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Canadian Securities Regulators Seek Comment on Proposed Amendments to Report of Exempt Distribution
by FCNB on 

 

The Canadian Securities Administrators (CSA) today published for comment proposed amendments to National Instrument 45-106 Prospectus Exemptions that would amend the report of exempt distribution set out in Form 45-106F1 Report of Exempt Distribution (Report).

"The proposed amendments provide greater clarity and flexibility on certain requirements of the Report while still providing regulators with the information necessary for oversight and policy development," said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

The proposed amendments are intended to address concerns raised by stakeholders about the certification and certain information requirements in the Report. The proposed amendments follow other steps taken by CSA staff in summer and fall 2016 to address these concerns, including providing relief from certain information requirements and issuing revised guidance on preparing and filing the Report.

The British Columbia Securities Commission did not publish the proposed instrument for comment, although staff anticipates doing so in the near future, after obtaining necessary approval.

The proposed amendments can be found on participating CSA members' websites. Comments should be submitted in writing by September 6, 2017.

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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Publication of a CSA Multilateral Staff Notice regarding the filing of the report by the auditor required by National Instrument 81-102 Investment Funds
by FCNB on 


The securities regulatory authorities in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, and Labrador, Northwest Territories, Nova Scotia, Nunavut, Price Edward Island, Québec, Saskatchewan, and Yukon (the Participating Jurisdictions) today published CSA Multilateral Staff Notice 81-328 Report by the Auditor in the Form Contained Respectively in Appendix B-1, B-2 or B-3 of National Instrument 81-102 Investment Funds regarding the requirement prescribed by paragraphs 12.1(1)(b), 12.1(2)(b) and 12.1(3)(b) of National Instrument 81-102 Investment Funds (NI 81-102).

The notice highlights the fact that, because of amendments to Canadian generally accepted auditing standards (the GAAS) in the "General Assurance and Auditing" section of "Other Canadian Standards" of the CPA Canada Handbook - Assurance, a report by the auditor filed in the form contained respectively in Appendix B-1, B-2 or B-3 of NI 81-102 (each, the Form Contained in NI 81-102) will not comply with Canadian GAAS for a report by the auditor dated on or after June 30, 2017.

Thus, the Participating Jurisdictions are publishing the notice to announce that they expect a report by the auditor dated on or after June 30, 2017 to comply with Canadian GAAS instead of the Form Contained in NI 81-102.

Some Participating Jurisdictions will issue a blanket order by June 30, 2017 to address the amendments to Canadian GAAS with regard to the current requirements in securities legislation.

The notice 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
Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

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Canadian securities regulators outline steps to support transition to T+2
by FCNB on 


The Canadian Securities Administrators (CSA) today published two notices outlining amendments to support the transition from a three-day settlement cycle (T+3) for trades in Canada to two days (T+2) on September 5, 2017, consistent with the U.S.
 
“Canadian securities regulators are committed to facilitating a smooth transition to the T+2 settlement cycle and to ensuring consistency across the markets by applying the shorter settlement cycle to all securities, including mutual funds,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.


The CSA today published final amendments to National Instrument  24-101 Institutional Trade Matching and Settlement  (NI 24-101) and its companion policy to support a smooth transition to T+2 for equity and long-term debt market trades. These amendments will apply to registered dealers and advisers, clearing agencies and matching service utilities. Because of the interconnectedness of Canadian and U.S. capital markets, final amendments to NI 24-101 will come into force on September 5, 2017 or on any other target date for U.S. capital markets.


At the same time, the CSA, other than the British Columbia Securities Commission (BCSC), published Notice and Request for Comment: Adoption of a T+2 Settlement Cycle for Conventional Mutual Funds, along with proposed amendments to National Instrument  81-102 Investment Funds (NI 81-102). The proposed amendments shorten the settlement cycle for conventional mutual funds to T+2.


While the BCSC is not an authority publishing the proposed amendments to NI 81-102, it anticipates that, subject to receiving the necessary approvals, it will, in the near future, publish for comment proposed amendments that will be consistent with these proposed amendments.


Comments on the proposed amendments to NI 81-102 should be submitted in writing by July 26, 2017. Regulators expect to publish the final amendments late in the summer of 2017.


The notices 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

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

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Canadian securities regulators propose to ban advertising, offering, selling and trading in binary options
by FCNB on 

The Canadian Securities Administrators (CSA) today published for comment National Instrument 91-102 Prohibition of Binary Options.  The proposed instrument would prohibit advertising, offering, selling or otherwise trading a binary option to an individual.

“We are deeply concerned by the increasing number of investor losses and complaints resulting from binary options,” said Louis Morisset, Chair of the CSA and President and Chief Executive Officer of the Autorité des marchés financiers. “The proposed ban is critical to our efforts to help stop binary options fraud in Canada.”

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, 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 binary options trading platforms are often located overseas. Investing offshore is a common red flag of fraud, as it may be impossible to get your money back if something goes wrong.  

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

The proposed instrument can be found on CSA members’ websites. The comment period is open until May 29, 2017 in Alberta and Québec, until June 28, 2017 in Manitoba and Saskatchewan, and until July 28, 2017 in all other participating jurisdictions. The CSA encourages comments by May 29, 2017.

The British Columbia Securities Commission did not publish the proposed instrument for comment, although staff anticipates doing so in the near future, after obtaining necessary approval.  
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, please visit http://www.binaryoptionsfraud.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

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021
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Canadian securities regulators seek comment on potential oversight requirements for foreign audit firms
by FCNB on 

The Canadian Securities Administrators (CSA) today published for comment CSA Consultation Paper 52-403 Auditor Oversight Issues in Foreign Jurisdictions (Consultation Paper), which seeks input on whether certain oversight requirements should be introduced for audits done by foreign firms.

“Auditors are important gatekeepers in our market, and we are seeking input on our current oversight requirements to ensure there continues to be public confidence in the integrity of financial reporting,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

The Consultation Paper discusses challenges faced by the Canadian Public Accountability Board (CPAB) in accessing audit work performed in certain foreign jurisdictions. The Consultation Paper describes a CPAB request for the CSA to amend National Instrument 52-108 Auditor Oversight to require certain audit firms involved in the audit of a reporting issuer’s financial statements to register as a participating audit firm. This requested amendment would assist CPAB in accessing audit working papers in most foreign jurisdictions.
 
CSA staff is also considering potential disclosure enhancements to provide stakeholders with information about situations where CPAB has been prevented from inspecting audit work performed.

The Consultation Paper can be found on CSA members’ websites. Comments should be submitted in writing by June 24, 2017.

The CSA will consider the feedback it receives and any requirements, if introduced, would be published in accordance with the regular rule-making process.

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

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021
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Canadian securities administrators publish summary of the roundtable on response to cyber security incidents
by FCNB on 

The Canadian Securities Administrators (CSA) today published CSA Staff Notice 11-336 Summary of CSA Roundtable on Response to Cyber Security Incidents, which provides an overview of the themes discussed and some of the key takeaways.

The CSA hosted a roundtable on February 27, 2017 to explore cyber security issues and opportunities for greater collaboration, communication and coordination in the event of a large-scale cyber security incident. Roundtable participants represented a cross-section of Canadian securities market stakeholders – including marketplaces, clearing agencies, registrants, reporting issuers, regulatory authorities, and cyber security experts – reflecting diverse roles and views.

“Our discussions highlighted the interconnected nature of the Canadian securities markets ecosystem,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “There was a clear agreement on the importance of cooperation and information sharing in responding to a cyber security incident and reducing the risk of contagion.”

In the view of roundtable participants, cyber security incidents can potentially have far-reaching implications beyond the immediate organizations that are affected, especially if core systems are impacted.

Participants focused on the importance of robust Incident Response Plans (IRPs) for entities, including entities that may be indirectly affected by a cyber incident. Participants indicated that IRPs are generally quite detailed and complete in relation to internal procedures in the event of an incident, but should also address coordination and information sharing with other stakeholders, particularly in the context of a market-wide incident.

Cyber security was identified as a priority area in the CSA 2016-2019 Business Plan. CSA members will continue to collaborate with market participants, other regulators and stakeholders to enhance cyber security preparedness and will work towards a more formal coordination process beyond the existing processes that are in place.

The notice can be found on CSA members’ websites.

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

- 30 -

For more information

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021
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Canadian securities regulators seek comments on reducing regulatory burden for non-investment fund reporting issuers
by FCNB on 

The Canadian Securities Administrators (CSA) today published CSA Consultation Paper 51-404 Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers (Consultation Paper), which seeks comments on potential options for reducing regulatory burden for non-investment fund reporting issuers in the public markets.

 “Regulatory requirements and the associated compliance costs should be proportionate to the regulatory objectives sought,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “The purpose of this consultation is to identify potential ways to reduce regulatory burden in the public markets without compromising investor protection or the efficiency of the capital markets.”

The Consultation Paper identifies and seeks input on potential options for reducing regulatory burden associated with capital raising in the public markets and the ongoing costs of remaining a reporting issuer. These options include:
  • expanding the application of streamlined rules for smaller reporting issuers;
  • reducing the regulatory burden associated with prospectus rules and the offering process;
  • reducing certain ongoing disclosure requirements;
  • eliminating overlap in potentially duplicative regulatory requirements; and
  • enhancing the electronic delivery of documents.

No definitive decisions have been made to move forward on any particular initiative identified in the Consultation Paper, and the CSA welcomes comments on other options for consideration that have not been identified in the Consultation Paper, as well as input on the relative priority of the various options noted above.  

Separately, the CSA is also considering ways to reduce regulatory burden in other areas of securities legislation, such as reducing disclosure obligations for investment funds.
 
Through recent policy initiatives, the CSA has already taken steps to support reporting issuers, including liberalizing the prospectus marketing regime, introducing new prospectus exemptions and modifying existing exemptions available to reporting issuers, and tailoring disclosure and other requirements to alleviate regulatory burden for venture issuers.

The Consultation Paper can be found on CSA members’ websites. Comments should be submitted in writing by July 7, 2017.

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

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021
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Canadian securities regulators seek input on proposed business conduct rules for derivatives dealers and advisers
by FCNB on 

The Canadian Securities Administrators (CSA) today published for comment Proposed National Instrument 93-101 Derivatives: Business Conduct and a related proposed companion policy. The proposed instrument establishes an investor protection regime for over-the-counter (OTC) derivatives markets that is consistent with international standards and foreign requirements and is intended to create a uniform approach to derivatives business conduct regulation in Canada.

 

“This is an important milestone for Canada in the regulation of over-the-counter derivatives,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “The proposed business conduct regime will protect investors, improve transparency and accountability, and protect against market abuse.”

 

The proposed instrument sets out fundamental obligations for OTC derivatives dealers and advisers. These include a fair dealing model suitable for derivatives markets that contains obligations to identify and respond to conflicts of interest; know-your-derivatives party obligations; and compliance and recordkeeping requirements.

 

For derivatives dealers and advisers working with non-institutional counterparties, the proposed instrument introduces further measures such as a derivatives-specific suitability standard, the requirement to identify derivatives party-specific needs, and disclosure regarding leverage.

 

As a significant proportion of OTC derivatives trading is cross-border, the proposed instrument includes exemptions for foreign derivatives dealers and advisers that are subject to and comply with comparable laws of certain foreign jurisdictions.

 

The CSA is also in the process of developing a registration regime for derivatives dealers and advisers. The CSA anticipates publishing proposed NI 93-102 Derivatives: Registration shortly. An extended comment period (150 days) is in effect for the proposed business conduct regime to provide stakeholders an opportunity to consider it in conjunction with the proposed registration regime.

 

The proposed instrument and companion policy 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

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

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Canadian Securities Administrators Renew Term of Chair and Vice-Chair
by FCNB on 

Pursuant to the last meeting of the members of the Canadian Securities Administrators (CSA), the term of CSA President Louis Morisset, President and CEO of the Autorité des marchés financiers, was renewed for a further two years, until March 31, 2019. Mr. Morisset was first appointed CSA Chair in March 2015.


“I look forward to another two years as CSA Chair and to continuing the collaborative work with my colleagues from other jurisdictions as we remain firmly committed to delivering on the priorities set in our most recent three-year business plan,” said Mr. Morisset. “Our focus will remain on our fundamental objectives, which are to work collectively to protect Canadian investors while striving to further harmonize and advance securities regulation in Canada.”


The terms of Mr. Don Murray, Chair of the Manitoba Securities Commission, as CSA Vice-Chair, and of Ms. Maureen Jensen, Chair and CEO of the Ontario Securities Commission, as Chair of the Policy Coordination Committee, were also renewed for two years.


The CSA, the council of securities regulators of Canada’s provinces and territories, coordinate and harmonize 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

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021
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Canadian securities regulators announce climate change disclosure review project
by FCNB on 

The Canadian Securities Administrators (CSA) today announced a project to review the disclosure of risks and financial impacts associated with climate change. The project will gather information on the current state of climate change disclosure in Canada and internationally, and will include consultation with investors and reporting issuers.


The disclosure practices of public companies in relation to climate-related risks and financial impacts have attracted significant international attention in recent years. Several voluntary disclosure frameworks have been proposed, culminating in the publication in December 2016 of a set of recommendations by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.


“In light of the increased scrutiny being placed upon reporting issuers’ climate-related disclosure, we believe it is appropriate to review the state of such disclosure in Canada,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.  “As securities regulators, it is important to assess whether issuers provide appropriate disclosure regarding risks and financial impacts associated with climate change, which in turn assists investors in making informed investment decisions.”   


Reporting issuers in Canada are currently required to disclose material risks, which may include risks associated with climate change, among other environmental matters, in their periodic disclosure. The CSA has provided guidance with respect to these disclosure requirements in CSA Staff Notice 51-333 Environmental Reporting Guidance.


CSA Staff intend to review disclosure prepared by large TSX-listed reporting issuers on the material risks and financial impacts associated with climate change as well as related governance processes; gather feedback from reporting issuers about current disclosure practices through an anonymous online survey; and conduct focus groups with reporting issuers and investors. CSA Staff will also examine risk disclosure requirements related to climate change in other jurisdictions, as well as recently proposed voluntary disclosure frameworks.


The CSA expects to conduct its information gathering in spring and summer 2017 and publish a progress report outlining its findings upon completing its review.


A backgrounder with additional details regarding the climate change disclosure project 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

Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

______________________________________________________________________________________________________________________________________


Backgrounder: CSA climate change disclosure review project

 

Purpose

 

Many investors who are concerned about business risks and financial impacts associated with climate change are requesting improved disclosure by businesses in respect of such risks and impacts, and the actions being taken to address them. The demand for improved disclosure has resulted in the proposal of a number of voluntary frameworks for disclosure in respect of climate-related risks and impacts, along with other sustainability matters. In addition, a number of jurisdictions outside of Canada have adopted specific climate-related disclosure requirements for public companies.

 

With these considerations in mind, the CSA intends to review various matters in relation to the disclosure of risks and financial impacts associated with climate change.  The review will be conducted with a view to ensuring that issuers provide  high quality disclosure of material information, which in turn assists investors in making informed investment and voting decisions.

 

 

Project Overview

 

The project includes three key components:

 

1) Review of international disclosure requirements and voluntary frameworks

 

CSA Staff will review climate-related disclosure requirements in the securities laws of certain international jurisdictions, such as Australia, the United Kingdom and the United States, as well as recommendations contained in recently proposed voluntary disclosure frameworks with respect to climate-related disclosure, including:

  • International Integrated Reporting Framework published by the International Integrated Reporting Council
  • Global Standards for Sustainability Reporting published by the Global Reporting Initiative
  • Climate Risk Technical Bulletin published by the Sustainability Accounting Standards Board
  • Recommendations of the Task Force on Climate-Related Financial Disclosures published by the Financial Stability Board.

 

2) Review of continuous disclosure by reporting issuers

 

CSA Staff will review public disclosure by Canadian reporting issuers in both their mandatory continuous disclosure filings and voluntary sustainability reports, to assess the extent to which these filings currently include disclosure concerning material climate-related risks and financial impacts, and the governance processes related to them. The review is expected to focus on disclosure prepared by large TSX-listed reporting issuers for the 2016 financial year.

 

3) Consultations

 

CSA Staff will gather feedback from reporting issuers on climate-related disclosure and the associated costs. CSA Staff will also consult with investors to better understand the climate-related information they require to make an informed investment decision. These consultations will occur through an anonymous online survey of reporting issuers as well as focus groups with investors and reporting issuers.

 

Existing Disclosure Requirements

 

In Canada, reporting issuers are required to disclose material risks in their periodic disclosure, including climate-related risks. In 2010, the CSA published CSA Staff Notice 51-333 Environmental Reporting Guidance, which provided guidance to reporting issuers (other than investment funds) on existing continuous disclosure requirements relating to environmental matters under securities legislation in Canada.

 

Next Steps

 

The CSA expects to conduct its information gathering in spring and summer 2017 and publish a progress report outlining its findings upon completing its review.


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