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Canadian Securities Regulators Extend Role of Exempt Market Dealers

Capital Raising | Release | Jun 20, 2024

Freepik jcomp raising capital - Canadian Securities Regulators Extend Role of Exempt Market Dealers

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New Time-Limited Exemption Allows EMDs to Sell Prospectus Offerings for Growth Capital

The Ontario Securities Commission (OSC), Autorité des marchés financiers (AMF), British Columbia Securities Commission (BCSC), Financial and Consumer Affairs Authority of Saskatchewan (FCAA), Alberta Securities Commission (ASC), and Nova Scotia Securities Commission (NSSC) are allowing exempt market dealers (EMDs) to participate as selling group members in prospectus offerings, increasing their potential to assist business growth.

See:  Final Report: Ontario Capital Markets Modernization Committee Recommendations

  • Historically, EMDs have helped start-ups and small to medium-sized firms access finance by distributing securities under prospectus exemptions. However, as these companies scale they tend to use full prospectus offerings, which EMD participation has been limited due to regulatory restrictions.
  • The recently announced time-limited exception is intended to address these hurdles. The exemption allows EMDs to join as selling group members in prospectus offerings, offering an additional route for capital acquisition for growing enterprises.
  • Investment dealers will continue to play key roles in these offerings, including underwriting.

Grant Vingoe, CEO of the OSC:

“Creating favorable conditions for business success is pivotal to our economic prosperity. Today's measures underscore the commitment of securities regulators to foster the growth and success of our capital markets,”

Stan Magidson, CSA Chair and Chair and CEO of the ASC:

"We are proud of the collaborative efforts among Ontario, Quebec, British Columbia, Saskatchewan, Alberta, and Nova Scotia to implement these measures. Harmonizing regulations to support Canadian businesses is a priority.”

This new exemption was one of the recommendations in the Ontario Capital Markets Modernization Taskforce 2021 report, as well as similar efforts in other jurisdictions. Note, New Brunswick's securities regulatory body intends to issue a similar local blanket order soon.

See: OSC Activates 3 New Interim Class Orders to Boost Early-Stage Capital

Outlook

Hopefully this new exemption allowing EMDs to participate in prospectus offerings will help improve the current capital-raising environment for early-stage and scaling companies.  This initiative will strengthen the relationship between EMDs and their growing clients creating a more dynamic market and opportunity.


NCFA Jan 2018 resize - Canadian Securities Regulators Extend Role of Exempt Market DealersThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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