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Canadian Securities Regulatory Monitor News and Insight

Category Archives: Exempt Market Dealers

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The State of Private Placements in Canada: OSC Publishes Update on Exempt Financings Market

Posted in Capital Markets, Exempt Market Dealers, OSC, SEC

The Ontario Securities Commission recently published a report summarizing capital raising activity by issuers in Ontario’s exempt market. Findings from the report include:

  • increased activity in 2016
  • significant participation from foreign issuers, including the U.S.
  • no reported use of Ontario’s new crowdfunding rule

In June 2017, the Ontario Securities Commission (the “OSC”) published OSC Staff Notice 45-715 2017 Ontario Exempt Market Report (the “Report”), which summarizes capital raising activity in Ontario’s exempt market (i.e. financings made other than by way of a prospectus).

The Report is a useful resource for businesses looking to raise capital from Canadian investors, including businesses … Continue 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

Tomorrow, May 18, Registrants Will Receive the OSC’s 2016 Risk Assessment Questionnaire – What Will Your Firm’s Risk Rating Be?

Posted in Exempt Market Dealers, Industry News, Investment Funds, Mutual Funds, OSC, Portfolio Managers, Registrants

For the first time since 2014, the Ontario Securities Commission (OSC) will send Ontario registrants a risk assessment questionnaire (RAQ) that must be completed by portfolio managers, investment fund managers, exempt market dealers, restricted portfolio managers and restricted dealers registered in Ontario. Registrants will receive the 2016 RAQ tomorrow, May 18.

The OSC uses data gathered through the RAQ to apply a risk ranking to firms. Firms with higher risk rankings are more likely to be targeted by the OSC for compliance reviews. As a result, it is important that the RAQ answers be considered … Continue Reading

OSC Sets Out Priorities for 2016-2017

Posted in Advisors, Broker-Dealers, Compliance and Supervision, Enforcement, Exempt Market Dealers, Mutual Funds, OSC, Registrants

The Ontario Securities Commission (OSC) released its draft Statement of Priorities for 2016-2017. The comment period ends May 9th.

Investor Protection Priorities

Advance Best Interest Standard – The OSC will recommend and conduct consultations on regulatory provisions to create a “best interest” standard for advisors. This standard is controversial for some industry participants but the OSC is committed to it. The OSC will also  continue to focus on advisor compensation practices and identify those that are inconsistent with a “best interest” standard.

Compensation Arrangements in Mutual Funds – The OSC will regulate embedded commissions and … Continue Reading

Changes to Offering Memorandum Exemption Regime

Posted in Amendments, Autorités canadiennes en valeurs mobilières, Capital Markets, Exempt Market Dealers

On October 29, the securities regulatory authorities in Alberta, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan (collectively, the “Participating Jurisdictions”) published Multilateral CSA Notice of Amendments to National Instrument 45-106 Prospectus Exemptions Relating to the Offering Memorandum Exemption (the “OM Exemption”) to make the offering memorandum exemption, found in section 2.9 of National Instrument 45-106 available in all jurisdictions of Canada.

The OM Exemption allows an issuer to offer securities to certain categories of investors without the requirement of a prospectus. The investments permitted under this exemption, in the Participating Jurisdictions where it is already … Continue Reading

CSA Proposals Require Enhanced Corporate Debt Trade Reporting and Transparency by 2017

Posted in Broker-Dealers, Continuous and Timely Disclosure, CSA, Exempt Market Dealers, IIROC, Industry News, Marketplaces, OSC, Proposals, Requests for Comment

Last week, the Canadian Securities Administrators (CSA) published for comment Proposals that would require trade information for all corporate debt securities executed by dealers to be made publicly available, subject to delayed dissemination and volume caps, by the end of 2017. The CSA Proposals aim to enhance the regulation and transparency of the Canadian fixed income market, partly in response to certain limitations highlighted in a Report on “The Canadian Fixed Income Market 2014” published earlier this year by the Ontario Securities Commission which suggested that retail investors in corporate fixed income securities have less access to … Continue Reading

The OSC’s 2014 Risk Assessment Questionnaire Exposes Registrants to Risk of Self-Incrimination

Posted in Exempt Market Dealers, Industry News, Investment Funds, Mutual Funds, OSC, Portfolio Managers, Registrants

For the first time in three years, the Ontario Securities Commission (OSC) has sent Ontario registrants a risk assessment questionnaire that must be completed by portfolio managers, investment fund managers, exempt market dealers, restricted portfolio managers and restricted dealers registered in Ontario. The OSC intends to use the data gathered through the questionnaire to inform its decisions about “which firms require further attention and oversight”.

In some cases, the questionnaire may put recipient registrants at risk of admitting working capital deficiencies, inappropriate marketing practices and other potential violations. As a result, it is important that answers be considered carefully. The … Continue Reading

Prospectus Exemption for Distributions to Existing Security Holders – A new tool for reporting issuers to raise equity

Posted in Exempt Market Dealers, Industry News, OSC

On March 13, 2014, the securities regulatory authorities in British Colombia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Yukon, Northwest Territories and Nunavut published a prospectus exemption which will allow issuers listed on the TSX Venture Exchange (TSXV), the Toronto Stock Exchange (TSX) or the Canadian Securities Exchange (CSE) to raise money through the issuance of securities to their existing security holders in a manner that is expected to simplify the fund raising process.

It must be noted that the Ontario Securities Commission has elected not to join in that initiative at this time as it … Continue Reading

Indications : meilleures pratiques

Posted in Autorités canadiennes en valeurs mobilières, Compliance and Supervision, CSA, Exempt Market Dealers, Portfolio Managers, Registrants

Le 9 janvier 2014, les Autorités canadiennes en valeurs mobilières (« ACVM ») émettaient l’avis 31‑336 relativement aux obligations de connaissance du client, de connaissance du produit et d’évaluation de la convenance au client.

Cet avis est à l’intention des gestionnaires de portefeuille, des courtiers sur le marché dispensés et des autres personnes inscrites.

Dans un premier temps, les ACVM rappellent que les obligations de connaissance du du client, du produit et d’évaluation de la convenance au client sont fondamentales et sont au cœur du régime de protection des investisseurs.

L’avis 31-336 fait suite à diverses inspections et conclusions résultant … Continue Reading

Exempt Market Dealers – A Regulatory Check-up

Posted in Compliance and Supervision, Continuous and Timely Disclosure, Exempt Market Dealers, OSC

The Ontario Securities Commission (“OSC”) recently released its 2013 annual review summary report for dealers, advisers and investment fund managers (the “Report“).

The OSC regulates or oversees through recognized self regulatory organizations the activities of approximately 1300 registered firms and 66,000 individuals in Ontario.  The Report largely focuses on registrants directly regulated by the OSC: exempt market dealers (“EMD”) portfolio managers and investment fund managers.

In this post, we summarize OSC findings in its compliance reviews of EMDs.… Continue Reading

Saskatchewan Becomes the First Canadian Jurisdiction to Exempt Equity Crowdfunding from Prospectus Requirements

Posted in Exempt Market Dealers, OSC, SEC

On December 6, 2013, Saskatchewan became the first Canadian jurisdiction to implement Rules that provide a prospectus exemption for equity crowdfunding. The Rules allow Saskatchewan start-ups and small businesses to raise capital through equity crowdfunding by selling their securities to the general public without a prospectus.

The Saskatchewan exemption is available subject to certain conditions, including the following:

  • Both the business and the investor must have an address in Saskatchewan;
  • The business must make available to investors a very simple offering document, in prescribed form;
  • The investment must be intermediated by an online funding portal that has filed with
Continue Reading

OSC Publishes Progress Report on Exempt Market Review and “Crowdfunding”

Posted in Exempt Market Dealers, OSC, Proposals

The Ontario Securities Commission is conducting a broad review of the “exempt market”, in which securities are issued and acquired without the need for a prospectus. The goal of the review is to identify possible new prospectus exemptions that would facilitate capital raising for business enterprises, particularly start-ups and small and medium-sized enterprises.

In a recently published progress report, the OSC summarizes work completed to date and provides a summary of consultations held with various stakeholders. One particularly well-received proposal was the “crowdfunding” exemption, a method of funding a project through small amounts of money raised from a large … Continue Reading

OSC Reports on 2012 Compliance Experience

Posted in Compliance and Supervision, Continuous and Timely Disclosure, Exempt Market Dealers, Investment Funds, OSC, Portfolio Managers, Registrants

The OSC has released its 2012 compliance report (OSC Staff Notice 33-738) on dealers, advisers and investment fund managers. This report reflects the increasing importance ascribed by the OSC to registrant practices and registration issues. The report also allows licensed securities businesses to benchmark their practices against regulatory expectations.

Directly and through self-regulatory organizations, the OSC oversees 1,300 firms and 66,000 individuals. The OSC follows a risk-based approach to compliance assessments (p. 35). For the last two years, over 80% of compliance reviews have resulted in requirements for enhanced or significantly enhanced compliance by registrants (p. 36).… Continue Reading

New Rules Proposed for Direct Electronic Linkages to Exchanges and Other Marketplaces

Posted in Broker-Dealers, CSA, Exempt Market Dealers, Marketplaces, Portfolio Managers, Proposals

Under Canadian securities law, registered dealers are intended to intermediate orders between customers and marketplaces. Sophisticated marketplace participants maintain a variety of relationships with brokers, some of whom are expected to provide order-routing services rather than advice. These sophisticated participants generate large volumes of orders to buy and sell securities and are concerned with limiting costs and delays in conveying orders to organized marketplaces. Accordingly, accessing marketplaces by direct electronic access (DEA) allows sophisticated marketplace participants, such as institutional traders, to effect their complex trading strategies more efficiently.… Continue Reading

Canadian Securities Regulatory Requirements Applicable to Non-Resident Broker-Dealers, Advisers and Investment Fund Managers

Posted in Advisors, Broker-Dealers, CSA, Enforcement, Exempt Market Dealers, Investment Funds, Portfolio Managers, Registrants, Registration

The purpose of this paper is to provide a non-resident of Canada with an overview of the dealer registration, adviser registration, investment fund manager registration and prospectus requirements that should be considered and addressed by the non-resident before it begins to trade securities with, or provide investment advice to, any person or company located in Canada, or to act as an investment fund manager in Canada. All currency amounts that are referred to in this paper are denominated in Canadian dollars.

The Canadian Securities Regulatory Framework

Like the United States, Canada has a federal system of government whereby the authority … Continue Reading