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Canadian securities regulators provide update on trading fees and rebates pilot study
by FCNB on 


The Canadian Securities Administrators (CSA) has awarded a research contract to develop a pilot study that will examine the impacts of trading fees and rebates on order routing behaviour by dealers, as well as execution quality and market quality.

The CSA has selected the following group of researchers with expertise in Canadian equity market structure to design and conduct the pilot study:
  • Katya Malinova, Associate Professor, Mackenzie Investments Chair in Evidence-Based Investment Management at the DeGroote School of Business, McMaster University. Professor Malinova is an expert on financial market structure, including trading fees and rebates, dark trading, high frequency trading, and technological innovation.
  • Andriy Shkilko, Associate Professor of Finance and Canada Research Chair in Financial Markets at Laurier’s Lazaridis School of Business and Economics. Professor Shkilko’s research focuses on securities trading and the structure of financial markets, including the effects of trading fees and rebates on market quality and order routing in U.S. options.
  • Andreas Park, Associate Professor of Finance at the University of Toronto Mississauga and the Rotman School of Management, and Research Director at the Rotman FinHub. Professor Park’s areas of expertise include FinTech and financial market trading, and the economic impact of technological transformations on financial markets.

Using the United States Securities and Exchange Commission’s (SEC) Proposed Transaction Fee Pilot as a basis, the research group will determine the design of the proposed Canadian pilot study, and work with the CSA on stakeholder consultations, and finalizing and implementing the pilot study. The research group will also conduct ongoing data analysis, compile research reports on the progress of the pilot study, and produce a final report once the pilot study is complete.

The CSA intends to publish a notice and request for comment on the proposed pilot study in fall 2018.

Prior to publishing the proposed pilot study for comment, the researchers plan to gather preliminary feedback on the design and scope of the study at an event hosted by the Capital Markets Institute (CMI) at the Rotman School of Management, University of Toronto, on September 12, 2018. More information about the event, once available, will be published on CMI’s website.

In March 2018, the CSA published a notice, which outlined the CSA’s consideration of a pilot study, following the SEC’s publication of a Proposed Transaction Fee Pilot.

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
Sara Wilson
Financial and Consumer Services Commission
506 643-7045

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Canadian securities regulators advise of unauthorized access to National Registration Database
by FCNB on 


The Canadian Securities Administrators (CSA) is advising of recent unauthorized access to the CSA’s National Registration Database, the web-based system that registrants use to file registration information with Canadian securities regulators.

A former contractor for the Government of Nunavut, with previously authorized access to the National Registration Database while under contract, electronically accessed information. The individual proactively disclosed their unauthorized access to CSA Staff. Access was then terminated immediately and, as a result, no further registrant information can be accessed by this individual.

The individual accessed personal information for a single registrant and business information for select registrants from a single registered firm.

The CSA has notified the single registrant whose personal information was accessed, and has contacted the registered firm.

The CSA conducts regular reviews of its systems to ensure all necessary protections and controls are in place. Additionally, the CSA uses industry-recognized security services to monitor and protect its national systems and data from malicious activity.

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
Sara Wilson
Financial and Consumer Services Commission
506 643-7045

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Canadian securities regulators provide update on approach to determining director and audit committee member independence
by FCNB on 


The Canadian Securities Administrators (CSA) today published CSA Staff Notice 52-330 Update on CSA Consultation Paper 52-404 Approach to Director and Audit Committee Member Independence. The notice summarizes feedback received during the CSA’s consultation on the approach to determining director and audit committee member independence, and outlines the CSA’s rationale for maintaining the current approach.

"Taking into account the comments we received, as well as the realities of the Canadian market, we have concluded that our approach to determining independence in Canada is appropriate for issuers and that it provides clarity, consistency and predictability for boards and stakeholders," said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

The CSA received 27 comment letters from various market participants during the consultation period. Most commenters expressed general support for the CSA’s approach to determining director and audit committee member independence.

CSA Staff Notice 52-330 includes a summary of the comments received and can be found on CSA members’ websites.

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


For more information
Sara Wilson
Financial and Consumer Services Commission
506 643-7045

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Canadian Securities Regulators Publish Final Amendments on Report of Exempt Distribution
by FCNB on 

The Canadian Securities Administrators (CSA) today published final amendments to National Instrument 45-106 Prospectus Exemptions, which revise Form 45-106F1 Report of Exempt Distribution (Report). The CSA also made a related change to Companion Policy 45-106CP Prospectus Exemptions.


Issuers and underwriters who rely on certain prospectus exemptions to distribute securities are required to file the Report within the prescribed timeframe. The amendments aim to provide greater clarity and flexibility regarding the certification requirement of the Report and streamline certain information requirements, while still providing regulators with the information necessary for oversight and policy development.


Provided all necessary ministerial approvals are obtained, the amendments will come into force on October 5, 2018.


The CSA is also publishing a 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 (CSA Staff Notice 45-308) to reflect the revisions.


A notice of amendments and revised CSA Staff Notice 45-308 can be found on CSA members’ websites.


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

Sara Wilson

Financial and Consumer Services Commission

506 643-7045


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Canadian securities regulators highlight common deficiencies in issuers’ continuous disclosure
by FCNB on 

The Canadian Securities Administrators (CSA) today published Staff Notice 51-355 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2018 and March 31, 2017, a biennial report that summarizes CSA staff’s ongoing review of reporting issuers’ (issuers) continuous disclosure and highlights common deficiencies and best practices.

“Among other issues, we continue to see deficiencies in issuers’ use of non-GAAP financial measures, and this remains an area of focus for the CSA,” said Louis Morisset, Chair of the CSA and Chair and CEO of the Autorité des marchés financiers. “We strongly encourage issuers to use this report as a guide to make improvements, as disclosure requirements are at the core of our investor protection regime.”

Other areas where issuers can improve disclosures include, but are not limited to: fair value measurements and disclosures; forward looking information; discussions of issuers’ results of operations and significant projects in development; climate change disclosures; and mineral project disclosure.

In fiscal 2018, 51 per cent (2017 – 43 per cent) of review outcomes required issuers to take action to improve and/or amend their disclosure, or resulted in the issuer being referred to enforcement, cease traded or placed on the default list.

The CSA’s continuous disclosure review program assesses the compliance of issuers’ continuous disclosure documents with securities law. The program also aims to help issuers improve the completeness, quality and timeliness of their disclosure.

CSA Staff Notice 51-355 is available on CSA members’ websites.

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

Sara Wilson

Financial and Consumer Services Commission

506 643-7045

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Canadian Securities Administrators Publish Report on 2017/18 Enforcement Activities
by FCNB on 


Securities regulators outline efforts to collaboratively deter violators, address emerging trends and protect the integrity of Canada’s capital markets

The Canadian Securities Administrators (CSA) today released its 2017/18 Enforcement Report, which outlines securities enforcement activities conducted by CSA members in Canada. This year’s Report highlights CSA members’ efforts to collaboratively work together to meet the challenges of an evolving regulatory environment, to effectively respond to new digital threats and to expand tool kits that play a critical role in detecting and disrupting securities violations.

“To effectively detect and disrupt securities misconduct in an age of digital transformation, we have focused on embracing novel enforcement tools, implementing new technology and sharing learnings across the CSA and with regulatory peers and law enforcement partners,” said Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers. “This year’s CSA Enforcement Report clearly shows that by working together across provincial and international borders, CSA members are continually enhancing efforts, increasing efficiency and addressing securities violations.”

Some highlights from the 2017/18 Enforcement Report include:
  • 124 respondents were placed under interim cease-trade, asset-freeze orders or both, preventing further harm to investors; and,
  • 43 years of jail time was ordered by the courts for individuals in both quasi-criminal and Criminal Code cases.

In addition, the Report highlights how enforcement efforts were enhanced through new relationships with technology and credit card companies, a binary options task force, and continued research into the risks of cryptocurrency and initial coin offering (ICO) investments.

Working with technology and credit card companies
In response to an increasingly complex digital economy, CSA members forged new relationships with technology, social media and credit card companies. CSA members drove efforts to prevent fraudsters from placing deceptive advertising on social media platforms and from accessing payment systems. This work set an important precedent for future digital threats to capital markets.

Binary options: Adapting to protect investors
Closer to gambling than investing, binary options were one of the fastest-growing sources of investor fraud in Canada in 2017. To combat this emerging threat, CSA members established the Binary Options Task Force, led the global discussion on best practices, launched a public education campaign and worked to disrupt widespread access to binary options. In September 2017, CSA members also announced the first ban on offering, selling or trading binary options shorter than 30 days.

Cryptocurrencies and ICOs 
CSA members continue to conduct ongoing research and analysis to monitor and mitigate fraud-related risks associated with cryptocurrency offerings and ICOs. CSA members’ activity included:
  • establishing a taskforce in collaboration with other CSA committees;
  • engaging with international colleagues at the North American Securities Administrators Association; and,
  • working with global digital platforms to ban related advertising.

To read the 2017/18 Enforcement Report, please visit http://www.csasanctions.ca/. 

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For more information
Alix Saulnier
Financial and Consumer Services Commission
506 643-7632

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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). The report evaluates whether selected regulatory processes were effective, efficient, and were applied consistently and fairly, and whether the MFDA complied with the terms and conditions of its recognition orders.

The MFDA is the national self-regulatory organization for the distribution side of the Canadian mutual fund industry.

On behalf of the CSA, the oversight review was conducted jointly by CSA staff of seven 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 Financial and Consumer Services Commission of New Brunswick, the Manitoba Securities Commission, the Nova Scotia Securities Commission, and the Ontario Securities Commission. The MFDA is also recognized by the Prince Edward Island Office of the Superintendent of Securities.  The MFDA has also entered into a Co-operative Agreement with the Autorité des marchés financiers and participates in the regulation of mutual fund dealers in Quebec.

Based on the annual risk-based assessment of the MFDA’s regulatory processes, CSA staff reviewed key regulatory processes in the following functional areas: sales compliance, membership services, financial operations, and corporate governance. 

No findings were identified during the oversight review and CSA staff concluded that the MFDA is meeting the relevant terms and conditions of the recognition orders in the functional areas reviewed.

Conducting on-site reviews is only one component of CSA staff’s oversight activities.  CSA staff are also active in the rule review process, discussing proposed MFDA rule amendments, providing comments and assessing the MFDA’s responses.  If satisfied, staff will ultimately recommend proposed rule amendments for approval or non-objection to their decision makers.  Moreover, the MFDA is responsible for filing certain information (other than proposed rules) with the CSA.  This information includes, but is not limited to, reports on financial condition, self-assessments, risk management, compliance examination results and enforcement matters.  CSA staff review the materials filed, conduct necessary follow-up with the MFDA on any issues raised and use CSA staff’s review of materials filed to inform the annual risk assessment.

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:
Sara Wilson
Financial and Consumer Services Commission
506 643-7045

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Canadian securities regulators publish annual report highlighting 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’s Investor Education Committee (IEC) and its members work to educate and protect Canadian investors through a variety of national and local initiatives.

“The IEC’s primary goal is to provide a credible and objective voice to help Canadians make better-informed financial decisions,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “This report provides a great inside perspective into the work our membership has put toward achieving that goal, in each and every province and territory.”

The report highlights national investor education initiatives from 2017 to 2018, including the CSA’s multi-year campaign to warn investors about the dangers of binary options fraud. In the reporting year, the campaign achieved remarkable success, including a complete ban on binary options in Canada. The report also highlights the findings of the 2017 Investor Index study of Canadian investors and their habits, as well as many regional projects.

The report can be viewed on the CSA’s website at securities-administrators.ca.

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:
Sara Wilson
Financial and Consumer Services Commission
506 643-7045

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Canadian securities regulators align to publish harmonized response to concerns with the client-registrant relationship
by FCNB on 


CSA publishes reforms to put clients’ interests first and indicate policy decision on embedded commissions

The Canadian Securities Administrators (CSA) today published two notices concerning investor protection initiatives. The first requests public comment on detailed reforms (Client Focused Reforms) to obligations of registered firms and individuals (registrants). The second sets out the intended policy decision with respect to mutual fund embedded commissions. These initiatives aim to better align the interests of registrants and investors, improve investor outcomes, and raise the bar for registrant conduct.

The CSA, through the Proposed Amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, is proposing changes that would require registrants to:

  • address conflicts of interest in the best interest of the client;

  • put the client’s interests first when making a suitability determination; and

  • provide clients with greater clarity on what they should expect from their registrants.

These Client Focused Reforms demonstrate a shared commitment by the CSA, as well as the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada, to changes that would require registered firms and individuals to promote the best interests of clients and put clients’ interests first. 

“These initiatives propose core changes that focus on the client’s interests in the client-registrant relationship,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “The reforms strengthen the fundamental obligations that registrants owe their clients and are essential to investor protection.”

The reforms are the result of extensive consultations by the CSA as well as focused consultations conducted by the Ontario Securities Commission (OSC) and the Financial and Consumer Services Commission of New Brunswick (FCNB) on an overarching regulatory best interest standard. 

This harmonized proposal by the CSA infuses the client’s best interest into reforms to the conflicts of interest obligation, and puts clients first in the suitability obligations of registrants. The OSC and FCNB are pleased that the resulting Client Focused Reforms address the specific concerns in these areas and ensure the interests of the client will be paramount in the client-registrant relationship. The reforms effectively raise the bar for registrant conduct and achieve the gains sought for investors.

“I am pleased to see that we have come together with a single, harmonized set of proposals for reforms that put clients first. Upon implementation, they will materially improve outcomes for investors,” said Maureen Jensen, Chair and CEO of the OSC.

In a separate notice, CSA Staff Notice 81-330 Status Report on Consultation on Embedded Commissions and Next Steps, the CSA announced its policy decision on mutual fund embedded commissions. The CSA’s policy decision has three components. The first component is integrated into the Client Focused Reforms’ proposal to require registrants to address conflicts of interest in the best interest of the client, including conflicts of interest associated with embedded commissions and other third-party compensation. The CSA will address the other two components with a publication of rule proposals for comment in September 2018 to prohibit:

  • all forms of the deferred sales charge option, including low-load options and their associated upfront commissions; and

  • the payment of trailing commissions to dealers who do not make a suitability determination.

Together, these initiatives are part of the CSA’s harmonized response to concerns with the client-registrant relationship as it exists today. 
The Client Focused Reforms and policy decision on mutual fund embedded commissions can be found on CSA members’ websites.

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:
Sara Wilson
Financial and Consumer Services Commission
506 643-7045

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Securities regulators urge Canadians to watch for red flags of financial abuse of older Canadians
by FCNB on 


Securities regulators across the country are urging Canadians to be aware of and report financial abuse of seniors as part of World Elder Abuse Awareness Day (WEAAD), on June 15.

The Canadian Securities Administrators (CSA) recognizes and supports the international effort against abuse of older adults in all of its forms.

“With a growing senior population in Canada, we need to work together as a community and be even more vigilant about protecting ourselves and the older adults in our lives,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers (AMF). “That’s why the CSA provides resources to help adults in our communities to make informed investment decisions and know how to recognize and avoid investment fraud.”

Canadians can take action and prevent financial abuse of seniors by:

  • Talking about financial matters with their aging parents.
  • Learning to recognize and avoid investment scams. Visit the CSA website to find important information and helpful resources about fraud prevention.
  • Taking time to investigate every investment opportunity or sales pitch as well as the person promoting the investment before handing over money. If unsure about an investment, consider seeking out independent, third party advice.
  • Reporting investment fraud to their provincial or territorial securities regulator. Reporting potential scams may help prevent other seniors from becoming victims of investment fraud.

“As we age, we may become more dependent on others, which can make us more vulnerable to financial abuse,” said Mr. Morisset. “However, if older Canadians lose all or part of their life savings, they have less time to recover financially. The effects of financial abuse frequently go well beyond the pocketbook too. Being a victim of financial abuse can lead to social isolation, depression, anxiety, and other negative health effects.”

In addition, many regulators across the country are working on initiatives to help detect, prevent and respond to the financial abuse of seniors.

New Brunswick: Based on feedback from consultations across the province, the Financial and Consumer Services Commission released yesterday 15 actionable items to safeguard the province’s seniors from financial abuse. The recommendations include spearheading legislative changes, developing financial abuse screening tools for industry, and championing an inter-agency senior financial abuse task force.

Quebec: The AMF is taking an active role as a member of the Governmental Action Plan to Counter Elder Abuse. On February 7, 2018, it entered into a provincial framework agreement with a number of other ministries and government agencies, which establishes a process to act appropriately in elder abuse cases. In addition to its partnerships with leading seniors’ associations to offer conferences, the AMF launched in March 2018 a new webpage and plans to publish by the end of 2018 a document providing guidance to industry stakeholders, including registered firms and individuals on good practices regarding clients in a vulnerable situation.

Ontario: The Ontario Securities Commission (OSC) is working to implement new initiatives to respond to the needs of older investors following the release of its seniors strategy  in March. Among its many initiatives, the strategy outlines the development of a flexible and responsive framework to address issues of financial exploitation and cognitive impairment among older investors that includes a safe harbour for firms and their representatives. The OSC also plans to introduce guidance and educational initiatives for registered firms and representatives who work with older investors, covering topics such as best practices for engaging and communicating with older investors.

Manitoba: The Manitoba Securities Commission has worked with WEEAD Manitoba on a number of publications and website materials. Their brochures − Identifying and Preventing Financial Abuse, Protect Your Money: Avoiding Frauds and Scams, The ABCs of Senior Investment Fraud, and Financial Concerns Checklist − will be available free of charge at public events hosted around the province during the month of June.

Saskatchewan: The Financial and Consumer Affairs Authority of Saskatchewan has released a campaign for seniors and family members telling them about the warning signs of financial exploitation and fraud, as well as preventative steps that can be taken and who they should contact. The campaign encompasses a news release, a newsletter article, an infographic, a video and website content.

Alberta: The Alberta Securities Commission (ASC) launched a month-long seniors outreach campaign to connect directly with seniors and their caregivers. The ASC’s program includes community events, a financial literacy quiz/contest and new seniors resources on Checkfirst.ca, including the Spot and Stop Seniors Investment Fraud fact sheet. The goal of this campaign is to help seniors improve their financial literacy, empower them to make wise investment decisions and encourage all Albertans to be aware of the signs and sLinkymptoms of elder financial abuse

WEAAD was launched by the International Network for the Prevention of Elder Abuse in 2006 and is recognized by thousands of international organizations and communities around the world.

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

Resources:

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For more information:
Sara Wilson
Financial and Consumer Services Commission
506 643-7045

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