators recently released the results of its second review of compliance with the new gender diversity disclosure rules.

Last year new rules came into effect requiring Canadian public companies to disclose, on an annual basis (either in their annual proxy circular or annual information form), certain information regarding women on boards and in executive positions (the Gender Disclosure Rules).

The Gender Disclosure Rules represent some of the most significant changes to the annual disclosure requirements of Canadian public companies that have come into effect in the last few years, and the Canadian Securities Administrators (CSAContinue Reading

CSA Sets Out Priorities for 2016-2019

Posted in Advisors, Broker-Dealers, Compliance and Supervision, Continuous and Timely Disclosure, CSA, Enforcement, Exempt Market Dealers, Investment Funds, Mutual Funds, Registrants

The Canadian Securities Administrators (CSA) published on July 7, 2016 their priorities for the three-year period 2016 to 2019 under four categories: “Enhanced Investor Protection”, “Fair and Efficient Markets and Reduction of Risks to Market Integrity”, “Enhancement of Enforcement Effectiveness” and “Enhancement of Information Technology”.

The CSA states its strategic objectives without once mentioning the possible impact on it of the proposed national Cooperative Capital Markets Regulatory Authority (CCMRA) some of its members support. On July 22, it was announced that the CCMRA is expected to be operational in 2018.

Enhanced Investor Protection

The CSA proposes to … Continue Reading

Les propositions des ACVM concernant les personnes inscrites ont des effets très importants sur les courtiers et les conseillers au Canada

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, Registrants, Requests for Comment

Les Autorités canadiennes en valeurs mobilières (les ACVM) ont publié un important document de consultation dans lequel il est proposé de rehausser considérablement les obligations de tous les conseillers, courtiers et représentants, y compris les membres de l’OCRCVM et de l’ACFM (les personnes inscrites). Les commentaires sur ce document de consultation peuvent être présentés jusqu’au 26 août.… Continue Reading

CSA Registrant Proposals Have Far-Reaching Effects on Dealers and Advisers in Canada

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, Registrants, Requests for Comment

Recently, the Canadian Securities Administrators (CSA) released an important Consultation Paper that proposes to significantly increase the obligations of all advisers, dealers and representatives, including IIROC and MFDA members (Registrants). Comments on the Consultation Paper can be made until August 26.

The CSA is proposing two distinct categories of changes that, if adopted, will significantly impact the economics of existing Registrant business models and Registrant compliance costs:

1. Best Interest Standard: A “client best interest” standard against which all Registrant-client obligations would be interpreted.

2. “Targeted Reforms”: A comprehensive set of so-called “targeted reforms” will affect … Continue Reading

Third Try: CSA Publishes Revised Mandatory Clearing Rules For OTC Derivatives

Posted in CSA

Our Business Law and Financial Services lawyers wrote an article on the Revised Clearing Rule Mandatory Central Counterparty Clearing of Derivatives (NI 94-101) — published by the Canadian Securities Administrators (CSA) in February 2016 — which modifies the proposed requirements for regulated clearing agencies to clear certain OTC derivatives transactions. The authors describe the new NI 94-101 requirements of the Revised Clearing Rule, as well as outline the changes that will now affect the Initial Clearing Rule drafted last February.… Continue Reading

Derivatives Update: A New Customer Clearing Rule and Changes to the Quebec Derivatives Regulation

Posted in AMF, CSA

Our Business Law and Financial Services lawyers wrote an article on a new customer clearing rule published by the Canadian Securities Administrators (CSA) called Derivatives: Customer Clearing and Protection of Customer Collateral and Positions (NI 94-102) and its related Companion Policy 94-102CP, both of which replace CSA’s 2014 Model Provincial Rule on Derivatives. The authors discuss and dissect key features of the new NI 94-102 proposal, as well as comment on the proposed amendments to the Québec Derivatives Regulation (QDR) proposed by Autorité des marchés financiers (AMF).… Continue Reading

IIROC Announces Dealer Sweep on Compensation-Related Conflicts

Posted in Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, Marketplaces, Registrants, Uncategorized

On April 6, IIROC published Notice 16-0068 – Managing Conflicts in the Best Interest of the Client (the 2016 IIROC Notice). IIROC intends to strengthen compliance by Dealer Members (DMs) with IIROC’s conflicts of interest rules, with a particular focus on the management of compensation-related conflicts.

Specifically, IIROC announced that it will take the following actions:

  1. Immediately enhance its compliance test procedures to more closely examine compensation grids, supervisory oversight of advisors recommending products with high commissions, and the monitoring of advisors approaching compensation thresholds;
  2. By June 2016, conduct a comprehensive survey to gather more detailed information
Continue Reading