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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.

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

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Canadian securities regulators seek comment on approach to determining director and audit committee member independence
by FCNB on 


The Canadian Securities Administrators (CSA) today published for comment CSA Consultation Paper 52-404 Approach to Director and Audit Committee Member Independence, which is intended to facilitate a broad discussion on the appropriateness of the CSA’s approach to determining director and audit committee member independence.

“The exercise of independent judgement by boards and board committees is a fundamental element of corporate governance,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “The purpose of this consultation is to solicit views on the appropriateness of our approach to determining independence for all issuers in the Canadian market.”

The Consultation Paper outlines key historical developments related to the CSA’s corporate governance regime, sets out our approach to determining director and audit committee member independence, and describes the approaches to determining independence in other jurisdictions. The Consultation Paper also examines the benefits and limitations of our approach.

The Consultation Paper can be found on CSA members’ websites. Comments should be submitted in writing by January 25, 2018.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates 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 release review of registered firms’ cyber security and social media practices
by FCNB on 


The Canadian Securities Administrators (CSA) today published CSA Staff Notice 33-321 Cyber Security and Social Media, which summarizes survey results of registered firms’ cyber security and social media practices, in addition to providing guidance to firms in these areas.

The survey found that more than half (51 per cent) of firms experienced a cyber security incident in 2016. Common incidents reported included phishing (43 per cent), malware incidents (18 per cent) and fraudulent email attempts to transfer funds or securities (15 per cent).

“Preparation is key to mitigating cyber security threats,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “We encourage all firms to perform comprehensive risk assessments, and evaluate the strength of existing policies, employee training programs and response plans as they relate to vulnerabilities in these areas.”

The notice summarizes results from a survey on the cyber security and social media practices of 649 registered firms, which include investment fund managers, portfolio managers and exempt market dealers. Questions were structured to gather relevant information on cyber security policies and plans, social media practices, third-party vendors and the frequency of risk assessments.

Registered firms should continue to implement clear cyber security and social media policies and procedures. CSA staff will maintain efforts to review the cyber security and social media practices of firms through compliance reviews.

The notice can be found on CSA members' websites.

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 outline disclosure expectations and certain risks for issuers with U.S. marijuana-related activities
by FCNB on 


The Canadian Securities Administrators (CSA) today published CSA Staff Notice 51-352 Issuers with U.S. Marijuana-Related Activities, which among other things, outlines CSA staff’s specific disclosure expectations for issuers that have, or are in the process of developing, marijuana-related activities in the U.S. 

Issuers with marijuana-related activities in the U.S. assume certain risks due to conflicting state and federal laws. While some states have authorized the use and sale of marijuana, it remains illegal under federal law. The federal law relating to marijuana could be enforced at any time, and this would put issuers with U.S. marijuana-related activities at risk of being prosecuted and having their assets seized.

“We expect issuers with marijuana-related activities in the U.S. to address the current legal and regulatory environment in their disclosures, including any risks that result from changes in the approach to enforcement of U.S. federal law,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

The CSA’s disclosure expectations 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.

CSA Notice 51-352, as well as a media backgrounder, can be found on CSA members’ websites.

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:
Huston Loke
Ontario Securities Commission
416-593-8254

______________________________________________________________________________________________________________________________________

Backgrounder: CSA Staff Notice 51-352 Issuers with U.S. Marijuana-Related Activities
 
Disclosure requirements

Securities regimes in Canada are primarily disclosure-based. Securities laws have requirements for when and how companies that distribute securities (issuers) disclose information. These laws require issuers to provide timely and accurate information to help investors make informed investment decisions.

When a company plans to go public and offer securities in Canada, it must disclose certain information, typically in a prospectus that is reviewed and receipted by securities regulators. A prospectus includes specific, detailed disclosure about a company, its business and the securities being offered.

Public companies must regularly make certain information available to investors, including details about risks and uncertainties associated with their business. This information must be disclosed in documents such as an issuer’s Annual Information Form (AIF), its Management’s Discussion and Analysis (MD&A) and news releases. These types of documents are known as continuous disclosure documents and are filed on the System for Electronic Document Analysis and Retrieval (SEDAR) website.

Disclosure requirements for public companies are primarily set out in National Instrument 51-102 Continuous Disclosure Obligations.

Disclosure expectations for issuers with U.S. marijuana-related activities

Issuers with marijuana-related activities in the U.S. assume certain risks due to conflicting state and federal laws. While some U.S. states have authorized the use and sale of marijuana, it remains illegal under U.S. federal law. In 2013, the U.S. Department of Justice issued guidance, stating that it will generally focus enforcement on conduct that interferes with certain federal priorities relating to marijuana. The guidance further outlines that prosecutors and law enforcement will be less likely to interfere with U.S. states that have a strong and effective regulatory program for marijuana. Many issuers rely on this guidance in carrying on business in U.S. states that have legalized marijuana. However, this guidance does not alter the authority of the U.S. Department of Justice to enforce the federal law relating to marijuana at any time. Furthermore, this guidance could be revoked or changed by other federal government policy pronouncements. This puts these issuers at risk of being prosecuted and/or having their assets seized.

In light of these risks and uncertainties, CSA staff have set out specific disclosure expectations in CSA Staff Notice 51-352 Issuers with U.S. Marijuana-Related Activities for issuers that have, or are in the process of developing, marijuana-related activities in the U.S.. CSA staff expect all issuers with marijuana-related activities in the U.S. to disclose information about their compliance with state regulatory frameworks and discuss the risk of enforcement of U.S. federal laws relating to marijuana. CSA staff have also set out additional disclosure expectations based on the nature of an issuer’s involvement in the U.S. marijuana industry.

These disclosures should be included in an issuer’s prospectus filings and continuous disclosure documents such as an issuer’s AIF and MD&A. Issuers that enter Canada’s capital markets through a reverse takeover or spinoff transaction are expected to include these disclosures in their listing statement or other documents, as applicable, which are filed on SEDAR. 

In the event that the U.S. federal government changes its approach to enforcement regarding marijuana, CSA staff would re-examine the views outlined in CSA Staff Notice 51-352 Issuers with Marijuana-Related Activities. CSA staff also recognize that there may be fact patterns and novel business models in the U.S. marijuana industry that cannot be addressed by disclosure. In these cases, CSA staff may consider regulatory action.

Exchange listings

In determining whether to list issuers with U.S. marijuana-related activities, each exchange applies its own listing requirements. These requirements are outlined in an exchange’s rules, which include rules related to an issuer’s compliance with applicable laws.

Different exchanges may make their own judgements in the application of their listing requirements and an independent assessment of compliance and risk-analysis. As a result, some exchanges may decide to list issuers with U.S. marijuana-related activities, while others may decide to reject listing applications from these companies.

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Regulators Release New Findings and Trends on Women on Boards and in Executive Officer Positions
by FCNB on 


The securities regulatory authorities in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Québec, Saskatchewan and Yukon (the participating jurisdictions) today published 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.

The notice summarizes results from a review of the corporate governance disclosure of 660 non-venture issuers with year ends between December 31, 2016 and March 31, 2017 as it relates to women in leadership roles. This is the third review following the implementation of rules under National Instrument 58-101 Disclosure of Corporate Governance Practices, which require non-venture issuers to disclose certain information regarding women on boards and in executive officer positions. The notice also highlights trends observed in the three reviews to date as well as certain compliance findings.

The review found the following:
  • The total percentage of board seats occupied by women has increased to 14 per cent from 11 per cent in the first year, reflecting a difference of three per cent.
  • Of the issuers with a market capitalization over $10 billion, 24 per cent of board seats are held by women, compared with 21 per cent in the first year, reflecting a difference of three per cent.
  • In the issuer sample, 61 per cent of issuers have at least one woman on their boards, compared to 49 per cent in the first year, reflecting a difference of twelve per cent.
  • The percentage of issuers with at least one woman in an executive officer position increased to 62 per cent from 60 per cent in the first year, reflecting a difference of two per cent.

The review noted a significant increase in the percentage of issuers that have adopted a policy relating to the representation of women on their board. Of the issuers sampled, 35 per cent have adopted a policy, representing a 20 per cent increase over three years. Those issuers that have adopted such a policy had a higher percentage of women on their boards compared to issuers without such a policy.

“Completing and publishing our third review fulfills our commitment to report on the representation of women on boards and in executive officer positions, following the implementation of disclosure requirements that aim to increase transparency for investors,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “This continues to be an area of focus for the CSA.”

Once all issuers have filed their corporate governance disclosure regarding women on boards and in executive officer positions for three consecutive years, the CSA intends to publish the underlying data.

The Staff notice can be found on the websites of the participating jurisdictions.

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:
Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

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Canadian securities regulators announce ban on binary options
by FCNB on 


The Canadian Securities Administrators (CSA) today announce the implementation of Multilateral Instrument 91-102 Prohibition of Binary Options, which makes it illegal to  advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual.

“Binary options are the leading type of investment fraud facing Canadians today, and the impact of this kind of scam on individuals is staggering,” said Louis Morisset, Chair of the CSA and President and Chief Executive Officer of the Autorité des marchés financiers. “This ban positions the CSA among the world leaders in fighting back against binary options fraud and represents an important step in protecting Canadians. It conveys a clear message that these products are unsuitable for individuals because of their risky characteristics and that their trading is illegal.”

The CSA’s Binary Options Task Force was formed in 2016 as a proactive means to fight this form of fraud. “From day one, our job has been to find every avenue to protect Canadians from this particular fraud,” said Jason Roy, the Task Force’s Chair and Senior Investigator with the Manitoba Securities Commission. “This ban supports our efforts, which include working with credit card companies, tech companies and advertisers that binary options fraudsters rely on to carry out their schemes. It will all add up to fewer Canadians being exposed, and fewer Canadians being cheated.”

Binary options take the form of a wager in which investors bet on the performance of an underlying asset, often a currency, commodity, stock index, or share. The timeframe on this bet is typically very short, sometimes hours or even minutes. When the time is up, the investor either receives a predetermined payout or loses the entire amount. In many instances, however, no actual trading occurs and the transaction takes place for the sole purpose of stealing money.  In addition, those who have provided credit or personal information to binary options sites frequently fall victim to identity theft.  Binary options are sometimes marketed under other names, including “all-or-nothing options,” “asset-or-nothing options,” “bet options,” “cash-or-nothing options,” “digital options,” “fixed-return options” and “one-touch options.”

The firms and individuals involved in the operation of binary options trading platforms are often located overseas. Investing offshore is a common red flag of fraud, as it may be impossible for investors to get their money back if something goes wrong.  Anyone who has invested with, or has concerns about, an offshore binary options trading platform should immediately contact their local securities regulator. For more information on binary options fraud, and tips on how to protect yourself, please visit http://www.binaryoptionsfraud.ca/.

The new instrument can be found on participating CSA members’ websites. For more information on the regulation of binary options in BC, please see BC Notice 2017/02 – Binary Options.

Before making a decision to invest in any product, the CSA encourages all investors to visit aretheyregistered.ca to check the registration of a person or company offering the investment. There are no registered individuals or firms permitted to trade binary options products in Canada. Any firm or individual selling investments or offering advice must be registered in the province where they do business. Registration helps protect investors because regulators will only register firms and individuals that are properly qualified.


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

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For more information:
Media inquiries:
Janine Allen
Kaiser Lachance Communications
T: 647.725.2520 x 214
C: 416.271.7002

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Canadian securities regulators publish MFDA oversight review report
by FCNB on 

The Canadian Securities Administrators (CSA) today released the Oversight Review Report of the Mutual Fund Dealers Association of Canada (MFDA), which evaluates whether specific regulatory processes are operating effectively, and outlines findings that require corrective action.

 

The coordinated review covers the period from August 1, 2015 to January 31, 2017, and was jointly conducted by six of the provincial securities regulators that recognize the MFDA: the Alberta Securities Commission, the British Columbia Securities Commission, the Financial and Consumer Affairs Authority of Saskatchewan, the Manitoba Securities Commission, the Nova Scotia Securities Commission, and the Ontario Securities Commission (the Recognizing Regulators). The MFDA is also recognized by the Financial and Consumer Services Commission of New Brunswick and the Prince Edward Island Office of the Superintendent of Securities.

 

Based on the annual assessment of the MFDA’s functional areas and key processes, the Recognizing Regulators selected above-average risk areas as the focus for the review, including Enforcement, Financial Compliance, and Policy. The Recognizing Regulators considered the previous oversight review and whether findings identified in that review had been resolved, as well as current issues and market conditions that could affect the MFDA.

 

In summary, CSA staff acknowledge that the MFDA made sufficient progress in resolving specific issues raised in previous oversight review reports. In the current review, CSA staff identified one medium priority finding in the Financial Compliance department and one low priority finding in the Enforcement department. There were no findings in the Policy department.

 

Other than the findings noted, CSA staff did not identify concerns with the MFDA meeting the relevant terms and conditions of its recognition orders. CSA staff will monitor the MFDA’s progress in taking timely and specific corrective action to resolve the findings.

 

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

 

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For more information:

Andrew Nicholson

Financial and Consumer Services Commission

506 658-3021

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CSA seeks new members for Mining Technical Advisory and Monitoring Committee
by FCNB on 

The Canadian Securities Administrators (CSA) is inviting applications for new members to join the Mining Technical Advisory and Monitoring Committee (MTAMC). The MTAMC serves as a forum for communication between the CSA and the mining industry, and advises the CSA on a variety of industry and professional developments related to securities regulatory issues.

The MTAMC is composed of 10 to 12 volunteers who generally serve three-year terms. Members are drawn from across Canada and different sectors of the mining industry, ranging from early stage exploration to commercial production. The MTAMC meets a minimum of twice annually, although it may meet more frequently should circumstances warrant. The British Columbia Securities Commission and the Ontario Securities Commission facilitate the meetings via teleconference.

Committee members typically have significant technical experience and a strong interest in securities regulatory policy as it relates to the mining industry. Familiarity with securities legislation (NI 43-101, NI 51-102) and policies that the CSA is responsible for is beneficial. Individual practitioners and representatives of public mining companies (small through large), mineral industry associations, consulting firms, and other interested persons are invited to apply in writing for membership on the MTAMC. Applicants should indicate their areas of practice and/or specialization, and provide a summary of their relevant experience.

Interested individuals should submit their applications via email by October 6, 2017. Please forward applications and any queries regarding this CSA Notice to:

Chris Collins, B.Sc., P.Geo., MBA

Chief Mining Advisor, Corporate Finance

British Columbia Securities Commission

Telephone: (604) 899-6616

Email: ccollins@bcsc.bc.ca

 

Craig Waldie, M.Sc.A., P.Geo.

Senior Geologist, Corporate Finance.

Ontario Securities Commission

Telephone: (416) 593-8308

Email: cwaldie@osc.gov.on.ca

 

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:

Andrew Nicholson

Financial and Consumer Services Commission

506 658-3021

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Canadian securities regulators outline securities law requirements that may apply to cryptocurrency offerings
by FCNB on 

The Canadian Securities Administrators (CSA) today published CSA Staff Notice 46-307 Cryptocurrency Offerings, which outlines how securities law requirements may apply to initial coin offerings (ICOs), initial token offerings (ITOs), cryptocurrency investment funds and the cryptocurrency exchanges trading these products.

 

The notice describes the factors CSA staff consider in assessing whether prospectus, registration and marketplace requirements apply. It also outlines how the CSA Regulatory Sandbox can help fintech businesses contemplating such offerings and summarizes key issues that businesses should be prepared to discuss with CSA staff.

 

“The technology behind cryptocurrency offerings has the potential to generate new capital raising opportunities for businesses and we welcome this type of innovation,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Given the growing activity in this novel area, we are publishing guidance to help fintech businesses understand what obligations may apply under securities laws.”

Any business that is planning to raise capital through an ICO or ITO, or that is seeking to establish a cryptocurrency investment fund, should consider whether it involves a security. Businesses should also contact their local securities regulatory authority to discuss possible approaches to complying with securities laws.


The CSA Regulatory Sandbox is an initiative of the CSA to support fintech businesses seeking to offer innovative products, services and applications in Canada.


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
Andrew Nicholson
Financial and Consumer Services Commission

506 658-3021
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Canadian securities regulators publish annual report outlining investor education campaigns and activities
by FCNB on 


The Canadian Securities Administrators (CSA) today published an annual activity report outlining its investor education and outreach efforts over the past year.

“The CSA Investor Education Committee continues to prioritize investors’ needs and develop innovative ways to help Canadians understand more about their finances,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “The latest activity report is a testament to the success the Committee has had in reaching investors across Canada with important educational information and resources.”

In 2016-2017, the CSA launched campaigns to educate investors about the importance of checking registration and how to recognize and avoid binary options scams. The CSA also adapted and promoted videos to raise awareness about new requirements under the Client Relationship Model Phase 2 (CRM2) and related changes to how advisers must report to their clients on the costs, performance, and value of their investments.

The report can be viewed on the CSA’s website.

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
Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

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