SAVE THE DATE - APPLICATIONS AND PARTNRESHIP OPPORTUNITIES OPENING SOON!

Not yet a done deal

Share

Investment Executive | By James Langton | Nov 23, 2018

Many hurdles remain for the CMRA before it becomes a reality

Canada’s regulatory landscape faces a transformation as politics, shifting priorities and new legal realities push the investment industry’s overseers in new directions.

Most obviously, the prospect of a fundamental reshaping of the regulatory framework in Canada now is, at least, a possibility – given the Supreme Court of Canada’s (SCC) long-awaited decision on Nov. 9, which reversed a lower court’s ruling in Quebec, that declared that a proposed federal/provincial model for a co-operative capital markets regulator is constitutional.

But while this decision knocks down a basic legal obstacle for the new model for overseeing the securities industry, that doesn’t mean that the adoption of a co-operative regulator is imminent – or even inevitable. Indeed, the SCC’s decision hints at the significance of the hurdles that still must be cleared before the proposed Capital Markets Regulatory Authority (CMRA) can become a reality in Canada.

Although the SCC has found that the proposed CMRA model is constitutional, that doesn’t necessarily mean it is a good idea. “It’s up to the provinces to determine whether participation is in their best interests,” the SCC’s decision states.

See:  CCMR Draft Prospectus and Related Registration Exemptions (Comment period ends Aug 7, 2018)

And even though several provinces have signed on to the proposed initiative, in theory, actually going through with adopting the new system, in practice, may be another matter.

“For example,” the SCC’s decision states, “the participating provinces will be required to effectively dissolve their existing securities commissions and to merge the administration of those commissions into the [proposed] authority’s organizational structure. Once this has been done, it would undoubtedly be impractical for those provinces to extricate themselves from the co-operative system at a later date.”

The SCC’s decision also points out that the legislation required to enable the proposed CMRA has not been published yet. And, once the required legislation is proposed, “it will have to be carefully drafted so as to respect the limits on overlapping, yet distinct federal and provincial authority.”

Indeed, poorly drafted legislation could prompt further challenges in court.

Certainly, policy-makers in Quebec are not ready to concede that some form of national regulation is inevitable now. Following the release of the SCC’s decision, Éric Girard, Quebec’s finance minister, said that the province intends to retain its autonomy and expertise regarding securities regulation. The Autorité des marchés financiers (AMF) is not in jeopardy of being absorbed into the CMRA if and when the new agency comes into being.

Girard also highlighted the SCC’s reminder that the CMRA’s enabling legislation must continue to respect provincial jurisdiction, and he hinted that Quebec will be keeping a close eye on this. “We reaffirm our resolve with regard to defending both the interests of Quebecers and Quebec’s jurisdiction from any eventual encroachment,” he said.

Even longtime supporters of national regulation don’t view the CMRA as a done deal, given the amount of political spadework that still needs to be done. Ian Russell, president and CEO of the Investment Industry Association of Canada, for example, notes that although the SCC decision removes one stumbling block to the “eventual launch” of a co-operative regulator, there are numerous others.

See:  SCC hears Canada and Quebec AGs arguments on national securities regulator

Not only will all of the participating provinces need to pass legislation to enable the CMRA and to delegate their authority to the proposed agency, they may have to amend other laws, such as privacy and labour laws, to be in accord with the new regulator, Russell points out: “This will contribute to continued delay, as the pending legislation has low priority in provincial governments beset with difficult economic conditions. The approval process is further handicapped by the lack of a champion at the political level.”

Moreover, the SCC’s decision on its own isn’t likely to win over any of the provinces that currently aren’t part of the initiative, Russell suggests: “This means significant further delay, given the need to establish a regulatory interface between the participating and non-participating provinces to ensure integrated national capital markets. The participating and non-participating provinces also will have to establish an umbrella arrangement to achieve a uniform rule framework.”

The one positive sign for supporters of the CMRA model is that the new Progressive Conservative government in Ontario backs the plan despite the fact that support for the idea of a co-operative regulator is a holdover from the previous Liberal government.

Although Ontario’s new government actively repudiates many of the previous administration’s policies, the Tories are casting the CMRA initiative as being in line with the party’s goal of curbing regulation. (See accompanying sidebar story.)

Reacting to the SCC’s ruling, Vic Fedeli, Ontario’s finance minister, said, “Ontario is committed to working with the other participating jurisdictions toward the launch of the system … the co-operative system would support businesses and investors by helping to streamline regulation and reduce red tape.”

Ontario’s government also reiterated its support for the CMRA initiative in its first-ever autumn economic update, noting that the government believes a co-operative regulator would help “businesses raise capital more efficiently and better protect investors.”

Nevertheless, launching the CMRA remains a distant prospect at this point. In the meantime, the fact that the SCC validated one of the CMRA’s core purposes – better monitoring of systemic risk – shifts the spotlight to the existing members of the Canadian Securities Administrators (CSA).

See:  Saskatchewan, New Brunswick to join national securities regulator

To be sure, systemic risk is on the agenda of both the CSA and the existing provincial securities commissions already, but the SCC ruling highlights that their efforts in this area are limited: “While provinces have the capacity to legislate [with] respect [to] systemic risk in their own capital markets, they do so from a local perspective and therefore in a manner that cannot effectively address national concerns.”

Indeed, in 2011, the SCC first ruled that the monitoring of systemic risk is an area in which the federal government could claim jurisdiction in the traditionally provincial realm of securities regulation. And the proposed federal legislation that would be adopted as part of the CMRA focuses largely on dealing with systemic risk.

“The heart of this is data collection. In the current Canadian financial regulatory regime, there is a gap in data collection because there is nobody charged with the authority to collect data relating to systemic risk threats on a national basis,” explained Kevan Cowan, CEO of the Capital Markets Authority Implementation Organization (which was established to help create the CMRA), at a hearing before the Standing Senate Committee on Banking, Trade and Commerce in early November.

At the same hearing, Cowan said that because the CMRA would carry out both day-to-day regulation and systemic risk monitoring under one roof, there could be synergies realized in this model that don’t exist in the current system.

Nevertheless, the CSA maintains that it stands ready to meet the ever-changing and evolving demands on securities regulators.

“While provincial governments will determine the nature of future relationships among all Canadian securities regulators, I am confident that our member jurisdictions will continue to work collaboratively to deliver on their core mission, which is to protect investors and promote fair, efficient and transparent markets,” says Louis Morisset, chairman of the CSA and president and CEO of the AMF.

Morisset adds: “If the CMRA initiative ever moves forward,” the members of the CSA will work together to “implement an interface” among provinces that are in the new arrangement and those that are not.

“In the meantime,” Morisset adds, “we are working on delivering on the initiatives of our 2016-19 business plan and will work on the development of a new business plan in the year to come.”

Continue to the full article --> here


The 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, 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


CNBC | Hugh Son | Feb 14, 2019 The first cryptocurrency created by a major U.S. bank is here — and it's from J.P. Morgan Chase. Engineers at the lender have created the "JPM Coin," a digital token that will be used to instantly settle transactions between clients of its wholesale payments business. Only a tiny fraction of payments will initially be transmitted using the cryptocurrency, but the trial represents the first real-world use of a digital coin by a major U.S. bank. While J.P. Morgan's Jamie Dimon has bashed bitcoin as a "fraud," the bank chief and his managers have consistently said blockchain and regulated digital currencies held promise. The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called "JPM Coin," the digital token created by engineers at the New York-based bank to instantly settle payments between clients. See:  Do Banks Even Want to Go Blockchain? J.P. Morgan is preparing for a future in which parts of the essential underpinning of global capitalism, from cross-border payments to corporate debt issuance, ...
Read More
JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business
Forbes | Alejandro Cremades | Aug 2018 Is debt or equity fundraising smarter for startups? There is more than one way to fund a new business venture and fuel its growth. For almost all, it is going to require bringing in outside money at some point. Even if that is only to multiply what is working or to create a source of emergency capital. The two primary options are to either leverage business debt financing or fundraise for equity investors. Each method can carry its own pros and cons. It is vital for entrepreneurs not to blindly follow the herd just “because everyone else is doing it.” Discover which is best for you, at your stage in business, and stack the most advantages in your corner. Once you have decided the course of action and have a lead investor covering at least 20% of your financing round you would typically also include in the pitch deck the form of financing in which you are raising the capital. I recently covered the pitch deck template that was created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted. Debt Financing We’re all familiar with debt. At ...
Read More
Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Financial Post | James McLeod | Feb 9, 2019 The Innovation, Science and Economic Development Minister gives the Financial Post an early look at Ottawa’s report card on innovation that will be released next week Navdeep Bains wants Canadians to know that things are happening. Lots of things. The Innovation, Science and Economic Development Minister has a big job on his hands, hauling Canada’s economy into the 21st century by embracing artificial intelligence and a panoply of digital technologies to boost productivity and keep us globally competitive. But the federal government’s innovation agenda is still very much a work in progress. One of its pillars, the five marquee superclusters spaced evenly across the country, is mostly just an idea at this point, although $950 million in funding is beginning to flow. Does Canada feel more innovative than it did four years ago? Are we future-proofing our economy and seizing the jobs of tomorrow? Bains certainly thinks so and that belief will probably be part of the Liberal’s pitch to voters when the country goes to the polls later this year. Next week, he will release a 100-page government report called Building a Nation of Innovators that mostly serves as a ...
Read More
The race to future-proof the economy: Navdeep Bains on the state of innovation in Canada
Modern Consensus | Leo Jakobson, February 4, 2019 Move is latest series of steps by regulator to bring clarity and less confrontational approach to regulations enforcement The U.S. Securities and Exchange Commission wants to know if the technology to help it monitor major cryptocurrency blockchains for risk and regulatory compliance issues exists. The SEC is not looking to buy big data analytics tools at this time, but characterizes its interest as “conducting market research to determine the availability and technical capability,” of the tools presently available on the market, it announced in a notice on Jan. 31 What the SEC wants to know about is the “ability to provide the requested data but also an overview of the processes used to extract the data, convert the data into a reviewable format, and the verification steps to ensure there is no loss in data completeness and accuracy due to the data transformation tools and processes applied.” The software it wants would also make the data easy for SEC staff to read and understand on an ongoing basis, and would provide insights about that data—notably identifying who the data belongs to—as well as a way of ensuring the data is accurate and ...
Read More
SEC wants big data tools for monitoring and enforcing cryptocurrency market compliance
NCFA Canada | Feb 8, 2019 Ep24-Feb 8:  Re-imagining Philanthropy with Daryl Hatton About this episode:  On this Episode of the Fintech Friday's Podcast, our host Manseeb Khan sits down with Daryl Hatton the CEO of Connection Point. They chatted about microprojects, saving little girls and puppies and how to get hooked on Philanthropy. Enjoy! Focus on value and avoid the complicated terminology when growing new innovative markets Branding customer segment-focused funding products, white labeling collaborative uses cases Crowdfunding for good at the intersection of technology, people and impact Host: Manseeb Khan, NCFA, Fintech Fridays show host Guest: DARYL HATTON, Founder and CEO, ConnectionPoint / FundRazr (linkedin) BIO:  Daryl Hatton, CEO of award winning international crowdfunding company FundRazr and of the innovative sponsored crowdfunding company Sponsifi has founded multiple start-ups and helped bring one to a successful NASDAQ IPO in 1999. He actively serves as board member or advisor to handfuls of other hot companies in Canada. In addition, he is a Director and Crowdfunding Ambassador for the National Crowdfunding Association of Canada. As a social media guy and frequent public speaker, his Twitter tagline includes words like “#KingOfGastown, entrepreneur, cardiac survivor, foodie, whisky nut, philosopher, mentor, father and friend.” * Senior Business and Technology ...
Read More
FINTECH FRIDAY$ (EP24-Feb 8):  Re-imagining Philanthropy with Daryl Hatton, Founder and CEO of ConnectionPoint/FundRazr
Forbes | Michael del Castillo | Feb 4, 2019 It’s a balmy 80 degrees on a mid-December day in Singapore, and something is puzzling Allen Day, a 41-year-old data scientist. Using the tools he has developed at Google, he can see a mysterious concerted usage of artificial intelligence on the blockchain for Ethereum. Ether is the world’s third-largest cryptocurrency (after bitcoin and XRP), and it still sports a market cap of some $11 billion despite losing 83% of its value in 2018. Peering into its blockchain—the distributed database of transactions underpinning the cryptocurrency—Day detects a “whole bunch” of “autonomous agents” moving funds around “in an automated fashion.” While he doesn’t yet know who has created the AI, he suspects they could be the agents of cryptocurrency exchanges trading among themselves in order to artificially inflate ether’s price. “It’s not really just single agents doing things on their own,” Day says from Google’s Asia-Pacific headquarters. “They’re forming with other agents to have some larger group effect.” Day’s official title is senior developer advocate for Google Cloud, but he describes his role as “customer zero” for the company’s cloud computing efforts. As such it’s his job to anticipate demand before a product ...
Read More
Navigating Bitcoin, Ethereum, XRP: How Google Is Quietly Making Blockchains Searchable
Bloomberg | Doug Alexander | Feb 4, 2019 Without digital keys, clients lose access to coins, funds Board said last week that it was seeking creditor protection Digital-asset exchange Quadriga CX has a $200 million problem with no obvious solution -- just the latest cautionary tale in the unregulated world of cryptocurrencies. The online startup can’t retrieve about C$190 million ($145 million) in Bitcoin, Litecoin, Ether and other digital tokens held for its customers, according to court documents filed Jan. 31 in Halifax, Nova Scotia. Nor can Vancouver-based Quadriga CX pay the C$70 million in cash they’re owed. Access to Quadriga CX’s digital “wallets” -- an application that stores the keys to send and receive cryptocurrencies -- appears to have been lost with the passing of Quadriga CX Chief Executive Officer Gerald Cotten, who died Dec. 9 in India from complications of Crohn’s disease. He was 30. Cotten was always conscious about security -- the laptop, email addresses and messaging system he used to run the 5-year-old business were encrypted, according to an affidavit from his widow, Jennifer Robertson. He took sole responsibility for the handling of funds and coins and the banking and accounting side of the business and, ...
Read More
Crypto CEO Dies Holding Only Passwords That Can Unlock Millions in Customer Coins
Forbes | Jeff Kauflin | Feb 4, 2019 This article was updated on 2/4/19 to include Ripple, the fourth-most valuable private fintech company in the U.S.  Financial technology startups continue to attract a growing amount of attention and capital. In 2018, valuations of the biggest private companies bulged, and at least six new fintech unicorns were minted in the U.S. U.S. fintechs raised $12.4 billion in funding, or 43% more than 2017, reports CB Insights. That growth outpaced the 30% increase in venture investments across the entire U.S. market. And fintechs will need those dollars—they tend to burn about two to three times as much cash compared with other startups, according to an analysis by Brex, likely due to factors like regulatory hurdles. Here are the 10 most valuable private, venture-backed fintechs in the U.S.: 1. Stripe, $22.5 billion Originally a service to help small online sellers process payments, today Stripe serves tech giants like Microsoft and Amazon, too. In 2018 the company announced three new high-profile products, including credit card issuing technology, point-of-sale software and a billing platform for subscription businesses. Cofounders: CEO Patrick Collison, 30, and president John Collison, 28. Irish-born brothers, dropouts from MIT (Patrick) and Harvard (John) ...
Read More
The 11 Biggest Fintech Companies In America 2019
CNBC | Elizabeth Schulze | Jan 31, 2019 Navigating the uncertainties of Brexit is proving to be a tough task for newcomers in the financial services sector. Fintech firms are proactively applying for licenses in EU countries ahead of the Brexit deadline. So far Brexit uncertainty hasn't dented investment into London's thriving fintech market. Europe's fintech companies are getting serious about the possibility of a no-deal Brexit. As uncertainty looms over the U.K.'s split from the EU, the industry gathered this week at the Paris Fintech Forum. Payments providers, cryptocurrency exchanges and digital banks all said they were taking steps to prepare for the worst-case scenario. But navigating the uncertainties of Brexit is proving to be a tough task for newcomers in the financial services sector who are luring in users with borderless, frictionless payment and banking solutions. "It is obvious the bigger the market is, the better it is for fintechs, the faster it is they can start, the more opportunities they have," Wim Mijs, CEO of the European Banking Federation, told CNBC on Wednesday. "If you cut off that market, you're hurting yourself, which is Brexit in one word." See:  Who’s afraid of Brexit? Here’s why Canadian fintechs ...
Read More
Europe's fintech companies are preparing for a no-deal Brexit
Crowdfund Insider | JD Alois | Feb 1, 2019 Regulation Crowdfunding (or Reg CF), created by Title III of the JOBS Act, has been available for several years now. While not without its shortcomings, Reg CF has been leveraged by hundreds of issuers, typically smaller firms, raising over $100 million since May 2016. This past week, Crowdfund Capital Advisors (CCA) published a report on Reg CF entitled “2018 State of Regulation Crowdfunding,” providing a snap-shot of the securities exemption and its overall performance. Crowdfund Insider communicated with CCA principle Sherwood “Woodie” Neiss regarding the report. Neiss told CI the promise of Reg CF as a jobs creator and economic engine is starting to prove true: “Back in 2012, the promise of Regulation Crowdfunding was jobs, a local economic generator, and an industry revitalizer. With the close of the 3rd calendar year of Reg CF we can see that those promises are holding true. Reg CF is proving to be a jobs engine (creating on average 2.9 jobs per issuer), economic generator (pumping over $289 million of revenues into local economies) and industry supporter (enabling 82 unique industries in regions across the USA).” See:  Prominent Group of Fintech Leaders Send Letter to SEC Chair Jay Clayton Demanding an Increase in Regulation Crowdfunding ...
Read More
Report: State of Regulation Crowdfunding Says No Gold Rush But an Undeniable Job Creator

 

Share