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Canadian securities regulators publish revised disclosure expectations for issuers with U.S. marijuana-related activities
by FCNB on 

The Canadian Securities Administrators (CSA) today published CSA Staff Notice 51-352 (Revised) Issuers with U.S. Marijuana-Related Activities, which sets out CSA staff’s disclosure expectations for specific risks facing issuers with marijuana-related activities in the U.S.

 

“In light of political and regulatory uncertainty surrounding the treatment of U.S. marijuana-related activities, CSA staff have updated our disclosure expectations for issuers in this space,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Today’s notice also follows CSA staff’s consideration of the rescission of the Cole Memorandum and our conclusion that a disclosure-based approach remains appropriate in the current circumstances.”

 

The revised notice includes additional disclosure expectations that apply to all issuers with U.S. marijuana-related activities, including those with direct and indirect involvement in the cultivation and distribution of marijuana, as well as issuers that provide goods and services to third parties involved in the U.S. marijuana industry. Issuers are expected to provide these disclosures in prospectus filings and other required documents, such as their Annual Information Form and Management’s Discussion and Analysis.

 

The CSA will continue to monitor developments in the U.S. marijuana industry.

 

The revised notice can be found on CSA members’ websites and replaces the prior version issued on October 16, 2017.

 

Additionally, TMX Group today published an update to confirm that CDS will continue clearing the securities of issuers with U.S. marijuana-related activities. The update can be found on TMX’s website.

The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.


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For more information:
Erin King
Financial and Consumer Services Commission

506 643-7045
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Canadian securities regulators sign agreement with the French Autorité des marchés financiers
by FCNB on 


The securities regulatory authorities in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan (participating jurisdictions) today announced a co-operation agreement with the French Autorité des marchés financiers (French AMF, based in Paris, France). This agreement will allow the participating jurisdictions and the French AMF to refer novel businesses seeking to enter the others’ markets.

This agreement extends the work of the CSA Regulatory Sandbox Initiative and the French AMF FinTech, Innovation and Competitiveness division, and provides a sound environment for businesses to develop innovative solutions in the financial sector. It will help these businesses navigate the regulatory systems in both countries, and monitor market developments to identify and propose ways to address emerging regulatory issues.

“Collaboration through this agreement will take many forms, including information sharing, support to financial innovators, referrals, expertise sharing, secondments, and dialogue on fintech and innovative financial services,” said Louis Morisset, CSA Chair and President and CEO of Québec’s Autorité des marchés financiers. “This framework marks another step for making Canada a financial hub for these types of businesses to operate in.”

“This newly established communication channel between France and Canada is an important step for innovative players willing to develop their activities beyond our borders, given Canada is a key jurisdiction for fintech firms,” said Robert Ophèle, Chairman of the French Autorité des marchés financiers. “This bridge between our two countries falls within the French AMF’s active international development actions and aims at reinforcing Paris as a financial innovation hub. Co-operation between the French AMF and its Canadian counterparts will create synergies between our authorities and should enable fintech firms to extend their global reach and actively learn from each other.”

The co-operation agreement is subject to the domestic laws and regulations of each authority and does not modify or supersede any applicable laws or regulatory requirements in force in, or applicable to, any such authority’s respective jurisdiction.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

The French AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected, that investors are provided with adequate information and for supervising the orderly operation of markets.

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For more information:
Erin King
Financial and Consumer Services Commission
506 643-7045

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Canadian securities regulators issue statement following rescission of the Cole Memorandum
by FCNB on 


On October 16, 2017, the CSA published Staff Notice 51-352 Issuers with U.S. Marijuana-Related Activities. The notice outlined a disclosure-based approach to highlight risks facing issuers with U.S. marijuana-related activities and reflected the existence of a U.S. federal government forbearance approach (per the Cole Memorandum) to the enforcement of federal laws relating to marijuana.

The notice indicated that we would re-examine our views in the event that the U.S. federal government’s approach were to change.

On January 4, 2018, the U.S. Attorney General rescinded all previous guidance specific to federal law enforcement relating to marijuana, including the prior approach under the Cole Memorandum.

The CSA is considering whether our disclosure-based approach for issuers with U.S. marijuana-related activities remains appropriate in light of the rescission of the Cole Memorandum. Issuers with no U.S. marijuana-related activities and that otherwise operate in compliance with applicable Canadian laws are not the focus.

We will communicate more details about our position shortly.
The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.

- 30 -

For more information:
Erin King
Financial and Consumer Services Commission
506 643-7045

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Canadian securities regulators issue statement regarding recent media coverage on enforcement in capital markets
by FCNB on 




Over the past week, the Globe and Mail (Globe) has published multiple reports on enforcement in Canada’s capital markets. In response to this recent media commentary, the Canadian Securities Administrators (CSA) today issued the following statement:

The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets. CSA enforcement teams work to protect the integrity of our capital markets and strive for responsive, collaborative and effective enforcement of securities laws. While the vibrancy, depth and overall health of the Canadian capital markets have been internationally recognized, Canada, like all markets, has criminals who prey on the investing public. We do everything in our power to identify, investigate and prosecute those individuals. We are concerned with how these enforcement efforts have been mischaracterized and wish to highlight some specific issues with the Globe’s coverage:

  1. Securities regulators do not have statutory authority to pursue criminal offences. In recognition, several securities regulators have strengthened their ability to address misconduct in the capital markets by developing partnerships with law enforcement.
  2. In order for securities regulators to access tools under the Criminal Code (e.g. power of arrest, ability to execute warrants), police officers must be seconded to securities commissions. More law enforcement resources are always welcome.
  3. Law enforcement is primarily responsible for investigating financial crime in Canada, and there is a dedicated unit of the RCMP (Integrated Market Enforcement Team) set up for this purpose. Despite the importance of law enforcement and their role in pursuing recidivists, the Globe chose not to seek comment from the RCMP or local law enforcement, nor did it include any statistical data from these agencies. 
  4. Securities regulators work together to address misconduct in Canada’s capital markets, and the Globe was provided with multiple examples of these collaborative efforts. For example, several securities regulators have Statutory Reciprocal Order Provisions, which essentially means that an order issued by one regulator is automatically in effect within all jurisdictions with these provisions. It should be noted that these provisions were introduced specifically to curb inter-provincial/territorial wrongdoing by repeat offenders.
  5. Securities regulators can and do pursue jail time where they have the authority to do so.
  6. Courts make decisions about sentencing in criminal matters, not securities regulators. 
  7. The Globe notes that former Bank of Canada governor David Dodge spoke of the “widely held perception that Canadian authorities aren't tough enough.” This quote was taken from a speech delivered 13 years ago in which the former governor actually said he was encouraged that provincial securities commissions were taking steps to toughen enforcement. 
  8. Securities regulators dedicate significant resources to helping investors protect themselves from fraud. These include local investor education initiatives, national campaigns about avoiding investment fraud, and a National Registration Search tool that investors can use to check whether an individual or firm is registered with provincial securities regulators.
  9. The Globe has stated that its investigation is based on an analysis of 30 years of data contained in the CSA's Disciplined List. This database does not contain 30 years of national data. Some securities commissions have uploaded data dating back just over 10 years.

The CSA supports having a national dialogue about what more can be done to deter recidivists, however, that discussion must be based on facts and must involve all participants in the justice system, including law enforcement.

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For more information:
Erin King
Financial and Consumer Services Commission
506 643-7045

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Canadian securities administrators remind investors of inherent risks associated with cryptocurrency futures contracts
by FCNB on 


The Canadian Securities Administrators (CSA) would like to remind dealers and investors of the inherent risks associated with products linked to cryptocurrencies, including futures contracts. While these contracts may be traded on regulated exchanges and may be cleared by regulated central counterparties, the fact remains that their high level of risk will not be suitable for all types of investors.

“More specifically, the underlying value of these futures contracts is based on trading occurring on markets for cryptocurrencies which are largely unregulated,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

“Therefore, there may be some circumstances such as price volatility in the underlying markets, which may lead to consequences such as sudden and significant margin calls in the futures market.”

As is the case with every investment, an investor looking to participate in cryptocurrency futures trading should understand all of the risks involved.   

The CSA reminds registered dealers and advisers that they must perform their own due diligence on these cryptocurrency-linked products before recommending them to their clients.
The CSA will continue to follow developments surrounding these initiatives. For additional information on the risks of cryptocurrencies, please refer to CSA Staff Notice 46-307 Cryptocurrency Offerings.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

- 30 -

For more information:
Erin King
Financial and Consumer Services Commission
506 643-7045

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Regulators sign an agreement with the Australian Securities and Investments Commission
by FCNB on 


The securities regulatory authorities in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Québec and Saskatchewan (participating jurisdictions) today announced a co-operation agreement with the Australian Securities and Investments Commission (ASIC). This agreement will allow the participating jurisdictions and the ASIC to exchange information on fintech trends and development, and efficiently refer innovative businesses seeking to enter the others’ markets.

The agreement extends the work of the CSA Regulatory Sandbox Initiative and the ASIC Innovation Hub. These innovation functions provide a controlled environment for businesses to develop and test innovative solutions that promote efficiency and consumer choices in the financial sector.

“This co-operation agreement with the ASIC is in addition to the one we recently signed with the Abu Dhabi Global Market Financial Services Regulatory Authority,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “This agreement marks new positive steps for the CSA, which already leads the Sandbox initiative to help innovative businesses seeking to operate across Canada.”

The co-operation agreement is subject to the domestic laws and regulations of each authority and does not modify or supersede any applicable laws or regulatory requirements in force in, or applicable to, any such authority’s respective jurisdiction.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

- 30 -

For more information:
Erin King
Financial and Consumer Services Commission
506 643-7045

Comments     Permalink     Add Comment

Canadian securities regulators publish notice on complying with requirements regarding the Ombudsman for Banking Services and Investments
by FCNB on 


The Canadian Securities Administrators (CSA), Investment Industry Regulatory Organization of Canada (IIROC) and Mutual Fund Dealers Association of Canada (MFDA) today released a joint notice CSA Staff Notice 31-351, IIROC Notice 17-0229, MFDA Bulletin #0736-M Complying with requirements regarding the Ombudsman for Banking Services and Investments (OBSI).

The notice highlights concerns about some registered firms’ complaint handling systems and participation in OBSI’s services, and sets out potential regulatory responses. The notice also outlines staff’s concerns regarding the use of an internal “ombudsman” as part of complaint handling systems.

“We expect firms to participate in OBSI’s dispute resolution process in a manner consistent with their obligation to deal fairly, honestly and in good faith with their clients and to respond to each customer complaint in a manner that a reasonable investor would consider fair and effective,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

“Investor confidence in the integrity of Canada’s capital markets is built on a foundation of trust, supported by a fair and effective dispute resolution process,” said Andrew J. Kriegler, President and CEO of IIROC. “IIROC expects its Dealer Members to deal with client complaints, including during the OBSI dispute resolution process, effectively, fairly and expeditiously.”

“Fair and timely handling of client complaints is a fundamental requirement for MFDA Members, both at the time of receipt and during the OBSI dispute resolution process,” said Mark Gordon, President and CEO of the MFDA.

The regulators are also continuing to consider options for strengthening OBSI’s ability to secure redress for investors, a key recommendation made by the independent evaluator in its 2016 report.

The Joint Regulators Committee (JRC), which is composed of designated representatives of the CSA, IIROC and the MFDA, provides oversight of OBSI and meets regularly with OBSI to discuss governance and operational matters, including the effectiveness of OBSI’s services.

IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. 

The MFDA is the self-regulatory organization which oversees the operations, standards of practice and business conduct of Canadian mutual fund dealers.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

- 30 -

For more information:
Erin King
Financial and Consumer Services Commission
506 643-7045

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Canadian Securities Administrators 2017 Investor Index: Canadian investors show increasing optimism about their economic future, but significant investor education needs remain
by FCNB on 

According to a new survey conducted for the Canadian Securities Administrators (CSA), 53 per cent of Canadian investors are optimistic about achieving their investment targets over the next year, compared with 39 per cent of investors in 2012.

 

However, more than half of Canadians (51 per cent) failed the general investment knowledge test included in the survey, highlighting the continued importance of the CSA’s and its members’ investor education initiatives.

 

The 2017 CSA Investor Index, which looked at investor behaviour and incidences of investment fraud affecting Canadians, also found that online investment advisers (sometimes referred to as “robo-advisers”) are gaining popularity among Canadians, with 23 per cent reporting that they are likely to use one if they open a new account or move an existing one. Yet, only nine per cent of Canadian investors currently have an account with an online investment adviser, and just 16 per cent of Canadians are familiar with automated online investing services.

 

“It’s encouraging news that Canadian investors are positive about their economic futures,” says Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers. “No matter how well the economy or their investments are performing, it’s important that investors continue to understand their investments, know the risks involved and be aware of the red flags of investment fraud.”

 

Other findings of the survey include:

  • Canadians continue to be approached with fraudulent investment opportunities, with 18 per cent believing they have been approached with a fraudulent investment opportunity. This is down slightly from 22 per cent in 2016.
  • More Canadians (43 per cent) are using some form of social media for investing information, up from 35 per cent in 2012. Specifically, Facebook (22 per cent in 2017 and 16 per cent in 2012) and YouTube (20 per cent in 2017 and 14 per cent in 2012) saw the largest increases in use.
  • Fewer Canadians who use financial advisers checked their background (29 per cent in 2017, down from 38 per cent in 2012). Those who did relied on the Internet, with just four per cent checking with their provincial regulator.

 

For the 2017 CSA Investor Index, Innovative Research Group interviewed 7,271 Canadian adults online between August 28 and October 2, 2017. Canadians were interviewed in both English and French. The online sample was weighted by age, gender, and province or territory using 2016 Statistics Canada Census data to reflect the actual demographic composition of the population.

The 2017 CSA Investor Index Key Highlights Report is available in both English and French on the CSA website. The key findings are also available on CSA members’ websites.

 

The CSA has developed tools to help investors check registration and avoid investment fraud. These resources are available in the Investor Tools section of the CSA website and investors are encouraged to visit the site to learn more about making informed investment decisions.

 

The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets. Their mandate is to protect investors from unfair or fraudulent practices through regulation of the securities industry. Part of this protection is educating investors about the risk, responsibilities and rewards of investing.


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For more information:
Erin King

Financial and Consumer Services Commission

506 643-7045
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Canadian securities regulators release detailed data from review of women on boards and in executive officer positions
by FCNB on 

The securities regulatory authorities in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Québec, Saskatchewan and Yukon today published the underlying data used to prepare CSA Multilateral Staff Notice 58-309 Staff Review of Women on Boards and in Executive Officer Positions – Compliance with NI 58-101 Disclosure of Corporate Governance Practices, which was published on October 5, 2017.

 

The data was compiled from public documents filed on SEDAR and includes the name, industry and year-end of the 660 non-venture issuers with year-ends between December 31, 2016 and March 31, 2017 that filed information circulars or annual information forms by July 31, 2017 as it relates to women on boards and in executive officer positions.

 

The data can be found on the websites of the jurisdictions noted above.

 

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.


- 30 -


For more information:
Erin King
Financial and Consumer Services Commission

506 643-7045
Comments     Permalink     Add Comment

Regulators sign an agreement with the Abu Dhabi Global Market Financial Services Regulatory Authority
by FCNB on 


The securities regulatory authorities in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan (participating jurisdictions) today announced a co-operation agreement with the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM).

The agreement will allow the participating jurisdictions and the FSRA to refer to one another innovative businesses seeking to enter the others’ markets.

The agreement is an extension of the work of the CSA Regulatory Sandbox Initiative, which was launched in February 2017, and the ADGM Regulatory Laboratory, which has been in operation since November 2016. These innovation functions provide a controlled environment for businesses to develop and test innovative solutions that promote efficiency and consumer choices in the financial sector.

“This agreement with the FSRA is a positive step for the CSA, which has already taken steps with the Sandbox to help innovative businesses seeking to operate across Canada,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “The co-operation agreement further builds on the Sandbox by helping innovative businesses seeking to expand globally.”

The co-operation agreement is subject to the domestic laws of each authority and does not modify or supersede any applicable laws in force in, or applicable to, any such authority’s respective jurisdiction.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

- 30 -

For more information:
Erin King
Financial and Consumer Services Commission
506 643-7045

Comments     Permalink     Add Comment

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