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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.

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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 guidance on conflict of interest transactions
by FCNB on 


The securities regulatory authorities in Ontario, Québec, Alberta, Manitoba and New Brunswick (the participating jurisdictions) today published CSA Multilateral Staff Notice 61-302 Staff Review and Commentary on Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

 

The notice outlines the approach used to review material conflict of interest transactions, including insider bids, issuer bids, business combinations and related party transactions that give rise to concerns regarding the protection of minority security holders. The notice also advises market participants of the participating jurisdictions’ views on special committees of independent directors and enhanced disclosure requirements.

 

“Our regulatory framework for conflict of interest transactions is designed to protect minority security holders when a related party of the issuer, who may have superior access to information or significant influence, is involved in such a transaction,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

 

The notice describes how staff review conflict of interest transactions to assess compliance with Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101), including the timing and scope of such reviews, the information-gathering process and potential remedies in the event of non-compliance.  

 

The notice also contains a discussion of staff’s views on special committees of independent directors and enhanced disclosure requirements based on the requirements of MI 61-101 and associated guidance, decisions of securities regulatory authorities, and issues identified in reviews of material conflict of interest transactions. The discussion addresses the role, composition and mandate of special committees, and disclosure regarding the background, approval process and fairness opinions for conflict of interest transactions.

 

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


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 Publish Final Amendments to Custody and Other Requirements for Dealers, Advisers and Investment Fund Managers
by FCNB on 

The Canadian Securities Administrators (CSA) today published final amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and National Instrument 33-109 Registration Information. The amendments enhance custody requirements for certain registered firms, clarify activities that may be conducted by exempt market dealers, incorporate previously granted relief from certain Client Relationship Model Phase 2 (CRM2) requirements and provide for certain changes of a housekeeping nature.

 

“These amendments aim to enhance market efficiencies while maintaining strong investor protections,” said Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers. “They also address market participants’ desire for clarity on certain regulatory requirements.”

 

The custody amendments address potential intermediary risks when certain registered firms are involved in the custody of client assets, enhance the protection of client assets and codify existing custodial best practices.

 

The exempt market dealer amendments clarify the activities that may be conducted under this category of registration relating to trades in prospectus-qualified securities. These changes also expand an existing exemption from the dealer registration requirement, allowing registered advisers to trade in the securities of investment funds provided that the adviser, or an affiliate, manages the investment fund and certain other conditions are met.

 

The CRM2 amendments make permanent relief granted by the CSA in May 2015, and address matters that have arisen in the course of CRM2’s implementation.

 

Provided necessary ministerial approvals are obtained, the amendments, other than the custody amendments, come into force on December 4, 2017. The custody amendments come into force on June 4, 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.

 

- 30 -


For more information

Andrew Nicholson

Financial and Consumer Services Commission

506 658-3021

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Securities Regulators Adopt Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions
by FCNB on 


The securities regulators of Alberta, Manitoba and New Brunswick (the Participating Jurisdictions) today published a notice of adoption of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101).

MI 61-101 is designed to facilitate the fair treatment of all security holders by addressing potential conflicts of interests on the part of insiders and related parties in certain transactions, and is already in effect in Ontario and Quebec. The instrument contains requirements for enhanced disclosure, independent valuations and majority of minority security holder approvals for transactions such as insider bids, issuer bids, business combinations and related party transactions.  

Concurrently, the Participating Jurisdictions also published the companion policy to the instrument and consequential amendments.

MI 61-101 and related documents can be found on each of the Participating Jurisdictions’ websites. The effective date of MI 61-101 and the consequential amendments is July 31, 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 caution industry about false and misleading registration applications and outline changes to trading supervision reports
by FCNB on 


The Canadian Securities Administrators (CSA) today published CSA Staff Notice 33-320 The Requirement for True and Complete Applications for Registration to caution firms and individuals about the potential consequences of submitting false or misleading applications for registration.

Each year, CSA staff receive many applications for registration that omit relevant information or contain information that is vague or untrue.

“The CSA will continue to hold individuals and firms accountable for false or misleading applications,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Applications for registration must be completed with truth and candour, and we expect firms to have robust policies and procedures in place to ensure this is the case for any applications they sponsor.”

Applications for registration are made through a prescribed form that requires the applicant to disclose information that CSA staff use to assess fitness for registration. This information includes, but is not limited to, information about current and previous employment, as well as financial and criminal disclosure.

After an individual becomes registered, if any of the information provided in their initial application changes, they must update their information using the prescribed form and within the time periods provided for in National Instrument 33-109 Registration Information. 

If an individual discloses false or misleading information to CSA staff, the matter may result in a denial of registration or in regulatory action being taken against a registrant. False or misleading statements made during the application process may also constitute a provincial or criminal offence. CSA staff may also take regulatory action against anyone complicit in an applicant’s delivery of a false or misleading application, including the sponsoring firm.  

The CSA also published today CSA Staff Notice 31-349 Change to Standard Form Reports for Close Supervision and Strict Supervision Terms and Conditions, which relates to dealing representatives that require enhanced supervision on their trading activities. The notice describes close and strict supervision and outlines changes to standard form reports.

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.

- 30 -

For more information
Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

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Canadian securities regulators seek comments relating to designated rating organizations
by FCNB on 


The Canadian Securities Administrators (CSA) today published for comment proposed rule amendments and policy changes related to designated rating organizations (DROs) and credit ratings of DROs.

CSA staff are proposing to amend National Instrument 25-101 Designated Rating Organizations (NI 25-101) to reflect new European Union (EU) requirements for credit rating organizations, to ensure the EU continues to recognize the Canadian regime as “equivalent” for regulatory purposes after these new requirements go into effect on June 1, 2018. The proposed amendments would allow credit ratings of a Canadian office of a DRO to continue to be used for regulatory purposes in the EU.

To ensure that NI 25-101 continues to reflect the International Organization of Securities Commissions (IOSCO) Code of Conduct Fundamentals for Credit Rating Agencies (the Code), the proposed amendments also reflect new provisions in the March 2015 version of the Code.

“The IOSCO Code offers a robust framework to protect the integrity of the credit rating process, ensure investors and issuers are treated fairly, and safeguard confidential information that rated issuers provide to credit rating organizations,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “We believe it is important that Canadian rules reflect the high standards of the IOSCO Code.”  

CSA staff are also proposing to amend National Instrument 44-101 Short Form Prospectus Distributions and National Instrument 44-102 Shelf Distributions to recognize the credit ratings of Kroll Bond Rating Agency, Inc. (Kroll), but only for the purposes of the alternative eligibility criteria for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, respectively. The proposed amendments also address other matters.

Kroll would only be designated as a DRO if the proposed rule amendments are enacted as final rule amendments and come into effect following any necessary Ministerial approvals. At this time, CSA staff do not anticipate proposing that Kroll be designated as a DRO for purposes of other credit rating provisions in securities rules and policies.

Stakeholders are invited to submit their comments in writing by October 4, 2017.

The notice and request for comment 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 regulators publish IIROC oversight review report
by FCNB on 


The Canadian Securities Administrators (CSA) today released the Oversight Review Report of the Investment Industry Regulatory Organization of Canada (IIROC), which evaluates whether specific regulatory processes are operating effectively and outlines findings that require corrective action.

 

The coordinated review was conducted jointly by seven of the provincial securities regulators that recognize IIROC: the Alberta Securities Commission; the Autorité des marchés financiers; 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. IIROC is also recognized by the Financial and Consumer Services Commission of New Brunswick, the Newfoundland and Labrador Office of the Superintendent of Securities, and the Prince Edward Island Office of the Superintendent of Securities (Recognizing Regulators).  

 

Based on the annual assessment of IIROC’s functional areas and key processes, the Recognizing Regulators selected above-average risk areas as the focus for the review, including Business Conduct Compliance, Enforcement, Information Technology, Market Surveillance, and Trade Review & Analysis. 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 IIROC.

 

In summary, CSA staff acknowledge that IIROC made sufficient progress in resolving specific issues raised in previous oversight reports. However, CSA staff note a repeat finding in the Business Conduct Compliance department given IIROC did not implement necessary changes to their examination programs (high priority). Also, CSA staff found that IIROC did not make sufficient progress in resolving an issue raised during the previous oversight review in the area of Information Technology (medium priority) by not providing an information security program report to a Board committee on a quarterly basis. In addition, CSA staff raise other medium priority findings in the Business Conduct Compliance (one), Information Technology (one) and Enforcement (two) departments.

 

CSA staff will actively monitor IIROC’s progress in addressing the findings outlined in the report.

 

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

Comments     Permalink     Add Comment

Canadian securities administrators propose a new prospectus exemption for the resale of securities of a foreign issuer
by FCNB on 


The Canadian Securities Administrators (CSA) today published for comment proposed amendments to National Instrument 45-102 Resale of Securities (NI 45-102) that would introduce a new prospectus exemption for the resale of securities of a foreign issuer.

“The proposed amendments would facilitate access to global markets,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Canadian investors are increasingly investing abroad, and we understand that some aspects of the current resale regime may pose challenges to participation in prospectus-exempt offerings by foreign issuers.”

If adopted, the proposed exemption would allow Canadian investors to resell, outside of Canada, securities of a foreign issuer acquired under a prospectus exemption where the issuer is not a reporting issuer in any jurisdiction of Canada. The proposed amendments suggest a different approach for determining minimal connection to Canada by introducing a definition of foreign issuer to replace the current 10 per cent Canadian ownership test.

With the increased globalization of capital markets, it may no longer be appropriate to determine minimal connection to Canada based solely on Canadian security holdings. The CSA believes that the proposed exemption would be more straightforward and effective in today’s global market.

The proposed amendments and CSA Notice and Request for comment can be found on the websites of CSA members. Comments should be submitted in writing by September 27, 2017.

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

Comments     Permalink     Add Comment

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.

- 30 -

For more information
Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

Comments     Permalink     Add Comment

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.

- 30 -

For more information
Andrew Nicholson
Financial and Consumer Services Commission
506 658-3021

Comments     Permalink     Add Comment

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