Ontario Securities Commission Bulletin
Issue 48/42 - October 23, 2025
Ont. Sec. Bull. Issue 48/42
• Ontario Securities Commission and Benjamin Ward -- ss. 127(1), 127.1
• Ontario Securities Commission and Radhakrishna Namburi -- ss. 127(1), 127.1
• Ontario Securities Commission and Andre Itwaru -- ss. 127(1), 127.1
• Ontario Securities Commission and Mitchell Carnie -- ss. 127(1), 127.1
• Ontario Securities Commission and Maurice Aziz -- ss. 127(1), 127.1
• Ontario Securities Commission and Nayeem Alli -- ss. 127(1), 127.1
• TeknoScan Systems Inc. et al.
• Ontario Securities Commission and Benjamin Ward
• Ontario Securities Commission and Radhakrishna Namburi
• Ontario Securities Commission and Andre Itwaru
• Ontario Securities Commission and Mitchell Carnie
• Ontario Securities Commission and Maurice Aziz
• Ontario Securities Commission et al.
• Ontario Securities Commission and Nayeem Alli
• TeknoScan Systems Inc. -- ss. 127(1), 127.1
• Satstreet Inc. -- ss. 27(1), 31
• Global X Investments Canada Inc. et al.
• LongPoint Asset Management Inc. et al.
• Temporary, Permanent & Rescinding Issuer Cease Trading Orders
• Temporary, Permanent & Rescinding Management Cease Trading Orders
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Ontario Securities Commission and Benjamin Ward -- ss. 127(1), 127.1
FILE NO.: 2025-21
BETWEEN:
Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: November 4, 2025 at 10:00 a.m.
LOCATION: By videoconference
The purpose of this proceeding is to consider whether it is in the public interest for the Capital Markets Tribunal to make the orders requested in the application filed by the Commission on October 15, 2025.
The hearing set for the date and time indicated above is the first case management hearing in this proceeding, as described in subsection 14(4) of the Capital Markets Tribunal Rules of Procedure.
Any party to the proceeding may be represented by a representative at the hearing.
IF A PARTY DOES NOT ATTEND, THE HEARING MAY PROCEED IN THE PARTY'S ABSENCE AND THE PARTY WILL NOT BE ENTITLED TO ANY FURTHER NOTICE IN THE PROCEEDING.
This Notice of Hearing is also available in French on request of a party. Participation may be in either French or English. Participants must notify the Tribunal in writing as soon as possible if the participant is requesting a proceeding be conducted wholly or partly in French.
L'avis d'audience est disponible en français sur demande d'une partie, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Tribunal par écrit dès que possible si le participant demande qu'une instance soit tenue entièrement ou partiellement en français.
Dated at Toronto this 16th day of October, 2025.
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
BETWEEN:
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5).
1. In response to breaches of Ontario securities law, the Capital Markets Tribunal (the Tribunal) may impose restrictions on respondents to protect Ontario investors and capital markets. These restrictions often include bans from acting as directors or officers of issuers. It is critical to fostering fair and efficient capital markets and confidence in capital markets that persons and companies comply with all terms and conditions of the Tribunal's orders, including these bans.
2. Benjamin Ward contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated November 4, 2022 (the November 2022 Order). The November 2022 Order required Ward to resign all positions he held as a director or officer of any issuer and prohibited him from becoming an officer or director of any issuer for a period of six years. Ward remained a director and officer of two non-reporting issuers in contravention of the director and officer ban. A prohibition from acting as a director or officer of an issuer applies to any issuer, not just reporting issuers.
3. This is a serious breach of Ontario securities law. When persons disregard the restrictions imposed on them by orders of the Tribunal, this undermines investor confidence and the fairness and efficiency of the capital markets.
The Ontario Securities Commission (the Commission) makes the following allegations of fact:
4. Ward is a resident of Puslinch, Ontario.
5. Ward was a respondent in Canada Cannabis Corporation (Re), 2022 ONCMT 34. On November 4, 2022, the Tribunal made the November 2022 Order. Among other things, the Order required Ward to resign from all positions that he held as a director or officer of any issuer and prohibited him from becoming or acting as a director or officer of any issuer for six years (D&O Ban).
6. Ward became the director of CCC Escrow Inc. (CCC Escrow) on May 7, 2014, incorporated in Ontario on the same date. Ward remained a director of CCC Escrow after the November 2022 Order.
7. Ward became the director and officer of Campbellco003 Group Inc. (Campbellco003) on February 13, 2012. Ward remained a director and officer of Campbellco003 after the November 2022 Order.
8. The two corporations are issuers within the meaning of the Securities Act, R.S.O. 1990, c. S.5 (the Act).
9. Ward has failed to comply with the D&O Ban for approximately three years.
10. On December 20, 2024, the Commission requested Ward to provide any evidence of his compliance with the D&O Ban.
11. Following the Commission's request, Ward resigned as a director of CCC Escrow effective December 30, 2024 and as a director of Campbellco003 effective December 30, 2024, but failed to resign as an officer of Campbellco003.
The Commission alleges the following breach of Ontario securities law:
12. By remaining a director and officer of two issuers after the November 2022 Order, Ward breached the D&O Ban and acted contrary to the Order and did, thereby, contravene Ontario securities law and section 122(1)(c) of the Act, and it is in the public interest to issue an order pursuant to section 127 of the Act.
13. The Commission requests that the Tribunal make the following orders:
(a) Ward shall resign any positions that he holds as a director or officer of any issuer, pursuant to paragraph 7 of subsection 127(1) of the Act;
(b) Ward is prohibited from becoming or acting as a director or officer of any issuer permanently or for such period as is specified by the Tribunal, pursuant to paragraph 8 of subsection 127(1) of the Act;
(c) Ward shall pay an administrative penalty of not more than $5 million for failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act;
(d) Ward shall disgorge to the Commission any amounts obtained as a result of non-compliance with Ontario securities law, pursuant to paragraph 10 of subsection 127(1) of the Act;
(e) Ward shall pay costs of the Commission's investigation and the hearing, pursuant to section 127.1 of the Act; and
(f) such other order as the Tribunal considers appropriate in the public interest.
October 15, 2025 |
ONTARIO SECURITIES COMMISSION |
20 Queen Street West, 22nd Floor |
|
Toronto, ON M5H 3S8 |
|
Mark Bailey |
|
Senior Litigation Counsel |
|
Tel: 416-593-8254 |
|
Email: mbailey@osc.gov.on.ca |
|
Susan Kimani |
|
Litigation Counsel |
|
Tel: 416-263-7717 |
|
Email: skimani@osc.gov.on.ca |
|
Ontario Securities Commission and Radhakrishna Namburi -- ss. 127(1), 127.1
FILE NO.: 2025-24
BETWEEN:
Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: October 29, 2025, at 1:00 p.m.
LOCATION: By videoconference
The purpose of this proceeding is to consider whether it is in the public interest for the Capital Markets Tribunal to make the orders requested in the application filed by the Commission on October 15, 2025.
The hearing set for the date and time indicated above is for the first case management hearing in this proceeding, as described in subsection 14(4) of the Capital Markets Tribunal Rules of Procedure.
Any party to the proceeding may be represented by a representative at the hearing.
IF A PARTY DOES NOT ATTEND, THE HEARING MAY PROCEED IN THE PARTY'S ABSENCE AND THE PARTY WILL NOT BE ENTITLED TO ANY FURTHER NOTICE IN THE PROCEEDING.
This Notice of Hearing is also available in French on request of a party. Participation may be in either French or English. Participants must notify the Tribunal in writing as soon as possible if the participant is requesting a proceeding be conducted wholly or partly in French.
L'avis d'audience est disponible en français sur demande d'une partie, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Tribunal par écrit dès que possible si le participant demande qu'une instance soit tenue entièrement ou partiellement en français.
Dated at Toronto this 16th day of October, 2025
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5).
1. In response to breaches of Ontario securities law, the Capital Markets Tribunal (the Tribunal) may impose restrictions on respondents to protect Ontario investors and capital markets. These restrictions often include bans from acting as directors or officers of issuers. It is critical to fostering fair and efficient capital markets and confidence in capital markets that persons and companies comply with all terms and conditions of the Tribunal's orders, including these bans.
2. Radhakrishna Namburi contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated October 7, 2022 (the October 2022 Order). The October 2022 Order required Namburi to resign from any positions he held as a director or officer of an issuer and prohibited him from becoming an officer or director of an issuer for ten years. Namburi remained a director of two non-reporting issuers in contravention of the director and officer ban. A prohibition from acting as a director or officer of an issuer applies to any issuer, not just reporting issuers.
3. This is a serious breach of Ontario securities law. When persons disregard the restrictions imposed on them by orders of the Tribunal, this undermines investor confidence and the fairness and efficiency of the capital markets.
The Ontario Securities Commission (the Commission) makes the following allegations of fact:
4. Namburi is a resident of Mississauga, Ontario.
5. Namburi was a respondent in VRK Forex & Investments Inc. (Re), 2022 ONCMT 28. On October 7, 2022, the Tribunal made the October 2022 Order. Among other things, the October 2022 Order required Namburi to resign from any positions he held as a director or officer of an issuer and prohibited him from becoming or acting as a director or officer of an issuer for ten years (D&O Ban).
6. Namburi became a director of VRK Forex & Investments Inc. (VRK) on November 1, 2011, incorporated in Ontario on the same date. Namburi remained a director of VRK after the October 2022 Order.
7. Namburi became a director of SSR Imports and Exports Inc. (SSR) on November 2, 2017, federally incorporated on the same date. Namburi remained a director of SSR after the October 2022 Order.
8. The two corporations are issuers within the meaning of the Securities Act, R.S.O. 1990, c. S.5 (the Act).
9. Namburi has failed to comply with the D&O Ban for approximately three years.
10. On December 20, 2024, and January 9, 2025, the Commission requested Namburi to provide any evidence of his compliance with the D&O Ban.
11. Following the Commission's request, Namburi resigned as director of SSR effective January 11, 2025, but did not resign as director of VRK.
The Commission alleges the following breach of Ontario securities law:
12. By remaining a director of the two issuers after the October 2022 Order, Namburi breached the D&O Ban and acted contrary to the Order and did, thereby, contravene Ontario securities law and section 122(1)(c) of the Act, and it is in the public interest to issue an order pursuant to section 127 of the Act.
13. The Commission requests that the Tribunal make the following orders:
(a) Namburi shall resign any positions that he holds as a director or officer of any issuer, pursuant to paragraph 7 of subsection 127(1) of the Act;
(b) Namburi is prohibited from becoming or acting as a director or officer of any issuer permanently or for such period as is specified by the Tribunal, pursuant to paragraph 8 of subsection 127(1) of the Act;
(c) Namburi shall pay an administrative penalty of not more than $5 million for failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act;
(d) Namburi shall disgorge to the Commission any amounts obtained as a result of non-compliance with Ontario securities law, pursuant to paragraph 10 of subsection 127(1) of the Act;
(e) Namburi shall pay costs of the Commission's investigation and the hearing, pursuant to section 127.1 of the Act; and
(f) such other order as the Tribunal considers appropriate in the public interest.
October 15, 2025 |
ONTARIO SECURITIES COMMISSION |
20 Queen Street West, 22nd Floor |
|
Toronto, ON M5H 3S8 |
|
Mark Bailey |
|
Senior Litigation Counsel |
|
Tel: 416-593-8254 |
|
Email: mbailey@osc.gov.on.ca |
|
Susan Kimani |
|
Litigation Counsel |
|
Tel: 416-263-7717 |
|
Email: skimani@osc.gov.on.ca |
|
Ontario Securities Commission and Andre Itwaru -- ss. 127(1), 127.1
FILE NO.: 2025-22
BETWEEN:
Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: October 30, 2025 at 9:30 a.m.
LOCATION: By videoconference
The purpose of this proceeding is to consider whether it is in the public interest for the Capital Markets Tribunal to make the orders requested in the application filed by the Commission on October 15, 2025.
The hearing set for the date and time indicated above is the first case management hearing in this proceeding, as described in subsection 14(4) of the Capital Markets Tribunal Rules of Procedure.
Any party to the proceeding may be represented by a representative at the hearing.
IF A PARTY DOES NOT ATTEND, THE HEARING MAY PROCEED IN THE PARTY'S ABSENCE AND THE PARTY WILL NOT BE ENTITLED TO ANY FURTHER NOTICE IN THE PROCEEDING.
This Notice of Hearing is also available in French on request of a party. Participation may be in either French or English. Participants must notify the Tribunal in writing as soon as possible if the participant is requesting a proceeding be conducted wholly or partly in French.
L'avis d'audience est disponible en français sur demande d'une partie, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Tribunal par écrit dès que possible si le participant demande qu'une instance soit tenue entièrement ou partiellement en français.
Dated at Toronto this 16th day of October 2025.
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
BETWEEN:
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5).
1. In response to breaches of Ontario securities law, the Capital Markets Tribunal (the Tribunal) may impose restrictions on respondents to protect Ontario investors and capital markets. These restrictions often include bans from acting as directors or officers of issuers. It is critical to fostering fair and efficient capital markets and confidence in capital markets that persons and companies comply with all terms and conditions of the Tribunal's orders, including these bans.
2. Andre Itwaru contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated June 22, 2023 (the June 2023 Order). The June 2023 Order required Itwaru to resign from any positions he held as a director or officer of any issuer and prohibited him from becoming an officer or director of any issuer for seven years. Itwaru remained a director and/or officer of four non-reporting issuers in contravention of the director and officer ban. A prohibition from acting as a director or officer of an issuer applies to any issuer, not just reporting issuers.
3. This is a serious breach of Ontario securities law. When persons disregard the restrictions imposed on them by orders of the Tribunal, this undermines investor confidence and the fairness and efficiency of the capital markets.
The Ontario Securities Commission (the Commission) makes the following allegations of fact:
4. Itwaru is a resident of Mississauga, Ontario.
5. Itwaru was a respondent in First Global Data Limited (Re), 2023 ONCMT 25. On June 22, 2023, the Tribunal made the June 2023 Order. Among other things, the June 2023 Order required Itwaru to resign from any positions he held as a director or officer of any issuer and prohibited him from becoming or acting as a director or officer of any issuer for seven years (D&O Ban).
6. Itwaru became a director and officer of Zaylex Corporation (Zaylex) on July 6, 2000, incorporated in Ontario on the same date. Itwaru remained a director of Zaylex after the June 2023 Order.
7. Itwaru became a director and officer of Azira Corporation (Azira) on November 14, 2002, incorporated in Ontario on the same date. Itwaru remained a director of Azira after the June 2023 Order.
8. Itwaru became a director of Mainroot Technologies Inc. (Mainroot) on October 4, 2011, incorporated in Ontario on the same date. Itwaru remained a director of Mainroot after the June 2023 Order.
9. Itwaru became a director of Man Minerals Inc. (Man Minerals) on August 26, 2011, incorporated in Ontario on the same date. Itwaru remained a director of Man Minerals after the June 2023 Order.
10. The four corporations are issuers within the meaning of the Securities Act, R.S.O. 1990, c. S.5 (the Act).
11. Itwaru has failed to comply with the D&O Ban for over two years.
12. On December 20, 2024, the Commission requested Itwaru to provide any evidence of his compliance with the D&O Ban.
13. Following the Commission's request, Itwaru resigned as a director of Mainroot effective January 6, 2025 and dissolved Man Minerals effective May 6, 2025. Itwaru did not resign as a director and officer of Zaylex and Azira.
The Commission alleges the following breach of Ontario securities law:
14. By remaining a director and/or officer of four issuers after the June 2023 Order, Itwaru breached the D&O Ban and acted contrary to the Order and did, thereby, contravene Ontario securities law and section 122(1)(c) of the Act, and it is in the public interest to issue an order pursuant to section 127 of the Act.
15. The Commission requests that the Tribunal make the following orders:
(a) Itwaru shall resign any positions that he holds as a director or officer of any issuer, pursuant to paragraph 7 of subsection 127(1) of the Act;
(b) Itwaru is prohibited from becoming or acting as a director or officer of any issuer permanently or for such period as is specified by the Tribunal, pursuant to paragraph 8 of subsection 127(1) of the Act;
(c) Itwaru shall pay an administrative penalty of not more than $5 million for failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act;
(d) Itwaru shall disgorge to the Commission any amounts obtained as a result of non-compliance with Ontario securities law, pursuant to paragraph 10 of subsection 127(1) of the Act;
(e) Itwaru shall pay costs of the Commission's investigation and the hearing, pursuant to section 127.1 of the Act; and
(f) such other order as the Tribunal considers appropriate in the public interest.
October 15, 2025 |
ONTARIO SECURITIES COMMISSION |
20 Queen Street West, 22nd Floor |
|
Toronto, ON M5H 3S8 |
|
Mark Bailey |
|
Senior Litigation Counsel |
|
Tel: 416-593-8254 |
|
Email: mbailey@osc.gov.on.ca |
|
Susan Kimani |
|
Litigation Counsel |
|
Tel: 416-263-7717 |
|
Email: skimani@osc.gov.on.ca |
|
Ontario Securities Commission and Mitchell Carnie -- ss. 127(1), 127.1
FILE NO.: 2025-23
BETWEEN:
Subsection 127(1) and Section 127.1 of the Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: October 27, 2025, at 10:00 a.m.
LOCATION: By videoconference
The purpose of this proceeding is to consider whether it is in the public interest for the Capital Markets Tribunal to make the orders requested in the application filed by the Commission on October 15, 2025.
The hearing set for the date and time indicated above is the first case management hearing in this proceeding, as described in subsection 14(4) of the Capital Markets Tribunal Rules of Procedure.
Any party to the proceeding may be represented by a representative at the hearing.
IF A PARTY DOES NOT ATTEND, THE HEARING MAY PROCEED IN THE PARTY'S ABSENCE AND THE PARTY WILL NOT BE ENTITLED TO ANY FURTHER NOTICE IN THE PROCEEDING.
This Notice of Hearing is also available in French on request of a party. Participation may be in either French or English. Participants must notify the Tribunal in writing as soon as possible if the participant is requesting a proceeding be conducted wholly or partly in French.
L'avis d'audience est disponible en français sur demande d'une partie, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Tribunal par écrit dès que possible si le participant demande qu'une instance soit tenue entièrement ou partiellement en français.
Dated at Toronto this 16th day of October, 2025
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
BETWEEN:
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5).
1. In response to breaches of Ontario securities law, the Capital Markets Tribunal (the Tribunal) may impose restrictions on respondents to protect Ontario investors and capital markets. These restrictions often include bans from acting as directors or officers of issuers. It is critical to fostering fair and efficient capital markets and confidence in capital markets that persons and companies comply with all terms and conditions of the Tribunal's orders, including these bans.
2. Mitchell Carnie contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated May 28, 2020 (the May 2020 Order). The May 2020 Order required Carnie to immediately resign from any positions he held as a director or officer of any issuer and prohibited him from becoming an officer or director of any issuer for seven years. Carnie remained a director and officer of four non-reporting issuers in contravention of the director and officer ban. A prohibition from acting as a director or officer of an issuer applies to any issuer, not just reporting issuers.
3. This is a serious breach of Ontario securities law. When persons disregard the restrictions imposed on them by orders of the Tribunal, this undermines investor confidence and the fairness and efficiency of the capital markets.
The Ontario Securities Commission (the Commission) makes the following allegations of fact:
4. Carnie is a resident of Whitby, Ontario.
5. Carnie was a respondent in First Class Crypto Inc (Re), 2020 ONSEC 14. On May 28, 2020, the Tribunal made the May 2020 Order. Among other things, the May 2020 Order required Carnie to immediately resign from any positions he held as a director or officer of any issuer and prohibited him from becoming or acting as a director or officer of any issuer (subject to one exception) until the later of (a) seven years from the date of the May 2020 Order or (b) the date on which amounts owed by Carnie pursuant to that Order are paid in full (D&O Ban).
6. Carnie became a director and officer of 2634676 Ontario Ltd. (676 Ontario) on May 9, 2018, incorporated in Ontario on the same date. Carnie remained a director and officer of 676 Ontario after the May 2020 Order.
7. Carnie became a director and officer of 2634685 Ontario Ltd. (685 Ontario) on May 9, 2018, incorporated in Ontario on the same date. Carnie remained a director and officer of 685 Ontario after the May 2020 Order.
8. Carnie became a director and officer of 2714649 Ontario Ltd. (649 Ontario) on September 4, 2019, incorporated in Ontario on the same date. Carnie remained a director and officer of 649 Ontario after the May 2020 Order.
9. Carnie became a director and officer of First Class Crypto Inc. (First Class Crypto) on December 8, 2017, incorporated in Ontario on the same date. Carnie remained a director and officer of First Class Crypto after the May 2020 Order.
10. The four corporations are issuers within the meaning of the Securities Act, R.S.O. 1990, c. S.5 (the Act).
11. Carnie has failed to comply with the D&O Ban for over five years.
12. On December 20, 2024, the Commission requested Carnie to provide any evidence of his compliance with the D&O Ban.
13. Following the Commission's request, Carnie resigned as a director and officer of First Class Crypto effective September 9, 2025, but did not resign as director and officer of the other issuers.
The Commission alleges the following breach of Ontario securities law:
14. By remaining a director and officer of the four issuers after the May 2020 Order, Carnie breached the D&O Ban and acted contrary to the Order and did, thereby, contravene Ontario securities law and section 122(1)(c) of the Act, and it is in the public interest to issue an order pursuant to section 127 of the Act.
15. The Commission requests that the Tribunal make the following orders:
(a) Carnie shall resign any positions that he holds as a director or officer of any issuer, pursuant to paragraph 7 of subsection 127(1) of the Act;
(b) Carnie is prohibited from becoming or acting as a director or officer of any issuer permanently or for such period as is specified by the Tribunal, pursuant to paragraph 8 of subsection 127(1) of the Act;
(c) Carnie shall pay an administrative penalty of not more than $5 million for failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act;
(d) Carnie shall disgorge to the Commission any amounts obtained as a result of non-compliance with Ontario securities law, pursuant to paragraph 10 of subsection 127(1) of the Act;
(e) Carnie shall pay costs of the Commission's investigation and the hearing, pursuant to section 127.1 of the Act; and
(f) such other order as the Tribunal considers appropriate in the public interest.
October 15, 2025 |
ONTARIO SECURITIES COMMISSION |
20 Queen Street West, 22nd Floor |
|
Toronto, ON M5H 3S8 |
|
Mark Bailey |
|
Senior Litigation Counsel |
|
Tel: 416-593-8254 |
|
Email: mbailey@osc.gov.on.ca |
|
Susan Kimani |
|
Litigation Counsel |
|
Tel: 416-263-7717 |
|
Email: skimani@osc.gov.on.ca |
|
Ontario Securities Commission and Maurice Aziz -- ss. 127(1), 127.1
FILE NO.: 2025-25
BETWEEN:
Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: November 5, 2025 at 2:00 p.m.
LOCATION: By videoconference
The purpose of this proceeding is to consider whether it is in the public interest for the Capital Markets Tribunal to make the orders requested in the application filed by the Commission on October 17, 2025.
The hearing set for the date and time indicated above is the first case management hearing in this proceeding, as described in subsection 14(4) of the Capital Markets Tribunal Rules of Procedure.
Any party to the proceeding may be represented by a representative at the hearing.
IF A PARTY DOES NOT ATTEND, THE HEARING MAY PROCEED IN THE PARTY'S ABSENCE AND THE PARTY WILL NOT BE ENTITLED TO ANY FURTHER NOTICE IN THE PROCEEDING.
This Notice of Hearing is also available in French on request of a party. Participation may be in either French or English. Participants must notify the Tribunal in writing as soon as possible if the participant is requesting a proceeding be conducted wholly or partly in French.
L'avis d'audience est disponible en français sur demande d'une partie, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Tribunal par écrit dès que possible si le participant demande qu'une instance soit tenue entièrement ou partiellement en français.
Dated at Toronto this 17th day of October, 2025.
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
BETWEEN:
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5).
1. In response to breaches of Ontario securities law, the Capital Markets Tribunal (the Tribunal) may impose restrictions on respondents to protect Ontario investors and capital markets. These restrictions often include bans from acting as directors or officers of issuers. It is critical to fostering fair and efficient capital markets and confidence in capital markets that persons and companies comply with all terms and conditions of the Tribunal's orders, including these bans.
2. Maurice Aziz contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated June 22, 2023 (the June 2023 Order). The June 2023 Order required Aziz to resign from any positions he held as a director or officer of any issuer and permanently prohibited him from becoming an officer or director of any issuer. Aziz remained a director and/or officer of seven non-reporting issuers in contravention of the director and officer ban. A prohibition from acting as a director or officer of an issuer applies to any issuer, not just reporting issuers.
3. This is a serious breach of Ontario securities law. When persons disregard the restrictions imposed on them by orders of the Tribunal, this undermines investor confidence and the fairness and efficiency of the capital markets.
The Ontario Securities Commission (the Commission) makes the following allegations of fact:
4. Aziz is a resident of Toronto, Ontario.
5. Aziz was a respondent in First Global Data Limited (Re), 2023 ONCMT 25. On June 22, 2023, the Tribunal made the June 2023 Order. Among other things, the June 2023 Order required Aziz to resign from any positions he held as a director or officer of an issuer and permanently prohibited him from becoming or acting as a director or officer of any issuer (D&O Ban).
6. Aziz became a director and officer of Springbok Developments Ltd. (Springbok) on April 2, 2012, incorporated in Ontario on the same date. Aziz remained a director and officer of Springbok after the June 2023 Order.
7. Aziz became a director of 1684093 Ontario Inc. (168 Ontario) on January 4, 2006, incorporated in Ontario on the same date. Aziz became an officer of 168 Ontario on January 5, 2006. Aziz remained a director and officer of 168 Ontario after the June 2023 Order.
8. Aziz became a director and officer of AMP Marketing Inc. (AMP Marketing) on April 30, 2019, incorporated in Ontario on January 10, 2019. Aziz remained a director and officer of AMP Marketing after the June 2023 Order.
9. Aziz became a director of Liberty Prime Financial Services Inc. (Liberty Prime) on December 21, 2020, incorporated in Ontario on January 30, 2020. Aziz remained a director of Liberty Prime after the June 2023 Order.
10. Aziz became a director of Mad Move Corp. (Mad Move) on November 28, 2017, incorporated in Ontario on the same date. Aziz remained a director of Mad Move after the June 2023 Order.
11. Aziz became a director of Simple Estate Planning Canadian Corporation (Simple Estate) on September 9, 2011, incorporated in Ontario on the same date. Aziz remained a director of Simple Estate after the June 2023 Order.
12. Aziz became an officer of Memberscanada.com Ltd. (Memberscanada) on October 22, 2014, incorporated in Ontario on the same date. Aziz remained an officer of Memberscanada after the June 2023 Order.
13. The seven corporations are issuers within the meaning of the Securities Act, R.S.O. 1990, c. S.5 (the Act).
14. Aziz has failed to comply with the D&O Ban for over two years.
15. On December 20, 2024, the Commission requested Aziz to provide any evidence of his compliance with the D&O Ban.
16. Following the Commission's request, Aziz resigned as a director and/or officer of Springbok, 168 Ontario, AMP Marketing, Liberty Prime, Mad Move, and Simple Estate, but did not resign as an officer of Memberscanada.
The Commission alleges the following breach of Ontario securities law:
17. By remaining a director and/or officer of the seven issuers after the June 2023 Order, Aziz breached the D&O Ban and acted contrary to the Order and did, thereby, contravene Ontario securities law and section 122(1)(c) of the Act, and it is in the public interest to issue an order pursuant to section 127 of the Act.
18. The Commission requests that the Tribunal make the following orders:
(a) Aziz shall resign any positions that he holds as a director or officer of any issuer, pursuant to paragraph 7 of subsection 127(1) of the Act;
(b) Aziz shall pay an administrative penalty of not more than $5 million for failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act;
(c) Aziz shall disgorge to the Commission any amounts obtained as a result of non-compliance with Ontario securities law, pursuant to paragraph 10 of subsection 127(1) of the Act;
(d) Aziz shall pay costs of the Commission's investigation and the hearing, pursuant to section 127.1 of the Act; and
(e) such other order as the Tribunal considers appropriate in the public interest.
October 17, 2025 |
ONTARIO SECURITIES COMMISSION |
20 Queen Street West, 22nd Floor |
|
Toronto, ON M5H 3S8 |
|
Mark Bailey |
|
Senior Litigation Counsel |
|
Tel: 416-593-8254 |
|
Email: mbailey@osc.gov.on.ca |
|
Susan Kimani |
|
Litigation Counsel |
|
Tel: 416-263-7717 |
|
Email: skimani@osc.gov.on.ca |
|
Ontario Securities Commission and Nayeem Alli -- ss. 127(1), 127.1
FILE NO.: 2025-26
BETWEEN:
Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: November 4, 2025 at 2:00 p.m.
LOCATION: By videoconference
The purpose of this proceeding is to consider whether it is in the public interest for the Capital Markets Tribunal to make the orders requested in the application filed by the Commission on October 17, 2025.
The hearing set for the date and time indicated above is the first case management hearing in this proceeding, as described in subsection 14(4) of the Capital Markets Tribunal Rules of Procedure.
Any party to the proceeding may be represented by a representative at the hearing.
IF A PARTY DOES NOT ATTEND, THE HEARING MAY PROCEED IN THE PARTY'S ABSENCE AND THE PARTY WILL NOT BE ENTITLED TO ANY FURTHER NOTICE IN THE PROCEEDING.
This Notice of Hearing is also available in French on request of a party. Participation may be in either French or English. Participants must notify the Tribunal in writing as soon as possible if the participant is requesting a proceeding be conducted wholly or partly in French.
L'avis d'audience est disponible en français sur demande d'une partie, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Tribunal par écrit dès que possible si le participant demande qu'une instance soit tenue entièrement ou partiellement en français.
Dated at Toronto this 20th day of October, 2025.
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
BETWEEN:
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5).
1. In response to breaches of Ontario securities law, the Capital Markets Tribunal (the Tribunal) may impose restrictions on respondents to protect Ontario investors and capital markets. These restrictions often include bans from acting as directors or officers of issuers. It is critical to fostering fair and efficient capital markets and confidence in capital markets that persons and companies comply with all terms and conditions of the Tribunal's orders, including these bans.
2. Nayeem Alli contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated June 22, 2023 (the June 2023 Order). The June 2023 Order required Alli to resign from any positions he held as a director or officer of any issuer and prohibited him from becoming an officer or director of any issuer for seven years. Alli remained a director and/or officer of two non-reporting issuers in contravention of the director and officer ban. A prohibition from acting as a director or officer of an issuer applies to any issuer, not just reporting issuers.
3. This is a serious breach of Ontario securities law. When persons disregard the restrictions imposed on them by orders of the Tribunal, this undermines investor confidence and the fairness and efficiency of the capital markets.
The Ontario Securities Commission (the Commission) makes the following allegations of fact:
4. Alli is a resident of Scarborough, Ontario.
5. Alli was a respondent in First Global Data Limited (Re), 2023 ONCMT 25. On June 22, 2023, the Tribunal made the June 2023 Order. Among other things, the June 2023 Order required Alli to resign from any positions he held as a director or officer of any issuer and prohibited him from becoming or acting as a director or officer of any issuer for seven years (D&O Ban).
6. Alli became a director of Man Minerals Inc. (Man Minerals) on August 26, 2011, incorporated in Ontario on the same date. Alli remained a director of Man Minerals after the June 2023 Order.
7. Alli became a director and officer of Mobility Fintech Solutions Inc. (Mobility Fintech) on September 23, 2019, incorporated in Ontario on the same date. Alli remained a director and officer of Mobility Fintech after the June 2023 Order.
8. The two corporations are issuers within the meaning of the Securities Act, R.S.O. 1990, c. S.5 (the Act).
9. Alli has failed to comply with the D&O Ban for over two years.
10. On December 20, 2024, the Commission requested Alli to provide any evidence of his compliance with the D&O Ban.
11. Following the Commission's request, Alli resigned as a director of Man Minerals, but did not resign as director and officer of Mobility Fintech.
The Commission alleges the following breach of Ontario securities law:
12. By remaining a director and/or officer of the two issuers after the June 2023 Order, Alli breached the D&O Ban and acted contrary to the Order and did, thereby, contravene Ontario securities law and section 122(1)(c) of the Act, and it is in the public interest to issue an order pursuant to section 127 of the Act.
13. The Commission requests that the Tribunal make the following orders:
(a) Alli shall resign any positions that he holds as a director or officer of any issuer, pursuant to paragraph 7 of subsection 127(1) of the Act;
(b) Alli is prohibited from becoming or acting as a director or officer of any issuer permanently or for such period as is specified by the Tribunal, pursuant to paragraph 8 of subsection 127(1) of the Act;
(c) Alli shall pay an administrative penalty of not more than $5 million for failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act;
(d) Alli shall disgorge to the Commission any amounts obtained as a result of non-compliance with Ontario securities law, pursuant to paragraph 10 of subsection 127(1) of the Act;
(e) Alli shall pay costs of the Commission's investigation and the hearing, pursuant to section 127.1 of the Act; and
(f) such other order as the Tribunal considers appropriate in the public interest.
October 17, 2025 |
ONTARIO SECURITIES COMMISSION |
20 Queen Street West, 22nd Floor |
|
Toronto, ON M5H 3S8 |
|
|
|
Mark Bailey |
|
Senior Litigation Counsel |
|
Tel: 416-593-8254 |
|
Email: mbailey@osc.gov.on.ca |
|
|
|
Susan Kimani |
|
Litigation Counsel |
|
Tel: 416-263-7717 |
|
Email: skimani@osc.gov.on.ca |
|
FOR IMMEDIATE RELEASE
October 15, 2025
TORONTO -- The Tribunal issued its Reasons and Decision and an Order in the above-named matter.
A copy of the Reasons and Decision and Order both dated October 14, 2025 are available at capitalmarketstribunal.ca.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Ontario Securities Commission and Benjamin Ward
FOR IMMEDIATE RELEASE
October 16, 2025
TORONTO -- The Tribunal issued a Notice of Hearing on October 16, 2025 setting the matter down to be heard on November 4, 2025 at 10:00 a.m. or as soon thereafter as the hearing can be held in the above-named matter.
A copy of the Notice of Hearing dated October 16, 2025 and Application for Enforcement Proceeding dated October 15, 2025 are available at capitalmarketstribunal.ca.
Members of the public may observe the hearing by videoconference, by selecting the "View by Zoom" link on the Tribunal's hearing schedule, at capitalmarketstribunal.ca/en/hearing-schedule.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Ontario Securities Commission and Radhakrishna Namburi
FOR IMMEDIATE RELEASE
October 16, 2025
TORONTO -- The Tribunal issued a Notice of Hearing on October 16, 2025 setting the matter down to be heard on October 29, 2025 at 1:00 p.m. or as soon thereafter as the hearing can be held in the above-named matter.
A copy of the Notice of Hearing dated October 16, 2025 and Application for Enforcement Proceeding dated October 15, 2025 are available at capitalmarketstribunal.ca.
Members of the public may observe the hearing by videoconference, by selecting the "View by Zoom" link on the Tribunal's hearing schedule, at capitalmarketstribunal.ca/en/hearing-schedule.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Ontario Securities Commission and Andre Itwaru
FOR IMMEDIATE RELEASE
October 16, 2025
TORONTO -- The Tribunal issued a Notice of Hearing on October 16, 2025 setting the matter down to be heard on October 30, 2025 at 9:30 a.m. or as soon thereafter as the hearing can be held in the above-named matter.
A copy of the Notice of Hearing dated October 16, 2025 and Application for Enforcement Proceeding dated October 15, 2025 are available at capitalmarketstribunal.ca.
Members of the public may observe the hearing by videoconference, by selecting the "View by Zoom" link on the Tribunal's hearing schedule, at capitalmarketstribunal.ca/en/hearing-schedule.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Ontario Securities Commission and Mitchell Carnie
FOR IMMEDIATE RELEASE
October 16, 2025
TORONTO -- The Tribunal issued a Notice of Hearing on October 16, 2025 setting the matter down to be heard on October 27, 2025 at 10:00 a.m. or as soon thereafter as the hearing can be held in the above-named matter.
A copy of the Notice of Hearing dated October 16, 2025 and Application for Enforcement Proceeding dated October 15, 2025 are available at capitalmarketstribunal.ca.
Members of the public may observe the hearing by videoconference, by selecting the "View by Zoom" link on the Tribunal's hearing schedule, at capitalmarketstribunal.ca/en/hearing-schedule.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Ontario Securities Commission and Maurice Aziz
FOR IMMEDIATE RELEASE
October 17, 2025
TORONTO -- The Tribunal issued a Notice of Hearing on October 17, 2025 setting the matter down to be heard on November 5, 2025 at 2:00 p.m. or as soon thereafter as the hearing can be held in the above-named matter.
A copy of the Notice of Hearing dated October 17, 2025 and Application for Enforcement Proceeding dated October 17, 2025 are available at capitalmarketstribunal.ca.
Members of the public may observe the hearing by videoconference, by selecting the "View by Zoom" link on the Tribunal's hearing schedule, at capitalmarketstribunal.ca/en/hearing-schedule.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Ontario Securities Commission et al.
FOR IMMEDIATE RELEASE
October 20, 2025
TORONTO -- The Tribunal issued its Reasons for Approval of a Settlement in the above-named matter.
A copy of the Reasons for Approval of a Settlement dated October 17, 2025 is available at capitalmarketstribunal.ca.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Ontario Securities Commission and Nayeem Alli
FOR IMMEDIATE RELEASE
October 20, 2025
TORONTO -- The Tribunal issued a Notice of Hearing on October 20, 2025 setting the matter down to be heard on November 4, 2025 at 2:00 p.m. or as soon thereafter as the hearing can be held in the above-named matter.
A copy of the Notice of Hearing dated October 20, 2025 and Application for Enforcement Proceeding dated October 17, 2025 are available at capitalmarketstribunal.ca.
Members of the public may observe the hearing by videoconference, by selecting the "View by Zoom" link on the Tribunal's hearing schedule, at capitalmarketstribunal.ca/en/hearing-schedule.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
Oasis World Trading Inc. et al.
FOR IMMEDIATE RELEASE
October 21, 2025
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated October 21, 2025 is available at capitalmarketstribunal.ca.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
FOR IMMEDIATE RELEASE
October 21, 2025
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated October 21, 2025 is available at capitalmarketstribunal.ca.
Subscribe to notices and other alerts from the Capital Markets Tribunal:
For Media Inquiries:
For General Inquiries:
TeknoScan Systems Inc. -- ss. 127(1), 127.1
File No. 2022-19
Adjudicators: |
Andrea Burke (chair of the panel) |
Cathy Singer |
|
Russell Juriansz |
October 14, 2025
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5)
WHEREAS on July 15, 2025, the Capital Markets Tribunal held a hearing at 20 Queen Street West, Toronto, Ontario, to consider the sanctions and costs that the Tribunal should impose as a result of the findings in the Reasons and Decision on the Merits issued on December 23, 2024;
ON READING the materials filed by the Ontario Securities Commission, TeknoScan Systems Inc., Philip Kai-Hing Kung and Soon Foo (Martin) Tam, and on hearing the submissions of the representatives for each of the Commission, H. Samuel Hyams, TeknoScan and Kung, and Tam appearing on his own behalf;
IT IS ORDERED THAT:
1. pursuant to paragraphs 2 and 2.1 of s. 127(1) of the Securities Act (the Act):
a. TeknoScan, Kung and Tam shall cease trading in or acquiring any securities, permanently; and
b. Hyams shall cease trading in or acquiring any securities, for a period of 20 years;
2. pursuant to paragraph 3 of s. 127(1) of the Act:
a. any exemptions contained in Ontario securities law shall not apply to TeknoScan, Kung and Tam, permanently; and
b. any exemptions contained in Ontario securities law shall not apply to Hyams for a period of 20 years;
3. pursuant to paragraphs 7, 8.1 and 8.3 of s. 127(1) of the Act, Kung, Tam and Hyams shall resign from any positions they hold as directors or officers of any issuer, registrant or investment fund manager;
4. pursuant to paragraphs 8, 8.2 and 8.4 of s. 127(1) of the Act, Kung, Tam and Hyams are prohibited permanently from becoming or acting as directors or officers of any issuer, registrant or investment fund manager;
5. pursuant to paragraph 8.5 of s. 127(1) of the Act, Kung, Tam and Hyams are prohibited permanently from becoming or acting as registrants, investment fund managers or promoters;
6. pursuant to paragraph 9 of s. 127(1) of the Act:
a. TeknoScan shall pay to the Commission an administrative penalty of $150,000;
b. Kung shall pay to the Commission an administrative penalty of $450,000;
c. Tam shall pay to the Commission an administrative penalty of $350,000; and
d. Hyams shall pay to the Commission an administrative penalty of $250,000; and
7. pursuant to s. 127.1 of the Act:
a. TeknoScan shall pay to the Commission $100,000 for the costs of the investigation and proceeding; and
b. Kung, Tam and Hyams shall pay to the Commission $300,000 for the costs of the investigation and proceeding, for which amount they shall be jointly and severally liable.
Oasis World Trading Inc. et al.
File No. 2023-38
Adjudicators: |
Mary Condon (chair of the panel) |
Andrea Burke |
|
Sandra Blake |
October 21, 2025
WHEREAS on October 17, 2025, the Capital Markets Tribunal concluded the evidentiary portion of the merits hearing in this proceeding;
ON HEARING the submissions of the representatives for the Ontario Securities Commission and for the respondents;
IT IS ORDERED THAT:
1. the Commission shall serve and file written closing submissions on the merits by 4:30 p.m. on December 3, 2025;
2. the respondents shall serve and file written closing submissions on the merits by 4:30 p.m. on January 9, 2026;
3. the Commission shall serve and file written reply submissions, if any, by 4:30 p.m. on January 19, 2026; and
4. oral closing submissions on the merits shall be heard on January 23, 2026, at 10:00 am, at the Capital Markets Tribunal located at 20 Queen Street West, 17th Floor, Toronto, Ontario, or as may be agreed to by the parties and set by the Governance & Tribunal Secretariat.
Harry Stinson et al. -- s. 144.1
BETWEEN:
File No. 2025-13
Adjudicators: |
Russell Juriansz (chair of the panel) |
Jane Waechter |
|
M. Cecilia Williams |
October 21, 2025
(Section 144.1 of the Securities Act, RSO 1990, c S.5)
WHEREAS on October 21, 2025, the Capital Markets Tribunal held a hearing at 20 Queen Street West, 17th Floor, Toronto, Ontario, regarding the application brought by Harry Stinson and Buffalo Grand Hotel Inc. (Applicants) for an order varying the Tribunal's order issued on December 15, 2023, in file number 2022-3;
ON READING the materials filed by the parties and on hearing the submissions of the representatives for the Applicants and for the Ontario Securities Commission, no one appearing on behalf of Stinson Hospitality Management Inc., Stinson Hospitality Corp., Restoration Funding Corporation, Buffalo Central LLC, and Stephen Kelley, and on hearing the submissions of the intervenors Simon Parry and Henry Wemekamp;
IT IS ORDERED, for reasons to follow, that the application to vary the order is dismissed.
TeknoScan Systems Inc. et al. -- ss. 127(1), 127.1
Citation: TeknoScan Systems Inc (Re), 2025 ONCMT 12
Date: 2025-10-14
File No. 2022-19
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5)
Adjudicators: |
Andrea Burke (chair of the panel) |
|
Cathy Singer |
||
Russell Juriansz |
||
|
||
Hearing: |
July 15, 2025 |
|
|
||
Appearances: |
Hanchu Chen |
For the Ontario Securities Commission |
|
||
Matthew Sokolsky |
For H. Samuel Hyams |
|
|
||
Andrew Max |
For Philip Kai-Hing Kung |
|
|
||
Sunil Joseph |
For TeknoScan Systems Inc. |
|
|
||
Soon Foo (Martin) Tam |
On his own behalf |
|
[1] These are the reasons for the sanctions we impose on TeknoScan Systems Inc., and three of its officers and directors, H. Samuel Hyams, Phillip Kai-Hing Kung and Soon Foo (Martin) Tam (the Individual respondents). We permanently restrict TeknoScan, Kung and Tam from participating in the capital markets and restrict Hyams from participating for 20 years. We impose permanent director and officer bans against all of the Individual respondents. We impose administrative penalties of $150,000 against TeknoScan, $450,000 against Kung, $350,000 against Tam and $250,000 against Hyams. We grant the Commission $400,000 in costs and disbursements, with $100,000 payable by TeknoScan and $300,000 by the Individual respondents, jointly and severally.
[2] In its decision on the merits released on December 23, 2024 (the Merits Decision),{1} the Tribunal found that the respondents perpetrated securities fraud contrary to s. 126.1(1)(b) of the Securities Act (the Act){2}. The finding followed 19 days of evidence.
[3] The respondents carried out the fraud by sending a notice (the Notice) to shareholders advising them that TeknoScan was negotiating with a strategic investor to purchase approximately 50% of its common shares at an attractive valuation (Share Purchase Transaction). The Notice advised preferred shareholders that they could participate in the Share Purchase Transaction by converting all of their preferred shares into common shares on a 1:1 basis by no later than January 31, 2017, regardless of when or if the transaction was completed.
[4] The Tribunal found that the Individual respondents and the TeknoScan Board knew that the Share Purchase Transaction was uncertain. They prepared and approved the Notice, knowing that it omitted key facts. The Notice failed to disclose that funding for the Share Purchase Transaction was uncertain as it depended on contrived and unconventional third-party funding arrangements, and it was non-arm's length. The omitted information was fundamental and essential to the purchaser's ability to close the Share Purchase Transaction and for preferred shareholders to understand the risks of it not closing. By omitting this information, the Notice conveyed the false impression that funding for the Share Purchase Transaction, which would be transformative and lucrative for shareholders, was secure. Relying on the Notice, 92.3% of preferred shareholders converted their shares into common shares, thereby forfeiting redemption, dividend and royalty rights attached to their preferred shares.
[5] The Tribunal also decided that TeknoScan, contrary to s. 126.2(1) of the Act, made a materially misleading statement to shareholders (in the form of the Notice) that would reasonably be expected to have a significant effect on the value of its common shares. The three Individual respondents authorized, permitted and acquiesced in that statement and were deemed liable for TeknoScan's breach under s. 129.2 of the Act.
[6] The Tribunal found the Commission failed to establish its allegations that the Individual respondents made a materially misleading statement to shareholders and that Kung and Hyams made misleading statements to the Commission during its investigation.
[7] The Commission seeks an order that Kung, Tam, and TeknoScan be subject to permanent trading, acquisition and exemption bans, and that Hyams be subject to 20-year bans in respect of the same conduct. It also seeks orders permanently prohibiting the Individual respondents from becoming or acting as directors and officers, registrants, investment fund managers and promoters. The Commission requests that the Tribunal also order administrative penalties of $600,000 against TeknoScan jointly and severally with the Individual respondents, and additional individual administrative penalties of $1 million against Kung, $900,000 against Tam, and $600,000 against Hyams. Finally, the Commission seeks costs and disbursements of $572,948.75 payable by all the respondents jointly and severally.
[8] TeknoScan asks that it be permitted to trade in securities, rely on exemptions under securities laws, and avoid financial sanctions. It submits this is necessary for it to continue as a going concern for the benefit of its shareholders and other stakeholders and to meet its obligations. TeknoScan also wants to be able to continue with at least two of its three existing directors, who are Kung, Tam and Mr. Sunil Joseph.
[9] Hyams submits that the administrative penalty imposed on him should not exceed $100,000 and he should not be prohibited from acting as a director or officer for more than six months.
[10] Kung and Tam both addressed the Tribunal personally at the sanctions hearing. Their oral submissions, as well as much of their written submissions, sought to explain why the Merits Decision was mistaken. Counsel from the Litigation Assistance Program (LAP) appeared for Kung and submits that the penalties sought by the Commission are not appropriately restrained. He urges us to consider the cumulative effect of all the penalties imposed and points out that several of the aggravating facts the Commission seeks to rely upon were not established before the Merits panel. Neither Kung nor Tam made any submissions about what specific sanctions should be ordered, although Kung asks that he be permitted to continue as a director of TeknoScan.
[11] The Merits Decision and its findings are binding for purposes of the sanctions stage of an enforcement proceeding. We must disregard Kung's and Tam's submissions inviting us to revisit those findings. We did not take into account what the Commission alleged was aggravating conduct about which the Merits Decision made no specific findings.
[12] The Tribunal imposes sanctions in the public interest under s. 127(1) of the Act. In doing so, we must keep in mind the purposes of the Act. These include protecting investors from unfair, improper and fraudulent practices, and fostering fair and efficient capital markets and confidence in them.{3}
[13] Specific and general deterrence are central to the imposition of sanctions under the Act. Specific deterrence ensures that the respondents themselves are dissuaded from engaging in future misconduct by making clear to them that violations carry meaningful consequences. General deterrence is also "an appropriate and perhaps necessary consideration", as the Supreme Court of Canada explained in Cartaway Resources Corp (Re){4}. General deterrence serves the broader protective function by using the sanctioning of one offender to discourage all market participants from engaging in similar misconduct. Both specific and general deterrence are essential to maintaining fair and efficient capital markets, promoting investor confidence, and protecting the public from harm.
[14] Sanctions such as bans on market participation and serving as directors or officers remove individuals from the capital markets who have demonstrated a disregard for the law. Such bans prevent such individuals from placing investors at further risk and are predicated on the concept that market participation is a privilege, and not a right.{5}
[15] As the Tribunal's jurisprudence repeatedly affirms, sanctions under the Act are protective and preventative, not punitive.{6}
[16] Sanctions must be proportionate to the respondents' misconduct in the circumstances. The cumulative effect of multiple sanctions for each respondent must also be fair and proportionate.{7}
[17] A list of the factors that the Tribunal may consider in deciding what sanctions are appropriate is well-established:
a. the seriousness of the misconduct;
b. level of activity in the marketplace, or the size of the contravention;
c. whether the misconduct was isolated or recurrent;
d. the respondents' experience in the marketplace;
e. whether the respondents benefitted or profited from the misconduct;
f. any mitigating factors; and
g. the likely effect that any sanction would have on the respondent and others.{8}
[18] This list is not closed, and the relevance and weight of any factor depends on the circumstances of the case. We address the factors applicable to determining the appropriate sanctions below.
[19] In perpetrating a fraud, the respondents have committed "the most egregious violation of securities law."{9} While all frauds fall in the egregious category of securities law, they vary in severity, and it is necessary to assess where on that spectrum the respondents' misconduct falls.
[20] While not minimizing the respondents' misconduct, we find that their fraud is not the most egregious kind; this is not a case, for example, of misappropriating the life savings of unsophisticated investors.
[21] The Merits panel dismissed the Commission's allegation that the respondents knew and believed that the third-party funding for the Share Purchase Transaction was implausible and nonsensical at the time of the Notice. To the contrary, the Merits Decision found that the respondents subjectively believed in the funding. However, the Merits Decision found unequivocally that the respondents knew that the Share Purchase Transaction was uncertain and that the third-party funding might not materialize. Their fraud consisted of sending shareholders a Notice that failed to indicate that uncertainty and instead conveyed that the funding was not an issue. The fraud would be more severe if the Share Purchase Transaction had been a complete sham.
[22] That said, the fraud remains serious and warrants meaningful sanctions to protect the integrity of the capital markets. Investors must be protected from those who make fraudulent disclosure to investors that omits important information they are entitled to receive, even where those making the fraudulent disclosure may hope that an investment will succeed and investors will not suffer deprivation.
[23] The Commission urged us to find the respondents' fraud caused "significant financial and emotional harm." The Commission introduced a survey of TeknoScan's preferred shareholders in addition to the testimony of four investors at the Merits hearing to prove this. The survey received only 18 substantive responses including four from the investors who testified at the Merits hearing. One survey respondent and witness at the Merits hearing, N.B., was aware of the facts omitted from the Notice prior to converting his preferred shares. Some surveys were from investors who declined to convert their preferred shares or had no intention of exercising redemption rights. Other survey respondents were not aware of a redemption right or did not have any redemption rights attached to their shares. On our reading, this evidence did not focus on the conversion of preferred shares and its related impact. Instead, these investors focused on their overall losses in TeknoScan. They emphasized the failure to receive any return of capital or return on investment without regard to holding preferred or common shares. The Commission did not establish to our satisfaction either through the surveys or investor testimony that the respondents' misconduct caused "significant financial and emotional harm" to investors.
[24] On the other hand, we accept that the respondents' conduct did erode confidence in the integrity of the capital markets and deprived investors of information important to their decision-making. This is a serious consequence. We attached no weight to the investor surveys filed by TeknoScan, Kung and Tam. They did not establish that preferred shareholders were aware of the information that the respondents omitted from the Notice.
[25] In December 2016, 108 investors held some 39.8 million TeknoScan preferred shares.{10} Approximately 20 million of those shares had redemption rights attached.{11} All of those shares had rights to a 6% cumulative dividend paid annually.{12} Shareholders, who held 33.7 million preferred shares, converted their preferred shares to common shares after receiving the Notice about the Share Purchase Transaction.{13} Ninety-three of the shareholders who converted their preferred shares were unrelated to the Individual respondents.
[26] The number of victims of the respondents' fraud is significant.
[27] We did not find persuasive the Commission's attempt to calculate the potential losses to preferred shareholders arising from the fraud. The Merits Decision found that the value of the forfeited redemption rights could not be established due to liquidity issues and lack of revenues. We are not satisfied with the Commission's attempt at the sanctions stage to now value the forfeited redemption rights at "at least" US $5.155 million. The Commission's approach to valuing the forfeited redemption rights does not overcome the liquidity issues and lack of revenues identified in the Merits Decision. We accept that the respondents' misconduct caused losses but proceed on the basis that those losses have not been quantified.
[28] The Commission contends the respondents' fraudulent conduct was recurrent, as the planning and work towards the Share Purchase Transaction spanned several years. The Commission also cites the respondents' sustained representations to investors, such as consistently promoting a $20 target share price for TeknoScan, as alleged recurrent misconduct. Furthermore, the respondents withheld the funding uncertainty and the transaction's non-arm's-length nature from their lawyers. The Commission says they deliberately ignored their lawyers' advice to establish a closing date, and this allowed them "to string along their shareholders". The Commission also cites TeknoScan's reports to shareholders about the funding delays and raising further funds from shareholders after the Notice was issued as further recurrent fraudulent conduct.
[29] We view things differently. There is a distinction between the duration of a respondents' preparation to commit a single fraud and the execution of multiple frauds. In this case the respondents committed fraud by sending the investors a misleading Notice and associated email. That occurred one time on December 14, 2016. While they may have planned and worked towards the Share Purchase Transaction over time, the Merits Decision finding of misconduct rests solely on this one communication. There was no finding of any other fraud. The respondents' other activities cited by the Commission were not part of the allegations made by the Commission and no finding of related misconduct was made in the Merits Decision.
[30] The Commission also relies on the Merits Decision's findings that each of the respondents breached two provisions of the Act. However, because the very same wrongdoing underlies both the fraud and misrepresentation findings (and related s. 129.2 deemed liability), we decline to consider the multiple breaches as an aggravating factor in setting sanctions.
[31] We are satisfied that the Individual respondents' experience in the marketplace is significant.
[32] Hyams has a Master of Business Administration degree and was previously a chartered accountant. Prior to joining TeknoScan, he founded and worked for two and a half years at a startup.
[33] Kung has a degree in Commerce, is a professional accountant and was a Chartered Financial Analyst charter holder. He completed several courses offered by the Canadian Securities Institute. He also previously sold mutual funds at Altamira Investment Services and was a Commission registrant. He claims to have learned the importance of rules and regulations in the area of investment and finance and to understand the importance of investors having information to make informed decisions.
[34] Tam completed Levels I and II of the Chartered Financial Analyst designation. He worked with Royal Bank of Canada in various capacities, including as a licensed investment representative and department manager. He co-founded and worked at 3i Financial Group. That involved establishing a Managing General Agency that was licensed with Equitable Life. He also launched 3i Financial Investment Services Inc., which was licensed under the Mutual Fund Dealers Association. He completed several industry courses through the Canadian Securities Institute, including the Partners, Directors, and Officers course, and was the Ultimate Designated Person and Chief Compliance Officer at 3i Financial, during which time he was a Commission registrant.
[35] Hyams and Kung founded TeknoScan in 2008. Since then, Hyams was TeknoScan's Chief Executive Officer, President and director. Kung was a director, Chief Financial Officer, Executive Vice President and Treasurer. Tam joined the company in 2011 as a director and became chairman of the Board in 2013.
[36] Kung and Tam, to a greater extent than Hyams, were responsible for raising funds for TeknoScan from investors.
[37] Given the Individual respondents' experience in the marketplace, we are satisfied that they appreciated full well that candid disclosure is essential to ensure that investors have accurate, timely, and complete information needed to make informed investment decisions.
[38] Although the fraud did not directly place investor funds into the respondents' pockets, the Commission submits that the respondents benefitted from their misconduct in three ways. First, TeknoScan avoided the potential liability of up to US $58 million to honour the preferred share redemption rights. Second, the Individual respondents (as common shareholders of TeknoScan) benefitted from the company avoiding this potential liability. Third, the Individual respondents benefitted because TeknoScan, having avoided these obligations, retained the funds used to pay their salaries and bonuses in the 18 months after the Notice.
[39] We are not persuaded the record supports a finding the respondents personally profited from their misconduct. We find the argument about the avoidance of a potential balance sheet liability to be too remote and hypothetical. Although some investors who responded to the Commission's investor survey did indicate that they "would have" exercised or "intended to" exercise the redemption rights attached to their preferred shares, this was in hindsight with no indication as to timing. The Commission did not establish when these investors' redemption rights crystallized and could have been exercised or would have been exercised. We are not satisfied that the Commission established a causal link between the fraud and the salaries and bonuses received by the Individual respondents.
[40] The respondents have no history of prior misconduct. While this is a mitigating factor for all of the respondents, for Kung and Tam it is diminished by their lack of recognition of the seriousness of their misconduct.
[41] Kung's and Tam's positions are that the Merits Decision was mistaken. After electing not to testify at the Merits hearing, they now seek improperly to proffer evidence to show the Merits Decision was mistaken. Although Tam states that he has remorse, he couched his language in a way that belies this. He said, "if we did harm them, we are truly sorry". Similarly, Kung stated that "it's really unfortunate" that the Notice went out and did not meet the Commission's standards. We find that both Kung and Tam entirely fail to appreciate the seriousness of their misconduct or to accept responsibility for it.
[42] On the other hand, Hyams satisfied us that he accepts responsibility for his misconduct and is remorseful, both personally and on behalf of the company. Unlike Kung and Tam, Hyams does not challenge the Merits Decision. We consider this in determining his sanctions.
[43] LAP counsel for Kung stresses that there is no evidence of a positive belief by the respondents that the Share Purchase Transaction would not occur. We do not accept this as mitigating. The Merits Decision found they knew full well that the Share Purchase Transaction was uncertain when they issued the Notice. That they did not know that the Share Purchase Transaction would not close does not excuse compliance with the duty to provide investors with accurate, timely, and complete information.
[44] We recognize that the sanctions the Commission seeks would likely have profound consequences for the Individual respondents, as well as for TeknoScan and its shareholders. The requested sanctions are intended to have both a specific and general deterrent effect.
[45] As outlined above, TeknoScan's representative pleads for leniency and asks that no sanctions be ordered against the company. The representative explained that a revenue stream is expected from the company's recent sale of its intellectual property to its global partner, Annika Sterilis. As well, TeknoScan holds shares in its global partner and may want to sell them after the global partner's initial public offering (IPO) at some unspecified future date. These developments could generate funds for shareholders and debtholders. The company may also want to be able to buy back its shares from shareholders. The TeknoScan representative claimed the company needs to continue with at least two of its present directors "so that we can follow the path we have taken since 2008". He submits TeknoScan should not be subject to any financial sanctions and should be permitted to avail itself of exemptions under securities law to continue as a going concern and be permitted to trade securities to "meet its obligations" to debtholders and shareholders.
[46] Kung and Tam both submit that their continued oversight as directors is necessary to TeknoScan's future success. TeknoScan itself asks that at least two of its current three directors (Kung, Tam and Joseph) be permitted to continue in their role.
[47] TeknoScan's submissions and evidence are too hypothetical, vague and insufficiently detailed to justify not ordering the requested bans against the company. The potential for future share transactions after a hypothetical IPO or future share buybacks is too speculative to justify TeknoScan's request. The company's governance plans, specifically its desire to retain Kung and/or Tam as directors, raise additional concerns. Nothing in this decision prevents TeknoScan from making a future application for a variation of the sanctions we impose.
[48] However, we do accept that the burden of the financial sanctions we impose on TeknoScan will ultimately impact its shareholders. The shareholders are innocent of the misconduct and they are the victims of it. We keep this in mind as we tailor the appropriate sanctions in this case.
[49] Hyams also asks for leniency. He submits that he is 70 years old and starting from scratch. He has been ousted from TeknoScan and has suffered great loss. He submits that he has no funds and is unable to pay the financial penalties the Commission seeks. He also submits that he needs the ability to earn a livelihood as an entrepreneur and the only thing he knows is to create a business. If he is not allowed to be a director or officer, he submits that he will be unable to make a living. He submits that any ban prohibiting him from acting as a director or officer be limited to six months and that his share of administrative penalties should not exceed $100,000.
[50] While this Tribunal may consider a respondent's inability to pay when imposing financial sanctions, unsupported assertions of impecuniosity are insufficient to meet the high evidentiary burden required.{14} In this case, Hyams filed no evidence to support his inability to pay, nor for his claim that he needs an extremely limited director and officer ban to make a living. Granting his requests for reduced sanctions without a proper evidentiary basis would undermine the fundamental objectives of sanctioning.
[51] As mentioned, Kung and Tam seek to continue in their present roles as directors of the company. Neither Kung nor Tam proposes specific alternatives to the other sanctions the Commission seeks.
[52] We note that sanctions under the Act may have severe consequences for the Individual respondents. However, the protection of the investing public and the preservation of confidence in the capital markets must prevail over the hardship imposed on wrongdoers. The broader public interest requires that sanctions act as an effective deterrent, ensuring that others are discouraged from similar misconduct. The regulatory regime prioritizes safeguarding the public over the private consequences to respondents.
[53] The Commission submits that the administrative penalties we order against the Individual respondents should distinguish between Kung, Tam and Hyams in a manner that reflects that Kung has the greatest level of culpability, then Tam, and then Hyams. The Commission submits that distinctions should be drawn on the basis that Kung and Tam had greater roles in advancing the Share Purchase Transaction, they were both Commission registrants, they received the bulk of the benefits that flowed from the conversion of preferred shares in the form of salaries and bonuses, and their misconduct was heightened by their interactions with the purchaser, Dan Davison, who they knew to be vulnerable.
[54] Determining an appropriate administrative penalty is not a science. As a starting point, we find that the administrative penalties requested by the Commission are excessive and disproportionate to the misconduct in this case, and while we agree that we ought to distinguish between the Individual respondents, we are not prepared to do so to the Commission's extent or for all its reasons.
[55] We have already stated we do not accept the Commission's submission that the respondents were personally enriched by their misconduct. We also do not accept that the Individual respondents' different roles in the Share Purchase Transaction is a distinguishing factor. The misconduct was not the Transaction itself, but the fraudulent disclosure about it in the Notice. We do consider that only Kung knew that the Share Purchase Transaction was non-arm's length.{15} We note that although Hyams was the CEO of TeknoScan, unlike Kung and Tam he was not previously a Commission registrant. We also note that both Kung and Tam have not taken responsibility for their misconduct, whereas Hyams has. Moreover, Kung and Tam have actively challenged and sought to revisit the Merits Decision findings.
[56] The Commission seeks a joint and several administrative penalty of $600,000 against TeknoScan and the Individual respondents to prevent sanctions from becoming unduly onerous for the company and adversely affecting its shareholders. We agree that the administrative penalty against TeknoScan should not unduly affect the shareholders. However, we are not persuaded there is good reason to make any of the administrative penalties joint and several.
[57] The factors discussed in these reasons, as well as the sanctions imposed in the cases cited to us,{16} which are helpful but not determinative, inform the quantum of administrative penalties we impose. We will order administrative penalties of $150,000 against TeknoScan, $450,000 against Kung, $350,000 against Tam and $250,000 against Hyams. We believe that these penalties, together with the market participation bans discussed below, achieve both specific and general deterrence. It is not necessary or in the public interest to impose administrative penalties at the high end of the spectrum. These amounts reflect the respondents' differing culpability, the other factors that distinguish the Individual respondents, and the potential impact on TeknoScan's shareholders.
[58] It must be remembered that participation in Ontario's capital markets is not a right. It is a privilege that is appropriately removed when individuals engage in conduct that breaches the Act and causes damage to investors and to the integrity of the capital markets. We repeat that the broader public interest requires that sanctions act as an effective deterrent to ensure that others are discouraged from similar misconduct.
[59] We will order the director and officer bans and the other market participation bans that the Commission has sought.
[60] The Commission seeks total costs and disbursements of $572,948.75 payable jointly and severally by the respondents. The Commission arrives at this figure after eliminating duplication arising from Commission staffing changes. The Commission's affidavit supporting its costs claim does not indicate that a reduction was made to reflect the dismissal of the Commission's s. 122 allegations against Kung and Hyams and its s. 126.2(1) allegations against the Individual respondents. We have reduced costs further because the Commission failed to establish these allegations. We have also reduced costs to reflect that the Merits panel declined to make numerous factual findings that the Commission urged the panel to make as part of the Commission's fraud and misrepresentation allegations.
[61] In light of these matters, we find a total of $400,000 is an appropriate award for the Commission's costs and disbursements. Due to our concern for the financial impact on TeknoScan's shareholders, we order that $100,000 of this amount is payable by TeknoScan, and the remaining $300,000 payable jointly and severally by the Individual respondents.
[62] For the above reasons, we order that:
a. pursuant to paragraphs 2 and 2.1 of s. 127(1) of the Act:
i. TeknoScan, Kung and Tam shall cease trading in or acquiring any securities, permanently; and
ii. Hyams shall cease trading in or acquiring any securities, for a period of 20 years;
b. pursuant to paragraph 3 of s. 127(1) of the Act:
i. any exemptions contained in Ontario securities law shall not apply to Kung, Tam and TeknoScan, permanently; and
ii. any exemptions contained in Ontario securities law shall not apply to Hyams for a period of 20 years;
c. pursuant to paragraphs 7, 8.1 and 8.3 of s. 127(1) of the Act, Kung, Tam and Hyams shall resign from any positions they hold as directors or officers of any issuer, registrant or investment fund manager;
d. pursuant to paragraphs 8, 8.2 and 8.4 of s. 127(1) of the Act, Kung, Tam and Hyams are prohibited permanently from becoming or acting as directors or officers of any issuer, registrant or investment fund manager;
e. pursuant to paragraph 8.5 of s. 127(1) of the Act, Kung, Tam and Hyams are prohibited permanently from becoming or acting as registrants, investment fund managers or promoters;
f. pursuant to paragraph 9 of s. 127(1) of the Act:
i. TeknoScan shall pay to the Commission an administrative penalty of $150,000;
ii. Kung shall pay to the Commission an administrative penalty of $450,000;
iii. Tam shall pay to the Commission an administrative penalty of $350,000; and
iv. Hyams shall pay to the Commission an administrative penalty of $250,000; and
g. pursuant to s. 127.1 of the Act:
i. TeknoScan shall pay to the Commission $100,000 for the costs of the investigation and proceeding; and
ii. Kung, Tam and Hyams shall pay to the Commission $300,000 for the costs of the investigation and proceeding, for which amount they shall be jointly and severally liable.
Dated at Toronto this 14th day of October, 2025
{1} TeknoScan Systems Inc (Re), 2024 ONCMT 32
{2} RSO 1990, c S.5 (Act)
{3} Act, s 1.1
{4} 2004 SCC 26 at para 60
{5} Polo Digital Assets (Re), 2022 ONCMT 32 at para 135
{6} Committee for the Equal Treatment of Asbestos Minority Shareholders v Ontario (Securities Commission), 2001 SCC 37 at para 42
{7} Mughal Asset Management Corporation (Re), 2024 ONCMT 14 (Mughal) at para 137
{8} Mughal at para 33
{9} Feng (Re), 2023 ONCMT 43 (Feng) at para 11
{10} Merits Decision at para 12
{11} Merits Decision at para 14
{12} Merits Decision at para 13
{13} Merits Decision at para 20
{14} Solar Income Fund Inc (Re), 2023 ONCMT 3 (Solar Income Fund) at paras 70, 76-79, 80-85; Paramount Equity Financial Corporation (Re), 2023 ONCMT 20 (Paramount) at para 94; First Global Data Ltd (Re), 2023 ONCMT 25 at paras 183-191
{15} Merits Decision at para 196
{16} Solar Income Fund at paras 112-125; Rezwealth Financial Services Inc (Re), 2014 ONSEC 18 at paras 107-109; Maple Leaf Investment Fund Corp (Re), 2012 ONSEC 8 at paras 38-44; 2196768 Ontario Ltd (Rare Investments) (Re), 2015 ONSEC 9 at paras 54-59; Phillips (Re), 2015 ONSEC 36 at paras 58-69; Feng at paras 75-81; Paramount at paras 113-115
Ontario Securities Commission et al. -- ss. 127(1), 127.1
Citation: Ontario Securities Commission v. Huynh, 2025 ONCMT 13
Date: 2025-10-17
File No. 2025-16
BETWEEN:
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5)
Adjudicators: |
James Douglas (chair of the panel) |
|
Cathy Singer |
||
Jane Waechter |
||
|
||
Hearing: |
By videoconference, September 26, 2025 |
|
|
||
Appearances: |
Sakina Babwani |
For the Ontario Securities Commission |
Adam Gotfried |
||
|
||
Clarke Tedesco |
For Huy Le Huynh |
|
|
||
Michael Byers |
For Thi Anh Nguyet Pham |
|
[1] The Ontario Securities Commission alleges that Huy Le Huynh, while a VP of Finance at Score Media & Gaming Inc., engaged in illegal insider trading and tipping, contrary to subsections 76(1) and 76(2) of the Securities Act{1} (the Act); and that Huynh's wife, Thi Anh Nguyet Pham, engaged in conduct contrary to the public interest, in contravention of subsection 127(1) of the Act, in connection with the role she played in relation to Huynh's breaches of Ontario securities law.
[2] The Commission and the respondents agreed to resolve these allegations and sought approval of their settlement agreement. For the reasons that follow, we approved the agreement and ordered the sanctions and costs agreed to by the parties.
[3] Huynh and Pham are husband and wife. Both are Chartered Professional Accountants. At all material times, Huynh was employed as a VP of Finance at Score, a digital media sports company based in Toronto, Ontario. Score was publicly listed on the TSX and Nasdaq exchanges. At all material times, Pham was employed by a Canadian telecom company and was on leave beginning in February 2021.
[4] On or before July 3, 2021, Huynh learned in the course of his employment that Score would be acquired by Penn National Gaming Inc. This acquisition was material for Score and was not generally disclosed to the public until the morning of August 5, 2021. Huynh told Pham about the acquisition before it was generally disclosed to the public.
[5] Huynh knew that neither he nor Pham could purchase or sell Score securities pending public disclosure of the acquisition. Nevertheless, in order to profit from his knowledge of the transaction, he enlisted Pham's friend, Jessica Tam, as an intermediary to purchase Score securities through her TFSA. Pham was generally aware of this plan.
[6] Huynh instructed Tam to purchase Score call options in July and August of 2021. Following the public announcement on August 5, 2021, of the acquisition by Penn, Huynh told Tam to sell the options. They were sold the next day for US$318,800, realizing a profit on the trades of US$311,848.
[7] Huynh instructed Tam to pay him his share of the profits slowly and in cash. Tam communicated with Huynh and Pham via WhatsApp to arrange delivery of the cash and used codewords over instant messaging to arrange payments.
[8] On December 12, 2021, Huynh and Pham met with Tam in person where Huynh gave Tam written instructions to use part of his share of the profit remaining in Tam's TFSA towards purchasing other securities. Tam was instructed by Huynh to delete his contact information and he gave her the name of a lawyer if anyone asked questions about the Score trades.
[9] Huynh and Pham received a total of $270,000 of the illicit profits earned from the trading in Score call options described above.
[10] The Commission and the respondents jointly proposed the following terms of settlement:
a. with respect to Huynh:
i. with the exceptions as set out in the order, Huynh will be subject to a 7-year restriction on his ability to trade in any securities or derivatives, and to acquire securities;
ii. any exemptions contained in Ontario securities law shall not apply to Huynh for 7 years;
iii. Huynh shall immediately resign any position that he holds as a director or officer of an issuer or of a registrant;
iv. Huynh shall be prohibited from becoming or acting as a director or officer of any issuer and of any registrant for a period of 7 years;
v. Huynh shall pay an administrative penalty of $325,000, shall disgorge to the Commission $270,000, and shall pay to the Commission costs of the investigation of $40,000;
b. with respect to Pham:
i. with the exceptions as set out in the order, Pham will be subject to a 3-year restriction on her ability to trade in any securities or derivatives, and to acquire securities;
ii. any exemptions contained in Ontario securities law shall not apply to Pham for 3 years;
iii. Pham shall be prohibited from becoming or acting as a director or officer of any reporting issuer and of any registrant for a period of 3 years;
iv. Pham shall pay to the Commission costs of the investigation of $10,000.
[11] In approving the settlement, we took into account certain well-recognized sanctioning factors. First, the seriousness, particularly of Huynh's conduct, is manifest. He is a professional accountant who was working in a senior financial role at a reporting issuer. His breaches of Ontario securities law were planned and deliberate. He took steps to hide his illicit actions and then to cover them up. Huynh's conduct was highly egregious and deserving of the Tribunal's heightened disapprobation.
[12] Secondly, illegal insider trading and tipping have long been recognized as among the most serious breaches of Ontario securities law.{2} Sanctions in this case must serve the needs of both specific and general deterrence. Not only should Huynh and Pham be prohibited from profiting from their actions but the sanctions, both financial and otherwise, need to be sufficiently severe to deter them from engaging in similar conduct in the future. Similarly, the sanctions need to be sufficiently severe to deter others from considering or engaging in similar conduct in the future.
[13] The respondents cooperated during the Commission's investigation and have accepted full responsibility for their conduct. We took these mitigating factors into account when approving the settlement.
[14] Had the allegations in the Application for Enforcement Proceeding been proven at a merits hearing, the factors referred to above may well have led us to order more severe sanctions, particularly as against Huynh. However, we recognize that it is not our role when approving a settlement to substitute our views of the appropriate sanctions for the terms negotiated and agreed upon by the parties. Settlements of enforcement proceedings play an important role in the securities regulatory process. They save costs, contribute to efficiency and lend certainty. These salutary benefits of settlements are consistent with the purposes of the Act and the principles that guide those purposes.{3}
[15] When considering whether to approve a settlement agreement in the context of an enforcement proceeding, we must be satisfied that the terms proposed are in the public interest. We recognize that, in most instances, there will be a range of reasonable outcomes that are consistent with the public interest. Provided that the proposed terms fall within that range, the Tribunal will ordinarily approve the parties' agreement.
[16] We found that the proposed settlement in this proceeding was reasonable and in the public interest. An order was issued on September 26, 2025, substantially in the form of the draft attached to the settlement agreement.
Dated at Toronto this 17th day of October, 2025
{1} RSO 1990, c S.5
{2} Kraft (Re), 2024 ONCMT 16 at para 27
{3} Act, ss 1.1, 2.1
OSC Staff Notice 33-760 -- Digital Engagement Practices: Focused Compliance Examination of Online Retail Platforms
Staff of the Ontario Securities Commission (OSC) conducted a targeted compliance examination (the Sweep) focused on the use of digital engagement practices (DEPs) by registered dealers and advisers, as well as certain crypto asset trading platforms (CTPs) that were operating under a pre-registration activities undertaking (referred to as registrants or firms),{1} for which the OSC is the principal regulator. This Notice summarizes the findings from our Sweep and offers guidance to registrants who use DEPs in their marketing or other client interactions, outlining how these practices may interact with their obligations under securities legislation.
This Notice builds upon CSA Staff Notice 31-325 Marketing Practices of Portfolio Managers and Joint CSA-IIROC Staff Notice 21-330 Guidance for Crypto-Trading Platforms: Requirements relating to Advertising, Marketing and Social Media Use (collectively, the previous marketing guidance). In the previous marketing guidance, staff raised concerns about misleading or false statements in advertising and marketing materials, as well as the use of "gambling-style" promotions -- such as contests, bonuses, and time-limited offers -- that may improperly encourage retail investors to trade more frequently, taking on risks they would normally avoid. The previous marketing guidance emphasized that depending on the circumstances, such practices may be inconsistent with a registrant's obligations to its clients, including the duty to deal fairly, honestly and in good faith with their clients.
The Sweep also follows the release of research reports published by the OSC's Investor Office -- namely, OSC Staff Notice 11-796 Digital Engagement Practices in Retail Investing: Gamification and Other Behavioural Techniques, Digital Engagement Practices: Dark Patterns in Retail Investing and Gamification Revisited: New Experimental Findings in Retail Investing (collectively, the OSC research reports) -- which explored the impact of gamification, dark patterns, and other behavioural techniques on retail investor behaviour in online environments. The findings indicated that DEPs could have a significant influence on investor decision-making.
Given the outcomes identified in the OSC research reports and previous marketing guidance, in addition to observed market trends and investors' experiences, OSC staff conducted the Sweep with the following objectives:
• to gain a greater understanding of what kinds of DEPs are being used by registrants and how the DEPs are being used;
• to assess registrants' compliance with applicable securities law requirements in employing each of the DEPs; and
• to engage in constructive dialogue with the registrants to enhance compliance, particularly where concerns were identified.
DEPs are defined as tools that include behavioural techniques, differential marketing, gamification, design elements, or design features that intentionally or unintentionally engage with retail investors on digital platforms. During the Sweep, staff observed a range of both positive and concerning uses of DEPs.
When thoughtfully designed and implemented, DEPs can yield positive outcomes for clients, including enhancing investor understanding, encouraging engagement, and supporting long-term financial outcomes. Positive examples of DEPs observed by staff included:
• helping clients track savings goals and monitoring investment contributions;
• delivering educational nudges and alerts to promote account security; and
• encouraging long-term investing behaviour in the clients' best interests.
Staff also observed instances where registrants employed overly promotional or unsubstantiated language in push notifications, rewards programs, contests, and other user interface features to prompt clients to trade more, which would result in clients taking on additional risks and paying fees for trades they would not have engaged in if not for the DEPs. Specific examples of these practices are discussed under the section "Types of DEPs Observed" below.
During the Sweep, Staff identified additional concerns relating to:
• omission or concealment of material information about pricing and applicable charges;
• exaggerated or unsubstantiated claims about the registrant or an asset that is traded on the registrant's platform; and
• deficient policies and procedures related to the use of DEPs and insufficient controls and supervision over the use of DEPs.
These issues raise significant concerns about registrants' compliance with securities laws when utilizing DEPs including compliance with:
• general conduct obligations (s. 2.1 of OSC Rule 31-505 Conditions of Registration (OSC Rule 31-505)),
• conflicts of interest obligations (s. 13.4 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103)),
• suitability determination requirement when providing recommendations or advice (s. 13.3 of NI 31-103),
• risk management obligations (s. 11.1 of NI 31-103), and
• other regulatory obligations such as client disclosure of charges (s. 14.2.1, s. 14.12, and s. 14.17 of NI 31-103).
For the Sweep, Staff examined the use of DEPs by thirteen registrants where Ontario is the principal regulator, covering a cross section comprising of CTPs (registered as restricted dealers or operating under the terms of a pre-registration activities undertaking), online advisers (registered as portfolio managers), and online dealers (registered as exempt market dealers). Our findings led to registrants revising or revisiting their use of DEPs in influencing client behaviour, as well as establishing controls and governance over the use of DEPs with their regulatory obligations.
As part of our Sweep, we reviewed how registrants employed various DEPs within their marketing strategies and other client interactions, through features embedded in their online platforms or mobile applications. These DEPs often took the form of specific design elements aimed at influencing client engagement and behaviour.{2} Below, we outline:
• the most common types of DEPs observed during the Sweep;
• the associated regulatory considerations; and
• examples of both concerning and positive practices.
Push and e-mail notifications refer to visual or graphic messages that are delivered to clients by registrants and are intended to share information, provide updates, and market products and services. While these notifications can play a constructive role in keeping clients informed, supporting clients' financial goals, and/or encouraging greater engagement, such notifications may also pose risks, particularly when they influence client behaviour in ways that are not aligned with the client's best interests.
Staff observed several DEPs associated with push and e-mail notifications that may have influenced client behaviour, including:
• attention grabbing prompts and reminders directing attention to specific assets or promotions;
• scarcity claims or "fear of missing out" language inducing urgency to take a particular action; and
• social norms messaging referencing the behaviour of other clients (e.g., popularity of certain trades) to elicit herding behaviour.
Indicators That May Signal Concerning Notification Practices
To assess whether push and e-mail notifications may inappropriately influence client behaviour in a manner that is contrary to registrants' obligations and not aligned with clients' best interests, staff considered the following factors:
• Objectivity -- Are the messages presented in a factual and neutral manner, or do they contain exaggerated, promotional or unsubstantiated claims?
• Persuasion Elements -- Does the language use biased or emotive wording, visual cues (e.g., emojis or other attention-grabbing graphics), or calls to action to prompt clients to take a certain action (e.g., trade)?
• Client Control over Delivery -- Do clients have the ability to easily manage their notification settings, including opting out of notifications both during the account set up and at any time afterward?
In many cases, the concerning practices were reinforced through the use of DEPs designed to capture attention and influence client behaviour:
• Prompts and Reminders -- Notifications that direct clients' attention to specific assets or promotions, nudging them towards a certain response.
• Scarcity Claims -- Messaging that emphasizes limited-time opportunities or urgency to bring out the feeling of "fear of missing out" and compel immediate decisions.
• Social Norms Cues -- References to the actions of other clients (e.g., "X% of investors are buying this asset") that may trigger a herding effect.
• Defaults -- Pre-set notification features that are enabled by default where clients faced difficulty managing their settings or were unable to opt out altogether.
Examples of Concerning Messaging
Throughout our Sweep, we identified several notifications that appeared to be designed to promote specific assets or encourage trading by creating a "fear of missing out" and/or herding effect:
• References to market dips with prompts like "Markets are having a wobble today" and referring the reader to "buy the dip".
• Promoting an asset that is described as "pushing higher" without further context.
• Highlighting trending assets and noting the percentage of other clients who are trading those assets.
• Notifications with overly positive language about an asset, using emojis to signal a positive market opportunity, and a call to action to trade.
• Targeted messaging to clients who trade infrequently, encouraging them to act on recent market trends and urging them to take action (e.g., trade imminently in a particular asset or generally).
2. Rewards Programs (e.g., Points, Badges, Scores)
Rewards programs are promotions or campaigns that provide investors with rewards in exchange for performing certain tasks or accomplishing specific goals. These rewards may:
• have no economic value (e.g., visual badges, scores, animations);
• have nominal economic value (e.g., points redeemable for a small incentive); or
• carry meaningful economic value (e.g., points redeemable for crypto assets or tangible prizes).
Staff observed that rewards programs were deployed across a range of online trading platforms. The design and delivery of rewards programs commonly incorporated the following DEPs:
• Goals and Progress Framing -- Registrants used features such as progress bars to visually track an investor's advancement toward earning a reward, thereby encouraging completion of certain tasks (often a trade or a series of trades).
• Scarcity Claims -- Some programs promoted rewards as available only for a limited time or in limited quantity, creating urgency for clients to act quickly to qualify.
As outlined in OSC's research report on gamification and DEPs, the practice of offering rewards for performing certain tasks or meeting specific goals -- irrespective of whether the rewards hold no, nominal or meaningful economic value -- can influence client decision-making.
Gamblification refers to techniques derived from gambling psychology to influence client behaviour. These mechanisms typically present clients, who perform a particular task, with the chance to receive a reward.
The contests reviewed during the Sweep typically included the following elements:
• Low barriers to entry, with either minimal or no purchase requirements;
• Increased odds of winning tied to taking certain actions (e.g., trading); and/or
• Promotional messaging or reminder notifications designed to maintain visibility of the contest and encourage client engagement throughout the contest period.
These contests also incorporated several DEPs, including:
• Gamblification -- Contests relied on variable rewards,{3} with uncertain economic value relative to the effort or cost incurred.
• Scarcity Claims -- Many contests were time-limited, prompting urgency and creating pressure for clients to act within a defined window to qualify for or maximize their reward opportunities.
• Goals and Progress Framing -- In some cases, clients were shown their progress toward contest-related milestones (e.g., number of entries earned), reinforcing continued engagement.
Staff found instances where registrants failed to make clear and complete disclosure about important information that could materially impact a client's investment decision. In some cases, the information was obscured, buried in less prominent areas, or presented in overly complex language that could hinder client understanding.
The client experience on some platforms reflected a couple of DEPs of concern:
• Sludge Practices -- Clients were required to navigate multiple steps or search through complex, lengthy legal documents to find important disclosures, introducing unnecessary friction and reducing the likelihood of informed decision-making.
• Use of Complex Language -- Important, non-standard information that may be material to a client's investment decision was sometimes written in overly technical, legal, or otherwise complex terms, or placed in obscure sections of the platform, mobile application or website. When such information is difficult to find or understand -- especially where it qualifies or contradicts more prominently displayed content (for example, a prominently quoted price but a hidden disclaimer negating the reliability of that price) -- the overall presentation can mislead clients and impede informed decision making.
Staff reviewed several gaming-style programs and interface features used on trading platforms that, while not directly tied to trading activity, were designed to keep clients engaged longer within the application. Examples included:
• Embedded games, where clients interact with an in-game character to earn in-game rewards transferable to their account on the registrant's platform, which could be used towards a trade.
• Loot box-style rewards, offering randomized, nominal monetary rewards in exchange for certain actions taken by the client. The rewards can be converted into a crypto asset and deposited into the client's account.
• Goal tracking features, such as progress bars showing progress toward savings goals or reminders to complete account-related tasks (e.g., security settings).
These programs incorporated various DEPs, including:
• Rewards Practices -- Clients were incentivized to perform certain actions, often unrelated to trading, through game-like tasks that offered small in-platform rewards.
• Gamblification -- Some initiatives included variable reward structures, offering random or probabilistic payouts, similar to lottery-style incentives.
• Goals and Progress Framing -- Platforms used visual elements (e.g., progress meters, badges) to show clients their proximity to completing goals or tasks, encouraging continued engagement.
While these practices did not raise concerns in the circumstances reviewed, and the instance involving goal tracking were viewed as potentially positive to enhancing the investor experience, different contexts could warrant a different assessment.
Staff reviewed the use of asset ranking, such as "top traded" or "trending now" lists, some of which were presented as informative features but lacked transparency around how the rankings were determined. It was often unclear whether rankings reflected trading activity on the specific platform, a broader market, or another external data source. In the absence of clear disclosure, clients could draw inaccurate conclusions about the popularity, performance, or reliability of listed assets.
This lack of transparency is particularly concerning given OSC research findings indicating that trending lists can influence investor behaviour, contributing to "herding" effects in which clients are more likely to trade assets perceived as popular.{4}
During the Sweep, staff identified the use of DEPs across the registrants' marketing and client interactions that raised securities regulatory concerns, particularly where such interactions were used to influence clients' investment decisions, including more frequent trading and herding behaviours. Such practices are concerning because they can expose investors to additional risks and fees that they might otherwise avoid.
Regulatory concerns and their implications included the following:
• Potential provision of recommendations or advice (push notifications, contests, top traded or trending asset lists) -- Some uses of DEPs were linked to specific products or used to influence clients' investment decisions in ways that could amount to providing a recommendation or advice. For firms subject to section 13.3 [Suitability determination] of NI 31-103, this raised concerns that the registrant was effectively providing a recommendation or advice without first assessing whether the action was suitable for the client. For registrants that operate a business model where they do not provide recommendations or advice and have been granted relief from the suitability requirement in section 13.3 of NI 31-103, this raised concerns that the registrant was providing recommendation or advice, contrary to their business model and the conditions of their exemptive relief.
• Conflicts of interest (all DEPs) -- Staff observed that DEPs were used in a way that could lead clients to trade more frequently, exposing them to additional risks and fees they might otherwise have avoided if not for the DEPs. Use of such DEPs may be contrary to a registrant's obligation to identify and respond to conflicts of interest in the best interest of the client, particularly where the registrant stood to benefit financially from increased client activity, such as through trading fees or other charges. Staff found that registrants offering such programs had often failed to identify the potential conflicts of interest until these concerns were raised during the Sweep. This raises concerns about registrants' compliance with section 13.4 [Identifying, addressing and disclosing material conflicts of interest -- registered firm] of NI 31-103.
• General conduct obligations (all DEPs) -- Registrants have a general duty to deal fairly, honestly and in good faith with their clients pursuant to section 2.1 [General Duties] of OSC Rule 31-505. Staff remind registrants to consider their securities law obligations before engaging in DEPs that encourage clients to trade more, exposing them to additional risks and fees they might otherwise avoid. Examples of such practices include:
• Design elements which include a call to action that links directly to trading interfaces, such as buttons directing clients to trade after completing a task or after a reward is earned;
• Frequent reward structures that reinforce trading, where clients receive a small incentive even if of negligible economic value each time.
Such encouragement of trading raises questions about whether the registrant is fulfilling its securities law obligations, including the duty to deal fairly, honestly and in good faith with clients.
• Risk management obligations (contests) -- Registrants' use of DEPs may have implications beyond securities regulation, including under consumer protection and competition laws. Pursuant to section 11.1 [Compliance system and training] of NI 31-103, registrants are required to manage the risks associated with their business in accordance with prudent business practices. Staff expect that registrants would proactively identify and address all applicable legal requirements when designing and implementing DEPs.
During the Sweep, staff identified positive uses of DEPs focused on improving clients' overall experience. The use of DEPs supported positive outcomes for clients, with the following overarching themes:
• Long-term financial planning through push notifications and design elements to remind clients about their savings and investment goals, and applicable contribution deadlines. Examples include client-defined notifications for price or percentage changes, enabling clients to monitor specific assets, or the use of savings goal visualization to support clients in monitoring and achieving self-set financial goals.
• Promoting investor education through incentive programs that were used to educate clients on the characteristics, risks, and benefits of certain assets offered by the registrant. Some firms used DEPs to help clients track their progress on educational modules or financial literacy content. This was considered positive, provided the content was delivered in a balanced and objective manner, and not used to promote particular products.
• Encouraging prudent cybersecurity practices for clients through the use of DEPs to promote security reminders, or reward clients for enabling account security protection features such as multi-factor authentication. Staff viewed these initiatives positively, as they promoted platform security and helped clients adopt best practices in safeguarding their accounts and assets.
While the primary focus of the Sweep was on the use of DEPs themselves, we also identified additional compliance issues that overlapped with DEPs and raised regulatory concerns.
Staff observed multiple instances where registrants made exaggerated and unsubstantiated claims in their marketing materials without sufficient and clear evidence to support such claims. For example:
• Claims such as "low fees," "lowest fees," or "most trusted," presented without disclosing the basis, data or methodology supporting such claims;
• Descriptions of certain assets, services, or the registrant as "top tier," "world-class," or "class leading," without reference to measurable criteria or objective comparisons;
• Notifications promoting a "trending asset" without disclosing the relevant time period for the price movement;
• Personalized notifications referencing a client's personal performance or ranking without clearly explaining the calculation methodology or basis.
These types of claims can mislead clients and influence investment decisions based on incomplete or unsupported information. Registrants are obligated to deal fairly, honestly and in good faith with their clients pursuant to section 2.1 [General Duties] of OSC Rule 31-505, which extends to any marketing claims or messages provided.
Staff observed the following instances where inadequate information or disclosure was provided to clients in respect of quoted prices and transaction charges.
• Inadequate Disclosure of Transaction Charges -- Transaction charges are broadly defined in NI 31-103 as "any amount charged to a client by a registered firm in respect of a purchase or sale of a security." Some registrants did not provide clients with disclosure of charges and fees specific to the transaction prior to the acceptance of a client's instruction. Instead, key information about charges (such as embedded spreads) was only referenced in general terms in lengthy legal documents.
Registrants are required to comply with pre- and post-trade disclosure obligations under Part 14 [Handling client accounts -- firms] of NI 31-103. Under section 14.2.1 [Pre-trade disclosure of charges] of NI 31-103, registrants must provide clients with pre-trade disclosure of all applicable charges or a reasonable estimate if the exact amount is unknown at the time of disclosure. Similar disclosure should be provided at the time of trade confirmation pursuant to section 14.12 [Content and delivery of trade confirmation] of NI 31-103 and in the report of charges and other compensation pursuant to section 14.17 [Report on charges and other compensation] of NI 31-103.
• Unclear or Misleading Presentation of Quoted Prices -- In some cases, firms displayed quoted prices to clients in their application or website but included disclaimers in their Terms of Service that the firm was not responsible for the accuracy of those prices. Such disclaimers were not prominent. If a quoted price shown is subject to change, registrants should make it clear at the time when the quoted price is displayed to clients that the amount is only indicative and may differ from the final transaction price. Without this clarity, clients may reasonably believe the displayed price is firm, and reliance on buried disclaimers to the contrary could be misleading.
Registrants are obligated to deal fairly, honestly and in good faith with their clients pursuant to section 2.1 [General Duties] of OSC Rule 31-505. Registrants remain subject to this obligation when any information is provided to clients that may impact the clients' investment decision prior to or at the time of a transaction.
Governance and oversight of DEPs was another area of concern during the Sweep. Staff observed that many registrants did not consider the use of DEPs in their policies and procedures and systems of compliance supervision.
Given the potential regulatory implications of the use of DEPs as outlined in this Notice, firms should ensure that their use of DEPs is explicitly contemplated within their policies and procedures. As a reminder, section 11.1 [Compliance system and training] of NI 31-103 requires registered firms to establish, maintain, and apply policies and procedures that create a system of controls and supervision sufficient to provide reasonable assurance that the firm and individuals acting on its behalf comply with applicable securities legislation and manage the risks associated with the firm's business in accordance with prudent business practices.
Registrants are expected to approach the use of DEPs with the same level of diligence, oversight, and accountability applied to any other client-facing function.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
• Develop policies and procedures that create a robust system of controls and supervision related to DEPs -- This system must be sufficient to provide reasonable assurance that the firm and its representatives comply with securities legislation, effectively manage business risks in line with prudent practices, and ensure appropriate training is provided. The policies and procedures should, at minimum, include implementation of the following considerations:
• Design and Development Oversight -- At the design and development stage, assess whether on-platform interactions or marketing content that incorporate use of DEPs can lead to outcomes that are inconsistent with the firm's regulatory obligations.
• Ongoing Monitoring -- Continually monitor DEPs to ensure that the ways in which they are deployed remain compliant with regulatory obligations and are not contrary to the interests of clients.
• Suitability and Advice Considerations -- Carefully evaluate whether a DEP or client interaction could reasonably be interpreted as providing a recommendation or advice. If so -- and if the registrant is permitted to offer such advice -- ensure that a suitability determination is conducted in accordance with section 13.3 [Suitability determination] of NI 31-103, prior to providing the recommendation or advice.
• Supervisory Processes -- Implement a review process for marketing and client interaction content that includes specific assessment criteria. This should ensure that language, design elements (e.g., emojis, visuals), and tone:
• Are objective and balanced;
• Do not unduly pressure clients into making a decision;
• Are substantiated, allowing clients to independently assess the accuracy and reliability of the information; and
• Comply with all applicable regulatory requirements.
• Allow clients to manage how they are engaged -- Provide clients with easy-to-use controls to manage their notification preferences, including options to modify or opt out entirely.
• Provide clear disclosure of charges to clients -- Ensure that all transaction charges are disclosed before and after each trade in accordance with Part 14 [Handling client accounts -- firms] of NI 31-103
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The findings outlined in this Notice demonstrate how DEPs are increasingly being used by registrants as part of their platforms, communications, and marketing strategies. DEPs can be beneficial tools when used appropriately. They can enhance client engagement, provide timely and relevant information, promote investor education, support client goals, and encourage protective actions. However, firms must also recognize that these same tools and behavioural techniques can influence clients in ways that may be contrary to the registrant's securities law obligations.
Registrants are encouraged to use this Notice as a self-assessment tool to assess compliance with their regulatory obligations. We also encourage registrants to review this Notice alongside the previous marketing guidance and the OSC research reports, which further explore how investor behaviour is shaped by design and communication choices in digital environments.
Staff will continue to monitor the use of DEPs by registrants through the normal compliance examination process. Where instances of non-compliance are identified, we will take appropriate action.
If you have any questions regarding this Notice, please refer them to any of the following:
Dena Staikos |
George Rodin |
Manager |
Senior Accountant |
Registration, Inspections and Examinations |
Registration, Inspections and Examinations |
dstaikos@osc.gov.on.ca |
grodin@osc.gov.on.ca |
|
|
Vincent Chow |
Marian Passmore |
Senior Accountant |
Senior Legal Counsel |
Registration, Inspections and Examinations |
Investor Office |
vchow@osc.gov.on.ca |
mpassmore@osc.gov.on.ca |
|
|
Jennifer Lee-Michaels |
Namrata Bhagia |
Senior Legal Counsel |
Legal Counsel |
Trading and Markets |
Trading and Markets |
jleemichaels@osc.gov.on.ca |
nbhagia@osc.gov.on.ca |
|
|
Matthew Kan |
|
Senior Advisor, Behavioural Insights |
|
Thought Leadership |
|
mkan@osc.gov.on.ca |
|
{1} A list of the registered CTPs and CTPs operating under a pre-registration activities undertaking is available at https://www.osc.ca/en/industry/registration-and-compliance/crypto-businesses.
{2} Throughout our summary of the use of DEPs below, we refer to the various DEPs as described in the OSC research reports. For further information and details regarding the definition of each individual DEP element, please refer to the OSC research reports referred to earlier in this Notice.
{3} Variable rewards are economic benefits (e.g., cash payouts) where the size, timing, or likelihood of the benefit is unpredictable to the client.
{4} Digital Engagement Practices: Dark Patterns in Retail Investing, pp. 14-15, available at https://www.osc.ca/sites/default/files/2024-02/inv-research_20240223_dark-patterns.pdf.
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Securities Act s. 88 -- Cease to be a reporting issuer in BC -- The securities of the issuer are beneficially owned by more than 50 persons and are not traded through any exchange or market; following an arrangement, all of the issuer's common shares were acquired by another company that is a reporting issuer and in compliance with its continuous disclosure obligations; the issuer has convertible securities that are beneficially owned by more than 50 persons; the convertible securities are exercisable for securities of the acquirer or redeemable based on the value of the shares of the acquirer; the issuer is not required under the terms of the convertible securities to provide any continuous disclosure to the holders of the convertible securities or to remain a reporting issuer.
National Policy 11-206 Process for Cease to be Reporting Issuer Applications -- Application by issuer for a decision that it is no longer a reporting issuer in the jurisdictions -- issuer has more than 15 securityholders in a jurisdiction and more than 51 securityholders worldwide that hold warrants exercisable into securities of the public acquirer -- holders of outstanding securities no longer require public disclosure in respect of the issuer -- relief granted.
Securities Act, R.S.B.C. 1996, c. 418, s. 88.
Securities Act, R.S.O. 1990, c. S.5, s. 1(10)(a)(ii).
2025 BCSECCOM 465
October 20, 2025
¶ 1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for an order under the securities legislation of the Jurisdictions (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).
Under the Process for Cease to be a Reporting Issuer Applications (for a dual application):
(a) the British Columbia Securities Commission is the principal regulator for this application,
(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta and Saskatchewan, and
(c) this order is the order of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
¶ 2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.
¶ 3 This order is based on the following facts represented by the Filer:
1. the Filer was incorporated under the Business Corporations Act (British Columbia) (the BCBCA);
2. the Filer is a reporting issuer or the equivalent in each of the Provinces of British Columbia, Ontario, Alberta and Saskatchewan;
3. prior to the Arrangement (as defined below), the Filer's head office was located in Vancouver, British Columbia;
4. the common shares in the capital of the Filer (the Filer Shares) traded on the Canadian Securities Exchange (the CSE) under the symbol NF and were quoted on the OTCQX Best Market (the OTCQX) under the symbol NFUNF, and no other securities of the Filer were listed on any marketplace;
5. Premier American Uranium Inc. (Premier) is a corporation existing under the Business Corporations Act (Ontario), and its authorized share capital consists of an unlimited number of compressed shares and an unlimited number of common shares (the Premier Shares), which are listed on the TSX Venture Exchange (the TSXV) under the symbol PUR and are quoted on the OTCQB Venture Market under the symbol PAUIF;
6. immediately prior to the Effective Time (as defined below), the Filer had the following issued and outstanding securities:
(a) 98,550,765 Filer Shares;
(b) stock options exercisable to purchase 4,495,000 Filer Shares (the Filer Options);
(c) common share purchase warrants to acquire 6,360,000 Filer Shares at a price of $0.80 per Filer Share (the January 2024 Warrants);
(d) common share compensation options to acquire 620,024 Filer Shares at a price of $0.60 per Filer Share (the January 2024 Compensation Options);
(e) common share purchase warrants to acquire 1,223,242 Filer Shares at a price of $0.55 per Filer Share (the August 2024 Warrants);
(f) common share purchase warrants to acquire 17,418,750 Filer Shares at a price of $0.55 per Filer Share (the November 2024 Warrants); and
(g) common share broker warrants to acquire 994,250 Filer Shares at a price of $0.40 per Filer Share (the November 2024 Broker Warrants)
(the January 2024 Warrants, the January 2024 Compensation Options, the August 2024 Warrants, the November 2024 Warrants and the November 2024 Broker Warrants, collectively, the Filer Warrants);
7. to the best of the Filer's knowledge and belief, upon due diligence searches conducted with the Filer's transfer agent and Broadridge Financial Solutions Inc., the Filer was able to ascertain the residence of 115 beneficial holders of Filer Warrants, 54 of which are in Ontario, 34 of which are in British Columbia, 2 of which are in Alberta, 7 of which are in the United States, and 18 of which are in a foreign jurisdiction;
8. under the terms and conditions of an arrangement agreement dated June 4, 2025 between the Filer and Premier, effective at 12:01 a.m. (Pacific Time) on September 16, 2025 (the Effective Time), Premier acquired all of the issued and outstanding Filer Shares by way of a statutory plan of arrangement under the BCBCA (the Arrangement);
9. the notice of special meeting (the Meeting) of holders of Filer Shares (the Filer Shareholders) and management information circular dated July 10, 2025 was delivered to Filer Shareholders and holders of Filer Options;
10. the Meeting was held on August 13, 2025 at which the Arrangement was approved by the Filer Shareholders;
11. under the Arrangement:
(a) Premier acquired all of the Filer Shares;
(b) all Filer Options were exchanged into stock options of Premier to acquire Premier Shares; and
(c) all holders of Filer Warrants became entitled to receive, and Premier became obligated to provide, upon exercise of such Filer Warrants, such number of Premier Shares which the holders would have been entitled to receive if the holders exercised their Filer Warrants immediately prior to the Effective Time.
12. the Filer is not required to remain a reporting issuer in any jurisdiction under any contractual arrangement between the Filer and the holders of the Filer Warrants, and no consents or approvals were required from the holders of the Filer Warrants;
13. the Filer Warrants do not provide the holders thereof with voting rights in respect of Premier;
14. in connection with the Arrangement, additional Premier Shares were authorized for issuance upon exercise of the Filer Warrants;
15. immediately upon the completion of the Arrangement, the Filer became a wholly-owned subsidiary of Premier;
16. the Filer Shares were delisted from the CSE and withdrawn from the OTCQX in the United States effective at the close of business on September 16, 2025;
17. Premier is a reporting issuer in each of Alberta, British Columbia, Ontario and Quebec, and as such, Premier is subject to continuous disclosure requirements that are relevant to holders of Filer Warrants, as such holders are entitled to receive Premier Shares upon exercise of such securities;
18. Premier is not in default of securities legislation in any jurisdiction;
19. the Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;
20. the Filer has no intention to seek public financing by way of an offering of securities;
21. no securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;
22. the Filer is applying for an order that it has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is currently a reporting issuer;
23. the Filer is not in default of securities legislation in any jurisdiction;
24. the Filer cannot rely on the exemption available in section 13.3 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) for issuers of exchangeable securities because the Filer Warrants are not designated exchangeable securities as that term is defined under NI 51-102;
25. the Filer is not eligible to use the simplified procedure under National Policy 11-206 Process for Cease to be a Reporting Issuer Applications because the securities of the Filer, namely the Filer Warrants, are not beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide; and
26. upon the granting of the Order Sought, the Filer will not be a reporting issuer or the equivalent in any jurisdiction in Canada.
¶ 4 Each of the Decision Makers is satisfied that the order meets the test set out in the Legislation for the Decision Maker to make the order.
The decision of the Decision Makers under the Legislation is that the Order Sought is granted.
OSC File #: 2025/0566
Satstreet Inc. -- ss. 27(1), 31
Date: 2025-10-10
(Opportunity to be heard by the Director, subsection 27(1) and section 31 of the Securities Act, RSO 1990, c S.5)
Director: |
Matthew Onyeaju, Senior Vice President Registration, Registration, Inspections and Examinations Division |
|
|
||
Hearing: |
In writing; final written submissions received September 5, 2025 |
|
|
||
Appearances: |
Mark Skuce |
For Staff of the Ontario Securities Commission |
|
||
Shane D'Souza |
For Satstreet Inc. |
|
Lori Stein |
||
[1] Satstreet Inc. (Satstreet) is a crypto asset trading platform (CTP) that has applied for registration (the Application) under the Ontario Securities Act{1} (the Act) as an exempt market dealer (EMD). Staff of the Registration, Inspections and Examinations Division (Staff) of the Ontario Securities Commission (OSC) recommended that the Application be refused because Satstreet's registration would be objectionable. Satstreet requested an opportunity to be heard in writing and both Satstreet and Staff delivered evidence and written submissions.
[2] Staff submitted grounds that, in their view, makes Satstreet's registration objectionable. In addition to these grounds, I have a concern that Satstreet's registration as an EMD would amount to the development of a bespoke regulatory regime with lengthy and unique terms and conditions to address its inherent risks. This will result in significant ongoing oversight from Staff, and OSC resources will be overburdened by the sort of regulatory arbitrage that Satstreet's registration would create when there is a more appropriate and rigorous regulatory framework already in place for CTPs. Further, I have concerns that this could set the stage for a dangerous precedent where other registrants or prospective registrants make claims of (self-defined) uniqueness to enable a bespoke regulatory regime for themselves.
[3] The Application is not a straightforward registration matter. When determining whether Satstreet's registration would be objectionable pursuant to subsection 27(1)(b) of the Act, my discretionary statutory decision-making powers allow me to consider a broad range of factors and nuanced policy matters. These reasons will discuss my considerations in greater detail.
[4] In all of the circumstances, I found that Satstreet's registration as an EMD would be objectionable. For the following reasons, my decision was to accept Staff's recommendation and refuse Satstreet's Application for registration.
[5] The issue before the Director is whether Satstreet should be approved for registration as an EMD. The main issue of whether Satstreet's registration would be objectionable consists of four sub issues identified in Staff's submissions. My decision considered whether Satstreet's registration is objectionable because of any of the following grounds submitted by Staff:
a. Satstreet failed to adhere to a pre-registration activities undertaking;
b. Satstreet failed to comply with the restriction on registered firms acting as the custodian for client cash;
c. Satstreet failed to obtain the required insurance; or
d. Satstreet applied for registration in the improper category.
[6] As noted above, I will also consider broader factors and policy matters. The Application raises the question of whether there are circumstances where an applicant's registration should be denied in a particular category if potentially eligible for multiple categories, and whether some registrants should have bespoke regulation. These issues arise in the context of ongoing policy development and where other regulatory intentions have been communicated, including through communications of the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO). However, the broad regulation of CTPs is a policy decision and an opportunity to be heard is not the appropriate forum to make general determinations on OSC policy. Accordingly, these reasons only determine Satstreet's specific Application for registration as an EMD.
[7] Pursuant to ss. 27(1) of the Act, the Director shall grant an application for registration unless it appears to the Director that either (a) the applicant is "not suitable for registration" or (b) the applicant's proposed registration "is otherwise objectionable". Staff have submitted that Satstreet's registration as an EMD would be "otherwise objectionable". Staff does not concede that Satstreet meets the suitability criteria for registration, nor has Staff taken the position that the firm is not suitable for registration. Staff's position is that Satstreet's registration would be objectionable. Staff bears the burden of proving that Satsteet's registration as an EMD is objectionable and must do so on a balance of probabilities.
[8] Staff submits that the term "otherwise objectionable" is not defined in securities legislation; however, case law has established that a purposive approach should be taken to the analysis of this concept, and that whether a registration would be "otherwise objectionable" should be determined with reference to the mandate of the OSC, as expressed in s. 1.1 of the Act.{2} The mandate of the OSC is to (a) provide protection to investors from unfair, improper or fraudulent practices, (b) foster fair, efficient and competitive capital markets and confidence in capital markets, (c) foster capital formation, and (d) contribute to the stability of the financial system and the reduction of systemic risk. A primary means for the OSC to discharge its mandate is the requirement for the maintenance of high standards of fitness and business conduct, to ensure honest and responsible conduct by market participants.
[9] Satstreet has taken the position that "otherwise objectionable" can only be argued on public interest grounds, meaning the sole issue before the Director is whether Satstreet's registration as an EMD is contrary to the public interest even though it meets all the suitability criteria (i.e., proficiency, solvency, and integrity). Satstreet argues that the public interest jurisdiction of the Director is broad, but it is not infinite or undefined, and that securities regulators cannot use their public interest jurisdiction to create legislation that does not exist or amend existing legislation.
[10] While I accept that my discretion is not infinite, I disagree with Satstreet's position that I must limit my decision to a consideration of whether Satstreet's registration is contrary to the public interest. In addition to the commentary from both Staff and Satstreet on the test for "otherwise objectionable", the powers granted to the Director under the Act are broad and mean the Director must take a holistic approach in determining whether a party's registration would be objectionable.
[11] Regarding CTP registration, policy intentions were messaged through the joint CSA and CIRO press release on August 6, 2024, (the Press Release) titled "CSA and CIRO expect crypto trading platforms to prioritize applications for investment dealer registration and CIRO membership". The Press Release states:
"...[the CSA] contemplated an interim approach, which allowed CTPs to operate as restricted dealers in an appropriately regulated environment for a time-limited period while working toward obtaining CIRO membership. CSA members expected CTPs to actively and diligently seek registration as investment dealers and membership with CIRO by the end of the time-limited period, which was generally expected to be two years. Given the time that has passed, CSA members expect CTPs to have carefully reviewed and understood the requirements to become investment dealers and CIRO members, and be actively engaged with CIRO on their applications. Moving forward, CSA members do not intend to continue with the interim approach for time-limited restricted dealer registration for CTPs as described in the staff notice". [emphasis added]
[12] Policy development within the OSC framework can be a lengthy process, often taking years to build out. Given the rapid evolution of markets, technology, and emerging business models, the OSC requires tools that enable it to respond swiftly to uphold its regulatory mandate. One such communication tool is the use of press releases, and another is the publication of staff notices. More than three years ago, the CSA and CIRO (then the Investment Industry Regulatory Organization of Canada) published the Joint Canadian Securities Administrators/Investment Industry Regulatory Organization of Canada Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements{3} (SN 21-329), which mentions the possibility of EMD registration being available to CTPs in limited circumstances. With the benefit of time, the CSA and CIRO determined that this past summer was an appropriate time to update industry on the subject of CTP regulation through the Press Release. Prior to the Press Release, the OSC's Strategic Plan{4} had already noted:
"Technological change is constant, often occurring at a rapid pace and in a way that presents both big opportunities and, sometimes, serious risks. We saw this with the advent of crypto assets, and there will be many more major developments to come, particularly as artificial intelligence progresses. Whether technologically driven or otherwise, there may be circumstances where we don't have the luxury of time to assess the full impact of disruptive forces on our market before we need to act. We must build our capacity to respond quickly, and to clearly communicate our intentions". [emphasis added]
Specifically, Goal 3 of the OSC's Strategic Plan (Dynamically right-size regulation informed by changing needs, risks and practices in Ontario and globally) is guided by the following outcome "[r]egulatory responsibilities are optimally allocated between the OSC and other regulators, including CIRO". It is expected that CIRO will ultimately become principally responsible for the registration and regulation of CTPs, with ongoing OSC oversight.
[13] Whilst I accept the Press Release is not law, there were no carve outs, caveats, or other qualifiers within this communication. Satstreet has argued that the Press Release does not hold any weight, and that their business operations, including but not limited to dealing exclusively with accredited investors and low volume trading, warrant registration as an EMD. However, the criteria identified by Satstreet, which will be discussed in greater detail in these reasons, have been entirely self-defined by Satstreet and do not reflect any recognized regulatory standard. Further, it is my view that Satstreet has not made meaningful efforts to respond to OSC expectations and dismisses the contents of the Press Release as not relevant to this proceeding. I have determined the policy intentions expressed in the Press Release to be relevant to this proceeding, which is within my discretionary authority as the Director who is responsible for registration matters.
[14] I will now consider the specific reasons that Staff submits Satstreet's registration as an EMD is objectionable.
[15] One of the four reasons that Staff argues Satstreet's registration is objectionable is that Satstreet failed to adhere to important investor protection-related commitments it made to Staff in 2023 in a written "pre-registration activities undertaking" (the PRU). Introduced by the CSA in August 2022, the PRU was a written undertaking given by unregistered CTPs in which they voluntarily committed to comply with certain terms and conditions that addressed investor protection concerns and were consistent with requirements applicable to registered platforms, while committing to working diligently and using their commercially reasonable best efforts to advance their applications for registration. Staff submits that Satstreet failed to comply with at least four commitments it made in the PRU. Two of these are ongoing breaches (the "Fiat Custody Requirement" and the "Cessation Requirement") and two occurred in the past (the "Prohibited Trades Provision" and the "Provision of Information Requirement"). Staff submits that the relevance of the non-compliance with the PRU is that past conduct is a predictor of future behaviour, and so an applicant that has previously failed to honour its regulatory commitments cannot be expected to observe the high standards of business conduct required on a continuous basis. I agree.
[16] Paragraph 40 of Schedule I to the PRU contains a requirement that is substantially similar to s. 14.5.2 of National Instrument 31-103 Registration, Exemptions and Ongoing Registration Obligations (NI 31-103){5} (the Fiat Custody Requirement). Staff submitted that Satstreet was required to comply with the Fiat Custody Requirement by June 22, 2023, and had not done so as of June 2, 2025, the date of Staff's submissions.
[17] In response, Satstreet responded that it was in compliance with the Fiat Custody Requirement as of June 19, 2025 (i.e., after Staff's initial submissions), resulting from the opening of an account at BMO Nesbitt Burns to hold client funds (BMO NB Account). Satstreet represented that during the week of June 23, 2025, it transferred Canadian dollars and U.S. dollars to the BMO NB Account. The transferred funds equalled or exceeded the aggregate of all Canadian and U.S. dollar balances held in the accounts of Satstreet's clients, other than non-individual permitted clients. As a result, Satstreet argued that the Fiat Custody Requirement was now met, resulting in the key basis for Staff's opposition to the Application falling away.
[18] Staff responded that Satstreet's compliance with the Fiat Custody Requirement remains a live and unresolved issue, and it does not meet the custody requirements in NI 31-103. Correspondence between Satstreet and Staff exhibited at Exhibit "C" to the Affidavit of Jennifer Lee-Michaels confirms that the BMO NB Account is not in strict compliance with sections 14.5.3(a) and (b) and 14.6(1)(c) of NI 31-103 because it is not designated in the books and records of BMO Nesbitt Burns as an "in trust" account. Satstreet submits that upon registration as an EMD, Satstreet is confident that it will be able to work with BMO Nesbitt Burns and Bank of Montreal toward opening a traditional "in trust" account for clients.
[19] Satstreet's wavering on the technical status of this requirement is concerning. Satstreet initially represented to the Director that they had achieved compliance with the Fiat Custody Requirement; however, upon further questioning by Staff, this position has been qualified. I also remain skeptical that Satstreet took all commercially reasonable measures to achieve compliance, a higher standard than Satstreet has made claims to, but one that was arguably warranted given their contractual commitments to the OSC. My skepticism is amplified by the fact that Satstreet was able to achieve some semblance of compliance approximately two weeks before their submissions were due for this opportunity to be heard, in response to Staff's submissions. Satstreet was aware of this requirement since signing the PRU in 2023. I accept Staff's position that this condition of the PRU was not met and view Satstreet's failure to honour its regulatory commitments as an indication that Satstreet may not observe the high standards of business conduct required on a continuous basis.
[20] Under the PRU, Satstreet was expected to "...have obtained a decision from the Principal Regulator respecting registration by the date that is 12 months from the date of this Undertaking or it will promptly cease to carry on all registerable activity...". The deadline for obtaining registration set out in the Cessation Requirement was extended from time to time, with the last extension expiring on April 30, 2025. On March 31, 2025, Staff informed Satstreet that the April 30, 2025 deadline would not be extended again and requested that Satstreet provide a wind down plan for its registerable activities by no later than April 15, 2025. On April 7, 2025, Satstreet informed Staff that it would not wind down.
[21] Staff argue that the Cessation Requirement was a core condition of the regulatory accommodation extended to Satstreet when it delivered its PRU. One of the purposes of the PRU was to permit firms to operate without registration in Ontario on an interim basis without enforcement action, so long as they met the commitments in the PRU, including the obligation to wind down if registration was not achieved within a specified time period.
[22] Satstreet disagrees with Staff's position that it breached the Cessation Requirement for the following reasons: (i) paragraph 12 of the PRU required Satstreet to obtain "a decision from the Principal Regulator respecting registration" within 12 months from the date of the Undertaking -- i.e. by March 2024, (ii) Staff extended the expiry of the PRU twice after March 2024: first on September 30, 2024 (to January 31, 2025) and then on January 31, 2025 (to April 30, 2025), and (iii) Satstreet believes that it honoured the compromise it made in the PRU by routinely engaging with Staff to discuss its business and regulatory options.
[23] Satstreet submits it made good faith efforts to comply and told Staff about the challenges it faced. Satstreet states that Staff abruptly and surprisingly sent a letter ordering Satstreet to wind down its operations on March 31, 2025. Satstreet states that it would not stop operating its profitable business without any enforcement proceeding or other opportunity to exercise its statutory rights.
[24] I ultimately accept Satstreet's position on the Cessation Requirement. Satstreet could not reasonably be expected to conclude that it must immediately wind down operations in April 2025, given all the circumstances.
[25] On July 7, 2023, Satstreet requested a revision to the PRU's Prohibited Trades Provision that would permit it to continue trading in USDT, which is a crypto asset issued by Tether Limited (Tether). The requested revision was not granted. Regulatory penalties were imposed on Tether by two government authorities in a "Specified Foreign Jurisdiction" (i.e., the United States of America) as that term is defined in the Prohibited Trades Provision, and the nature of the claims made by them against Tether (i.e., misleading statements) fall within the ambit of that provision. Staff subsequently reminded Satstreet on at least two occasions that USDT could not be traded under the Prohibited Trades Provision. Regardless, in the period of approximately one year following the effective date of that provision, Satstreet traded over 10 million units of USDT with Ontario clients for a value of over $13.5 million. Staff submitted that Satstreet only confirmed that it would cease trading in USDT after Staff informed Satstreet that its failure to do so could result in regulatory action. Staff states that Satstreet acknowledges that it continued to trade USDT with clients after it agreed to the Prohibited Trades Provision.
[26] Satstreet submitted that (a) Staff inexplicably took months to respond to Satstreet's disclosure of ongoing trading on USDT, and (b) the OSC's alleged jurisdiction over OTC trading of USDT continues to be uncertain and (as Staff acknowledges) need not be determined in this hearing. Satstreet advanced an argument that having regard to the popularity of USDT, and the large number of virtual currency dealers registered as Money Service Businesses with FINTRAC, it is likely that there are hundreds of competitors to Satstreet that offer OTC trading in USDT to Canadian customers. Despite its analysis of the industry, Satstreet represented that as soon as Staff said it did not support further USDT trading, Satstreet immediately stopped such trading.
[27] I agree with Staff and Satstreet that this Application is not the appropriate forum to resolve the debate as to whether USDT is a security. However, I am persuaded by Staff's submissions that USDT was captured by the Prohibited Trades Provision, a fact undisputed by Satstreet, and that Satstreet continued to trade USDT after the applicable deadline. Satstreet should not cherry pick what components of the law and its obligations it complies with. Satstreet entered into the PRU and ought to have understood the implications of doing so. Satstreet's position is that Staff presents the PRU as a benevolent regulatory gift that allowed Satstreet to carry on business that clearly required registration as a dealer under securities laws. This is an inaccurate characterization. As stated above, the PRU was introduced to ensure CTPs were complying with certain terms and conditions that addressed investor protection concerns and were consistent with requirements applicable to registered platforms. Satstreet appears to view the PRU as a good faith commitment from CTPs not to challenge the OSC's jurisdiction and novel position that crypto contracts are securities or derivatives. Satstreet's opinion about the OSC's regulation of crypto contracts does not entitle Satstreet to pick the regulations it agrees with and disregard the regulations it disagrees with. Satstreet's overall attitude on the Prohibited Trades Provision and subsequent exchange of submissions leads me to expect that if EMD registration was approved, Satstreet's similar behaviour would continue, which could threaten investor protection.
[28] Staff argues that through Satstreet's failure to comply with the PRU by continuing to trade in USDT, Sastreet breached another commitment it made in the PRU: the Provision of Information Requirement. Staff submits that when Staff attempted to investigate this apparent non-compliance, Satstreet refused to cooperate. Satstreet refused to fulfill Staff's initial request for data, though it eventually provided the data several months later. The data was only provided after Staff informed Satstreet that its failure to do so could result in regulatory action.
[29] Satstreet denies breaching the Provision of Information Requirement. Satstreet submits that there was a disagreement as to whether the information requested was "reasonable". Satstreet took the position it was not, and its position was informed by (a) its view that OTC trading in USDT was outside of the OSC's jurisdiction; (b) its view that Satstreet's non-registerable activities outside of Ontario were outside of the OSC's jurisdiction; (c) its concern that providing anonymous client data was not possible given the low number of its clients that traded in USDT with Satstreet; and (d) its belief that the information provided by Satstreet in March 2024 was more than sufficient for Staff to achieve its objective, to "investigate Satstreet's apparent non-compliance with the Prohibited Trades Provision".
[30] Satstreet's evidence is that they nevertheless provided the additional information requested by Staff on July 22, 2024, after Staff followed up (over 4 months later).
[31] It is significant that Satstreet's pattern of conduct is to only respond when Staff advises that regulatory action may be taken. It happened in relation to the Prohibited Trades Provision and the Provision of Information Requirement. In the context of the latter, Satstreet's position was essentially that it should be able to establish the limitations of how it would comply, initially only agreeing to provide anonymized data and resolving to make Staff "prove" why this was insufficient. Satstreet ultimately acceded to Staff's initial request, following escalation. Satstreet's conduct shows an apparent unwillingness to meet their regulatory obligations unless it is under their own terms. This pattern of conduct contributes to my finding that their proposed EMD registration is objectionable.
[32] Satstreet has previously failed to honour its regulatory commitments and continues to challenge the authority of the OSC to oversee crypto related activity. It argues that Canada continues to be the only jurisdiction that is taking the "Crypto Contracts" approach toward the regulation of crypto assets, rather than developing a bespoke framework to accommodate the fact that most crypto assets have the properties of both investments and commodities.
[33] It is a long-established principle that registration is not a right, but rather a privilege. While Satstreet acknowledged this position in its submissions, its actions suggest a belief that the reverse ought to be true. I accept Staff's position that Satstreet failed to achieve compliance with three important provisions of the PRU and that Satstreet lacks the requisite high standards of business conduct required of an EMD registrant going forward. These failures are compounded by Satstreet's attitude and indifference for OSC processes and unwillingness to accept oversight unless favorable to their own timing and terms. This is evidenced in their responses to Staff's requests related to the Prohibited Trades Provision and the Provision of Information Requirement.
[34] A registered firm can only be a custodian for a client's cash or securities in certain circumstances. This is known as the restriction on self-custody and qualified custodian requirement. It provides an important measure of investor protection as it relates to the safeguarding of client assets. Specifically, s. 14.5.2(1) of NI 31-103 provides that a registered firm must not be a custodian or sub-custodian of a client's cash or securities unless the registered firm:
a. is a Canadian custodian under specified paragraphs of the definition of "Canadian custodian", being either a (i) a bank listed in Schedule I, II or III of the Bank Act (Canada), (ii) a qualifying trust company, or (iii) an investment dealer that is a member of IIROC (now named CIRO) and that is permitted under the rules of IIROC, as amended from time to time, to hold the cash and securities of a client, and
b. has established and maintains a system of controls and supervision that a reasonable person would conclude is sufficient to manage the risks to the client associated with the custody of the client's cash or securities.
[35] Staff initially submitted that, because Satstreet did not meet the specified definition of "Canadian custodian", if Satstreet was registered it could not be the custodian of its clients' cash or securities. Because of Satstreet's inability to comply with the Fiat Custody Requirement (which mirrors s. 14.5.2 of NI 31-103 and is discussed above), it would follow that immediately upon becoming registered, Satstreet would not be in compliance with of NI 31-103. Staff submitted that such a result would be inconsistent with the Act's purposes.
[36] In response, Satstreet opened the BMO NB Account on June 19, 2025. BMO Nesbitt Burns Inc. is a registered investment dealer and CIRO member, and is therefore a "qualified custodian" for purposes of the Fiat Custody Requirement. Immediately upon becoming registered as an EMD, Satstreet would be able to comply with s. 14.5.2 of NI 31-103, since the Fiat Custody Requirement mirrors that provision.
[37] Although full compliance is not currently achieved, the core requirement-securing a qualified custodian-is primed for resolution should Satstreet be granted registration as an EMD. As already discussed, the broader issue associated with the custody requirement is Satstreet's general indifference to OSC processes and its attitude regarding the commitments of a responsible capital market participant.
[38] Section 12.3 of NI 31-103 details the requirements for bonding or insurance of registered dealers.
[39] Staff initially submitted that the insurance policy submitted with Satstreet's Application for registration did not meet the requirements set out in NI 31-103 for two reasons: it does not provide for double aggregate limit or full reinstatement of coverage as required by s. 12.3(1), and the coverage limits it provides for do not meet the amounts specified by s. 12.3(2).
[40] Satstreet responded that effective June 19, 2025 (i.e., after the delivery of Staff's initial submissions), it had amended its Financial Institution Bond to provide for coverage limits in the amounts specified by s. 12.3(2) of NI 31-103. Satstreet represented that immediately upon becoming registered as an EMD, Satstreet would be in compliance with the insurance requirement in s. 12.3 of NI 31-103.
[41] This issue appears primed for resolution. However, in theme with previous observations, Satstreet's conduct raises concerns of commitment to high conduct standards expected of registrants given the questionable timing of how quickly this issue was (materially) resolved.
[42] A premise of the registration regime is that different business models give rise to different risks, and firms should register in the category and be subject to the regulatory framework that is necessary to address their risks. The investment dealer registration regime is generally more rigorous than the regulatory framework for EMDs. Accordingly, Staff submit that Satstreet should seek CIRO membership and apply for registration as an investment dealer, instead of applying for registration as an EMD. This is cited as another reason that Satstreet's proposed EMD registration is objectionable.
[43] Staff maintain that investment dealer registration, with oversight by CIRO, is the only appropriate registration category, being both necessary and proportionate to the risks posed by Satstreet's business model. If Satstreet's business model requires flexibility in regulatory requirements, then Satstreet's proper route would be to apply for exemptive relief from specific requirements otherwise applicable to investment dealers. Staff frames Satstreet's Application as an improper attempt to bypass the investment dealer framework altogether.
[44] Satstreet argues that its business does not require investment dealer registration because Satstreet does not engage, and does not propose to engage, in any activities that require investment dealer registration. Rather, Satstreet only distributes securities in reliance on the accredited investor exemption, so that Satstreet argues EMD registration is an appropriate registration category. While Satstreet acknowledges that, from a policy perspective, the public interest might be sufficient to compel a party to register in one category when that party also qualifies in another category, it argues that this outcome should only occur (a) in the rarest of cases, and even then, (b) only when justified by clear and cogent evidence. Satstreet argues that Staff failed to adduce the required evidence.
[45] A purposive approach is required to address the question of the appropriate registration category, which will also consider whether the business model bears more semblance to an investment dealer or an exempt market dealer. Satstreet petitions for a strict technical read defining EMD eligibility, while Staff highlights the policy intentions of the OSC and the underlying risks of varying business models that inform these stated intentions. The Director possesses broad statutory discretion in establishing objectionability and is not bound by singular concepts such as public interest or the absence of available case law.
[46] Again, I note the Director's broad authority under s. 27 of the Act to determine whether it appears to the Director that a proposed registration is otherwise objectionable. Unlike in 3iQ Corp (Re),{6} which involved a Director's denial of a prospectus receipt, the current Application is in the context of the registration regulatory oversight regime, which is responsible for granting or refusing applicants for registration to participate in the capital markets. The regime creates an important gatekeeper function that is essential to the protection of the capital markets and public investors. The legislation gave broad discretion to the Director, without limiting the factors the Director can consider relevant for granting or refusing registration to an applicant. There was a conscious extension of the three-pronged suitability test (which considers proficiency, integrity and solvency) to also make objectionability available to the Director, who is ultimately responsible for the eventual oversight and risk when granting registration to an applicant. If the Director lacks confidence that an applicant can be effectively supervised under a particular oversight regime, it is incumbent upon the Director to consider this when determining whether registration is objectionable.
[47] I will now outline the specific issues raised by the parties in distinguishing each regulatory environment. An overall conclusion to the appropriate registration category will then be discussed at section 3.4.4 of these reasons.
[48] In support of their position regarding the proper registration category, Staff point to several relevant distinctions between the investment dealer and EMD registration categories. First, registered investment dealers who are members of CIRO can act as custodians for their clients' assets. But EMDs cannot act as custodians (subject to certain exceptions that do not apply to Satstreet).{7} Staff highlight that Satstreet custodies its clients' cash and crypto assets on an ongoing basis, holding approximately $154 million on behalf of its clients, with up to 20% of crypto assets self-custodied.
[49] Custodial services are a key part of Satstreet's business model. Satstreet concedes the NI 31-103 prohibition on acting as custodians for clients, but argues that EMDs are not prohibited from providing custodial services to their clients, so long as such services are provided in compliance with the custodial provisions of NI 31-103{8}. Satstreet further asserts that those custodial provisions apply to securities and cash, but not crypto assets. It also notes a carve out from the restriction against self-custody for "a security that is recorded on the books of the security's issuer, only in the name of the client."{9} Satstreet states that it records all crypto contracts on its books and records in the names of its clients.
[50] Staff argue that the EMD registration category was not intended for business models involving ongoing custody of client assets, but was intended for dealers facilitating private placements and other exempt market transactions on a limited, transaction-by-transaction basis, typically acting as intermediaries without ongoing custody of client assets. As a result, the EMD framework does not provide the structural safeguards or oversight mechanisms necessary for CTPs like Satstreet that provide continuous custody of client assets.
[51] Satstreet denies this premise, pointing to guidance in several sources (Appendix F of Companion Policy to NI 31-103, the Registration, Inspections and Examinations Division's 2025 Annual Report, and the OSC Coordinated Blanket Order 31-930), which it says all imply that some EMDs hold client assets. Satstreet also says it compiled a list (developed with the help of artificial intelligence) of stand-alone EMDs registered in Ontario, along with the types of investments they offer. It purports to identify over 150 EMDs in Ontario that offer private investment products to accredited investors, including private equity, private mortgages, private credit, real estate, venture capital and impact investments.
[52] Staff's second identified difference between the registration categories is that registered investment dealers face more prescriptive requirements under CIRO's Investment Dealer and Partially Consolidated Rules (IDPC Rules) than EMDs face under the comparable requirements in NI 31-103. Staff argue that compliance with the more prescriptive IDPC Rules is necessary to address the risks associated with CTPs such as Satstreet, even though Satstreet may have its own internal controls.
[53] Staff point to Capital Market Tribunal findings that CTPs have complex and risky products, heightening the need for such registration protections.{10} As a result, Satstreet's proposal to register as an exempt market dealer, even if subject to limited additional terms and conditions, does not sufficiently address the breadth of risks posed by Satstreet's business activities.
[54] Satstreet denies that the Capital Market Tribunal findings apply to its products because the decisions concern automated, electronic trading platforms that provide services to retail investors. Those platforms do not conduct suitability assessments and do not have client-facing personnel that meet proficiency standards in the CTP's home jurisdiction or in Canada.
[55] The parties' submissions addressed several examples of potentially relevant requirements under the IDPC Rules, highlighting issues of cybersecurity, the segregation of client assets, audits, Form 1, and working capital:
a. Cybersecurity: The IDPC Rules require implementation of cybersecurity policies and procedures, and additional reporting of cybersecurity incidents. They provide sector-specific guidance and real-time intelligence-sharing mechanisms.{11} Satstreet submits that compliance with these prescriptive IDPC Rules is unnecessary because Satstreet operates in compliance with basic information privacy laws and is subject to oversight by the by the Office of the Privacy Commissioner of Canada. While this framework may be sufficient to manage some cybersecurity risks, Staff argue that the framework under the IDPC Rules goes beyond general privacy protections, aiming to strengthen operational resilience and safeguard custodied assets in the event of a cybersecurity breach.
b. Segregation of client assets: The IDPC Rules require greater controls around the segregation of client assets, including twice weekly segregation reports and restrictions on which employees can move securities into or out of segregation.{12} These heightened safeguards are proactive and specifically tailored to address the risks associated with firms that custody client assets. However, Satstreet submits that it already segregates client assets from its own funds and, going forward, it would be sufficient for Satstreet to comply with the custody provisions governing EMDs under NI 31-103.
c. Audits: The IDPC Rules require audits by a CIRO-approved audit firm.{13} Satstreet disputes the necessity of this requirement for its business model, but proposes that a condition of its EMD registration could require annual financial audits performed by a CIRO panel auditor.
d. Form 1: The IDPC Rules require compliance with a special purpose report called Form 1 that includes financial information and an assessment of financial stability and ability to withstand adverse conditions.{14} Form 1 underpins the calculation of a firm's risk-adjusted capital, which is central to assessing whether a firm has sufficient financial resources to meet its obligations, and continue operating without compromising client interests. Predefined financial thresholds are embedded in Form 1 to detect early signs of financial distress, making investment dealers subject to an early warning system. The annual audit of Form 1 must be conducted by a CIRO-approved panel auditor trained specifically in the form's technical and risk-based aspects.{15} Conversely, EMD financial reporting is largely limited to delivering a simplified working capital calculation and audited financial statements on an annual basis. Satstreet argues that Form 1 and its audit are not necessary to provide effective regulatory oversight of Satstreet's business, since Satstreet does not engage in many of the activities that create financial risk for CIRO members, such as providing margin, derivatives or other forms of leverage. But as Staff notes, all CIRO members are required to file Form 1, regardless of the nature of their trading activities, because of the important investor protection function of CIRO's capital requirements.
e. Working capital: The IDPC Rules require increased excess working capital,{16} which could help facilitate operational continuity in cases of market or operational disruption and volatility. Again, though Satstreet disputes the necessity of this requirement, Satstreet proposes that a condition of its EMD registration could simply require a specified minimum level of working capital (it proposed $250,000). Staff argue this condition would be insufficient because the CIRO framework imposes a more comprehensive assessment of a firm's financial exposure, when compared to the working capital test for EMDs under NI 31-103. In this way, a firm could appear adequately capitalized under a simple working capital test but fail CIRO's capital test after properly accounting for its risks.
[56] Finally, on the issue of Satstreet's proper registration category, Staff notes that all other CTPs registered as dealers in Ontario are registered as investment dealers (or as restricted dealers under the interim registration pathway previously in place), and none are EMDs. Staff emphasizes that Satstreet, like all other registered CTPs, custodies its clients' cash and crypto assets on an ongoing basis. Therefore, allowing Satstreet's registration as an EMD would disrupt what is currently a level playing field for registered CTPs. This would fail to advance one of the Act's stated purposes of fostering "fair, efficient and competitive capital markets and confidence in capital markets".
[57] Once again, Satstreet responds to this argument by highlighting the differences between it and the CTPs registered as dealers in Ontario. Satstreet essentially argues that it warrants special regulatory treatment because it appears to be the only crypto asset liquidity provider that offers crypto contracts in Canada that: (a) does not offer services to retail (non-Accredited Investor) clients; and (b) has taken steps to come into compliance with the OSC's regulatory guidance and exemption orders. Staff does not dispute these distinctions, but argues that they fail to alleviate the core regulatory concerns associated with crypto asset trading and custody.
[58] Parties raised several factors in considering the appropriate registration category for Satstreet. I do not interpret them to be equally weighted. On custodial services, I agree with Satstreet that the extension of custodial services alone is not the hallmark of defining an investment dealer. However, the extensiveness of use is a factor to consider in determining whether a business model appears to conform to one registration category over another. I accept Staff's assertion that EMDs do not typically make extensive use of custody services and that 20% is a material amount.
[59] Satstreet has defined its business as a dealer providing 'white glove' services to high-network investors (and permitted clients), which provides suitability determinations, custodial services and managing long-term relationships as setting it apart from other CTPs and warranting EMD registration. Since the issuance of the Press Release, all CTPs have become CIRO members or are progressing to CIRO membership. I fail to see how Satstreet is materially unlike other investment dealers, setting crypto contracts aside. I accept Staff's position that compliance with other laws does not serve as a substitute for the protections of the most appropriate regulatory regime for a particular business model. I also reject Satstreet's claims of proportionality and one-size fits all regulation. There are a myriad of different size firms and business models under CIRO oversight: activities on exchanges, mutual fund dealers, investment dealers, ATS platforms, firms engaged in exclusively proprietary trading, firms dealing with institutional investors, firms dealing with retail investors and CTPs. CIRO can be flexible and proportionate in performing their regulatory responsibilities. Accordingly, I must consider whether CIRO is the more appropriate regulator in circumstances where an applicant for registration is potentially eligible for more than one category of registration. My conclusion is that the heightened safeguards should be applied in most if not all circumstances where an applicant for registration materially bears all the characteristics of a particular category of registration in order to ensure fairness and proportionality to the overall marketplace. Should Satstreet pursue CIRO membership, CIRO should apply their tests for suitability and objectionability independently.
[60] Both Staff and Satstreet have raised the possibility of using terms and conditions as an alternative. For Staff, this was considered as a minimum condition for granting EMD registration. For Satstreet, it was proposed in the event the Director believes that granting EMD registration alone would leave certain risks unaddressed.
[61] Terms and conditions are typically reserved for significant compliance remediation or novel issues. Bespoke, unnecessary, complicated terms and conditions are not an acceptable alternative to applying for registration in the most appropriate registration category. The OSC must maintain its discretion to establish the criteria for uniqueness and determine how and when terms and conditions are applied. It is not for the applicant to decide what constitutes uniqueness. I find that providing an exception to Satstreet as a result of their specific business model to be unreasonable and unnecessary. If bespoke, individual regulatory regimes were created for every applicant, it would not only be unfair to the overall marketplace, but it would result in significant demands on OSC resources for continuous oversight. Further, Satstreet has not shown that it can be trusted to fully comply with tailored terms and conditions, as demonstrated by their past conduct discussed in these reasons.
[62] For these reasons, I accepted Staff's recommendation, and I refused Satstreet's Application for registration as an EMD.
Dated at Toronto this 10th day of October, 2025
{1} RSO 1990, c S.5
{2} Sawh (Re), 2012 ONSEC 27 at paras 288-289; affirmed at Sawh v Ontario Securities Commission, 2013 ONSC 4018 (Div Ct)
{3} Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements (2021), 44 OSCB 2717
{4} Ontario Securities Commission Strategic Plan, 2024-2030, issued May 3, 2024
{5} National Instrument 31-103 Registration, Exemptions and Ongoing Registration Obligations (2009), 32 OSCB (Supp-2), as amended
{6} 3iQ Corp (Re), 2019 ONSEC 37
{7} NI 31-103, s. 14.5.2(1)
{8} NI 31-103, ss. 14.5.1-14.6.2
{9} NI 31-103, s. 14.5.2(7)(c)
{10} For instance, Polo Digital Assets, Ltd (Re), 2022 ONCMT 32 at para 55
{11} IDPC Rules, ss. 3703 and 4710-4711
{12} IDPC Rules, ss. 4329(1) and 4331(1); Compare with the segregation requirements for EMDs under NI 31-103, s. 14.5.3(b)
{13} IDPC Rules, s. 4172(2)
{14} IDPC Rules, s. 4151(1) and Form 1, Part II -- Schedule 3
{15} NI 31-103, Part 12
{16} IDPC Rules, Form 1, Part I -- Statement B, Note (4)
Global X Investments Canada Inc. et al.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from paragraphs 2.5(2)(a), (a.1) and (c) of National Instrument 81-102 Investment Funds to allow corporate class exchange-traded funds to purchase additional units of private investment trusts that are not reporting issuers in a Canadian jurisdiction or subject to NI 81-102 -- Mutual fund corporation is the sole unitholder of each private investment trust -- Private investment trusts are redeemable at NAV by the corporate class exchange-traded funds daily on demand and will hold only cash and cash equivalents -- Relief requested in connection with implementation of proposed structure intended to utilize tax loss carryforwards of the private investment trusts for the benefit of the shareholders of the corporate class exchange-traded funds -- Relief revokes and replaces prior relief -- Relief subject to conditions.
National Instrument 81-102 Investment Funds, ss. 2.5(2)(a), 2.5(2)(a.1) and 2.5(2)(c) and 19.1.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 144.
October 15, 2025
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the ETFs, for a decision under the securities legislation of the Jurisdiction (the Legislation) revoking and replacing a previous decision granted to the Filer on February 25, 2020 (the Previous Decision) and granting an exemption to the ETFs from the following provisions of National Instrument 81-102 Investment Funds (NI 81-102):
i. paragraph 2.5(2)(a) (in respect of each ETF that is a mutual fund, other than an alternative mutual fund) and paragraph 2.5(2)(a.1) (in respect of each ETF that is an alternative mutual fund) of NI 81-102 to purchase and/or hold securities of one or more Global X Private Trusts even though the Global X Private Trusts are not subject to NI 81-102; and
ii. paragraph 2.5(2)(c) to permit each ETF to purchase and hold securities of one or more Global X Private Trusts even though the Global X Private Trusts are not reporting issuers in any Canadian Jurisdiction
(collectively, the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the OSC) is the principal regulator for this application; and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Canadian Jurisdictions).
Terms defined in National Instrument 14-101 Definitions (NI 14-101), MI 11-102 and NI 81-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
The Filer
1. The Filer is a corporation existing under the laws of Canada with its head office located in Toronto, Ontario. The Filer is a wholly-owned subsidiary of Mirae Asset Global Investments Co., Ltd.
2. The Filer is registered as a portfolio manager in Alberta, British Columbia, Ontario and Québec, an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan, a commodity trading manager and a commodity trading adviser in Ontario and an investment fund manager in each of Ontario, Québec and Newfoundland and Labrador.
3. The Filer or an affiliate or associate of the Filer acts, or will act, as manager of each ETF. The Filer is the manager, trustee and portfolio manager of certain private investment trusts (each a Global X Private Trust) identified in Appendix "A" hereto.
4. The Filer's primary business is to act as manager and investment manager for the ETFs and other exchange traded funds in Canada.
5. The Filer is not in default of securities legislation in any of the Canadian Jurisdictions.
The ETFs
6. Each ETF is, or will be, an exchange traded mutual fund or alternative mutual fund structured as a separate class of shares of Global X Canada ETF Corp. (formerly Horizons ETF Corp.), a mutual fund corporation established under the federal laws of Canada (Global X MFC).
7. Each existing Global X ETF currently consists of a single series of a class of exchange traded fund shares of Global X MFC. Each ETF is, or will be, a separate investment fund having specific investment objectives and is specifically referable to a separate portfolio of investments.
8. Securities of the ETFs are, or will be, distributed in each of the Canadian Jurisdictions under long form prospectuses and ETF facts documents prepared in accordance with the requirements of NI 41-101 General Prospectus Requirements (NI 41-101), Form 41-101F2 Information Required in an Investment Fund Prospectus (Form 41-101F2) and NI 81-102, as applicable, and subject to any exemptions obtained therefrom.
9. Each ETF is, or will be, an investment fund organized and governed by the laws of Canada or a Canadian Jurisdiction.
10. Each ETF is, or will be, a reporting issuer under the applicable securities legislation in one or more Canadian Jurisdictions.
11. Each ETF is, or will be, subject to, among other laws and regulations, NI 81-102, National Instrument 81-106 Investment Fund Continuous Disclosure, National Instrument 81-107 Independent Review Committee for Investment Funds and any exemptions therefrom that have been, or may in the future be, granted by the securities regulatory authorities.
12. As a result of the Reorganization (as defined below) and for the reasons described below, each Global X ETF became the holder of 100% of the outstanding units of its corresponding Global X Private Trust.
13. The ETFs may, from time to time, wish to invest in the Global X Private Trusts.
14. The holding by each existing Global X ETF of securities of the corresponding Global X Private Trust was the result of the implementation of the Reorganization (as described below) that was approved by unitholders, and the continued holding by each existing Global X ETF in securities of one or more Global X Private Trusts represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Global X ETF and its securityholders.
15. Each existing Global X ETF is not in default of applicable securities legislation in any Canadian Jurisdiction.
The Reorganization
16. On November 27, 2019 and November 29, 2019, the Filer announced the reorganization of an aggregate forty-four exchange traded funds into Global X MFC, a single multi-class corporate class structure managed by the Filer (the Reorganization). As a result of the Reorganization, these exchange traded funds structured as trusts were delisted, and became trusts solely held by Global X MFC (on behalf of the corresponding Global X ETF and its shareholders).
17. Pursuant to a decision of the OSC approving the Reorganization under paragraph 5.5(1)(b) of NI 81-102, the OSC approved the continued existence of the Global X Private Trusts following the Reorganization, in part, because leaving the Global X Private Trusts and their assets in place was represented by the Filer to be necessary to defer the unnecessary realization of taxable income or gains that might otherwise occur on a wind-up of such Global X Private Trust, and/or it would otherwise be beneficial to the shareholders of the Global X ETFs not to wind them up.
18. In connection with the implementation of the Reorganization, substantially all of the assets of each Global X Private Trust were transferred to Global X MFC for the benefit of the corresponding Global X ETF, or were left in the Global X Private Trust for the benefit of the corresponding Global X ETF.
19. As a result of the Reorganization, the Global X Private Trusts ceased to offer units to the public, holders of units of the Filer's exchange traded funds structured as trusts became holders of shares of the corresponding Global X ETFs, and Global X MFC (on behalf of the corresponding Global X ETF) became the sole unitholder of each Global X Private Trust.
The Global X Private Trusts
20. Each Global X Private Trust is an investment trust established under the laws of Ontario.
21. Global X MFC (on behalf of the corresponding Global X ETF) is the sole unitholder of each Global X Private Trust.
22. The Global X Private Trusts do not carry on any active business. As a result of the Proposed Structure (defined below), the Global X Private Trusts will hold cash and cash equivalents.
23. Although units of the Global X Private Trusts are not listed or quoted on any public exchange or market, units of the Global X Private Trusts continue to be liquid as they are redeemable daily on demand by the Global X ETFs.
24. Units of the Global X Private Trusts are only available for purchase or issuance to Global X MFC on behalf of the Global X ETFs.
25. Each Global X Private Trusts is not a reporting issuer in a Canadian Jurisdiction.
26. The Global X Private Trusts are not in default of applicable securities legislation in any of the Canadian Jurisdictions.
Proposed Structure
27. ETFs that are alternative mutual funds hold, or will hold, amongst other investments, cash and cash equivalents for the purpose of securing its obligations under certain derivatives transactions with its derivatives counterparties. ETFs that are mutual funds (other than alternative mutual funds) hold, or will hold, amongst other investments, cash and cash equivalents as "cash cover" for certain derivatives transactions in accordance with section 2.8 of NI 81-102.
28. In order to utilize the tax loss carryforwards of the Global X Private Trusts, which were preserved as part of the Reorganization, and to realize tax efficiencies for the benefit of the ETFs and their shareholders, subject to the agreement of the derivatives counterparties, the Filer proposes to transfer cash and cash equivalents from the ETFs to one or more Global X Private Trusts as subscription proceeds for additional units of the applicable Global X Private Trusts (the Proposed Structure), which cash and cash equivalents held in the Global X Private Trusts would secure the ETFs' obligations under their derivatives transactions.
29. The tax loss carryforwards in the Global X Private Trusts can be used to offset any income earned on the holdings of the Global X Private Trusts, which is expected to have a material tax benefit for the shareholders of the ETFs on an ongoing basis until the losses are entirely used.
30. Following the implementation of the Proposed Structure, certain of the ETFs may continue to engage in transactions that require such ETFs to hold cash cover in accordance with the requirements of section 2.8 of NI 81-102. Units of a Global X Private Trust can be considered cash cover to the extent that the Global X Private Trust's investment activities conform to those of a "money market fund" set out under section 2.18 of NI 81-102 such that the Global X Private Trust meets the definition of "money market fund" as defined in section 1.1 of NI 81-102, since the definition of "cash cover" under NI 81-102 includes securities issued by a money market fund. Accordingly, to the extent required, the units of a Global X Private Trust that is a money market fund can be held by an ETF as cash cover to allow the ETF to continue to satisfy any cash cover obligations under section 2.8 of NI 81-102 following the implementation of the Proposed Structure.
31. The Filer also initially applied for relief excluding an ETF's holding of units of a Global X Private Trust from consideration as an "illiquid asset" for purposes of section 2.4 of NI 81-102. After discussions with OSC staff, the Filer withdrew its request for such relief given that the Global X Private Trusts are managed by the Filer as money market funds and are redeemable daily at NAV.
32. Absent the Fund of Fund Restriction Relief, the continued investment by Global X MFC, on behalf of the existing Global X ETFs, in securities of one or more Global X Private Trusts would be prohibited under paragraph 2.5(2)(a) of NI 81-102 (in respect of each ETF that is a mutual fund, other than an alternative mutual fund), paragraph 2.5(2)(a.1) (in respect of each ETF that is an alternative mutual fund) and under paragraph 2.5(2)(c) of NI 81-102 (in respect of each ETF), since the Global X Private Trusts are not subject to NI 81-102 and the Global X Private Trusts are not reporting issuers.
33. As the Global X Private Trusts do not charge any management fees or incentive fees, no ETF will pay any management or incentive fees which to a reasonable person would duplicate a fee payable by a Global X Private Trust for the same service.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the Principal Regulator under the Legislation is that the Exemption Sought is granted, provided that:
i. The investment by the ETFs in securities of the Global X Private Trusts is in accordance with the investment objectives of the ETFs;
ii. the Global X Private Trusts only issue new securities to the ETFs;
iii. the investment of the ETFs in securities of one or more Global X Private Trust otherwise complies with section 2.5 of NI 81-102, with the exception of paragraphs 2.5(2)(a), 2.5(2)(a.1) and 2.5(2)(c) of NI 81-102;
iv. the Global X Private Trusts remain in compliance with NI 81-102, with the exception of Part 12 -- Compliance Reports;
v. the Global X Private Trusts hold only cash and cash equivalents;
vi. the Global X Private Trusts are redeemable daily on demand by the ETFs;
vii. units of the Global X Private Trusts will be issued to and redeemed by the ETFs at NAV, in accordance with subsections 9.3(1) and 10.3(1) of NI 81-102.
viii. the prospectus of each ETF discloses, or will disclose at the time of its next renewal, the fact that the ETF has obtained the Exemption Sought to permit the relevant transactions on the terms described in this decision.
Application File #: 2025/0448
SEDAR+ File #: 6311217
BetaPro Canadian Gold Miners -2x Daily Bear ETF
BetaPro Canadian Gold Miners 2x Daily Bull ETF
BetaPro Crude Oil -2x Daily Bear ETF
BetaPro Crude Oil 2x Daily Bull ETF
BetaPro Gold Bullion -2x Daily Bear ETF
BetaPro Gold Bullion 2x Daily Bull ETF
BetaPro Marijuana Companies 2x Daily Bull ETF
BetaPro Marijuana Companies Inverse ETF
BetaPro NASDAQ-100® -2x Daily Bear ETF
BetaPro NASDAQ-100® 2x Daily Bull ETF
BetaPro Natural Gas -2x Daily Bear ETF
BetaPro Natural Gas 2x Daily Bull ETF
BetaPro S&P 500 VIX Short-Term FuturesTM ETF
BetaPro S&P 500® -2x Daily Bear ETF
BetaPro S&P 500® 2x Daily Bull ETF
BetaPro S&P 500® Daily Inverse ETF
BetaPro S&P/TSX 60TM -2x Daily Bear ETF
BetaPro S&P/TSX 60TM 2x Daily Bull ETF
BetaPro S&P/TSX 60TM Daily Inverse ETF
BetaPro S&P/TSX Capped EnergyTM -2x Daily Bear ETF
BetaPro S&P/TSX Capped EnergyTM 2x Daily Bull ETF
BetaPro S&P/TSX Capped FinancialsTM -2x Daily Bear ETF
BetaPro S&P/TSX Capped FinancialsTM 2x Daily Bull ETF
BetaPro Silver -2x Daily Bear ETF
BetaPro Silver 2x Daily Bull ETF
Horizons Cdn High Dividend Index ETF
Horizons Cdn Select Universe Bond ETF
Horizons Crude Oil ETF
Horizons Equal Weight Canada Banks Index ETF
Horizons Equal Weight Canada REIT Index ETF
Horizons Europe 50 Index ETF
Horizons Gold ETF
Horizons Intl Developed Markets Equity Index ETF
Horizons Laddered Canadian Preferred Share Index ETF
Horizons NASDAQ-100® Index ETF
Horizons Natural Gas ETF
Horizons S&P 500 CAD Hedged Index ETF
Horizons S&P 500® Index ETF
Horizons S&P/TSX 60TM Index ETF
Horizons S&P/TSX Capped Energy Index ETF
Horizons S&P/TSX Capped Financials Index ETF
Horizons Silver ETF
Horizons US 7-10 Year Treasury Bond ETF
LongPoint Asset Management Inc. et al.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exchange traded mutual funds granted exemption from the concentration restriction in subsection 2.1(1.1) of NI 81-102 to permit each fund to purchase and/or enter into specified derivatives transactions to obtain daily investment results that endeavour to correspond to up to 200% of the daily performance of a single Canadian public issuer, or up to 200% of the inverse of the daily performance of a single Canadian public issuer, in accordance with, and as limited by, its investment objective -- relief subject to conditions.
National Instrument 81-102 Investment Funds, ss. 2.1(1.1) and 19.1.
October 15, 2025
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the ETFs for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting each ETF from subsection 2.1(1.1) of National Instrument 81-102 Investment Funds (NI 81-102) (the Concentration Restriction) to permit each ETF, in accordance with its fundamental investment objective, to purchase a security of an issuer (or enter into a specified derivative transaction or purchase an index participation unit) where, immediately after the transaction, more than 20% of the net asset value of the ETF will be invested in securities of a single Specified Canadian Public Issuer (as defined below) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for the application; and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada and the Jurisdiction (together with the Jurisdiction, the Canadian Jurisdictions).
Terms defined in MI 11-102, National Instrument 14-101 Definitions, MI 11-102, National Instrument 41-101 General Prospectus Requirements (NI 41-101) and NI 81-102 have the same meaning when used herein unless otherwise defined herein. In addition:
Absolute Leverage means, with respect to an ETF, the aggregate notional absolute value of the securities and/or financial derivative positions as a ratio of the total assets held by the ETF.
Canadian Public Issuer Requirements has the meaning ascribed to such term in the definition of Specified Canadian Public Issuer.
Designated Broker means a registered dealer that has entered, or intends to enter, into an agreement with the Filer to perform certain duties in relation to the ETF, including the posting of a liquid two-way market for the trading of the ETF Securities on an Exchange or another Marketplace.
ETF Security means an exchange-traded security of an ETF.
Exchange means a "recognized exchange" as defined in National Instrument 21-101 Marketplace Operation (NI 21-101).
Marketplace means a "marketplace" as defined in NI 21-101 that is located in Canada.
Portfolio Securities means, in relation to an ETF, the securities of a Specified Canadian Public Issuer in which the ETF invests.
Prospectus means the prospectus of each ETF.
Specified Canadian Public Issuer means a public company (i) that is incorporated and headquartered in Canada; (ii) that is listed on an Exchange; (iii) that has a market capitalization in excess of CAD$20 billion at the time of initial investment; and (iv) whose Portfolio Securities have an average daily trading volume in the month before the date that the ETF Securities are listed on an Exchange in excess of CAD$75 million (collectively, the Canadian Public Issuer Requirements).
Securityholders means the beneficial or registered holders of ETF Securities.
TSX means the Toronto Stock Exchange.
All references herein to sections and subsections are to the provisions of NI 81-102 unless specifically identified otherwise.
This decision is based on the following facts represented by the Filer:
The Filer and the ETFs
1. The Filer is a corporation formed and organized under the laws of the Province of Ontario. The head office of the Filer is located in Toronto, Ontario.
2. The Filer is currently registered as a portfolio manager, commodity trading manager and exempt market dealer in Ontario and as an investment fund manager in Ontario, Québec and Newfoundland and Labrador.
3. The Filer will be the investment fund manager and portfolio manager of the Proposed ETFs. The Filer or an affiliate of the Filer will be the investment fund manager of the Future ETFs.
4. The Filer is not a reporting issuer in any Jurisdiction and is not in default of securities legislation in any of the Jurisdictions.
5. Each Proposed ETF will be a separate open-ended corporate class of LongPoint ETF Corp., a mutual fund corporation established under the federal laws of Canada. Each corporate class will be a separate investment fund with specific investment objectives and a separate portfolio of investments.
6. Each Future ETF will be an exchange-traded mutual fund that is a trust, corporation or separate class of shares of a mutual fund corporation governed by the laws of a Canadian Jurisdiction.
7. Each ETF will be a reporting issuer in the Canadian Jurisdiction(s) in which it offers ETF Securities.
8. Each ETF will be an open-ended alternative mutual fund (as defined in NI 81-102).
9. The ETFs will be subject to NI 81-102, subject to any exemptions that may be granted by the applicable securities regulatory authorities.
10. The Filer will file a final prospectus in respect of each ETF which will be prepared and filed in accordance with NI 41-101 or National Instrument 81-101 -- Mutual Fund Prospectus Disclosure, subject to any exemptions that may be granted by the applicable securities regulatory authorities.
11. The ETF Securities will be (subject to satisfying the original listing requirements of the applicable Exchange) listed on an Exchange.
12. Designated Brokers will act as intermediaries between investors and the ETFs, performing a market-making function, including by standing in the market with bid and ask prices for the ETF Securities to maintain a liquid market for the ETF Securities. The majority of trading in ETF Securities will occur in the secondary market.
13. The fundamental investment objective of each ETF will be to seek to provide daily investment results that endeavour to correspond, before fees and expenses, to a multiple (the Target Leverage) greater than one times and that is up to or equal to two times (i.e., between 1X and 2X) or a multiple greater than one times the inverse (opposite) and that is up to or equal to two times the inverse (opposite) (i.e., between -1X and -2X) of the daily return (on a percentage basis) of a Specified Canadian Public Issuer.
14. Each Proposed ETF will employ Absolute Leverage that will not exceed its Target Leverage. Use of leverage by an ETF will be in accordance with NI 81-102, subject to any exemptions that may be granted by the applicable securities regulatory authorities. In order to ensure that a securityholder's risk is limited to the capital invested, each Proposed ETF's Absolute Leverage will be rebalanced daily and when the Absolute Leverage breaches certain bands. Specifically, each Proposed ETF's Absolute Leverage will be rebalanced back to its Target Leverage within one business day if the Proposed ETF's Absolute Leverage moves 5% below its Target Leverage or is above its Target Leverage (for example, if the Target Leverage is 200%, then rebalancing will occur if the Absolute Leverage is less than 195% or if the Absolute Leverage is greater than 200%).
15. In order to achieve its investment objective, each Proposed ETF may invest in Portfolio Securities and/or other financial instruments, including specified derivatives. Where the Filer considers it in the best interests of the ETF to do so, the ETF may purchase Portfolio Securities directly using borrowed cash.
16. Specifically, the Portfolio Securities and the Specified Canadian Public Issuer for each of the Proposed ETFs will be as follows:
Proposed ETF |
Portfolio Securities |
Specified Canadian Public Issuer |
|
||
SavvyLong (2X) Barrick ETF |
Common stock |
Barrick Mining Corporation |
|
||
SavvyLong (2X) Cameco ETF |
Common stock |
Cameco Corporation |
|
||
SavvyLong (2X) Cdn Natural Resources ETF |
Common stock |
Canadian Natural Resources Limited |
|
||
SavvyLong (2X) CIBC (CM) Equity-Linked ETF |
Common stock |
Canadian Imperial Bank of Commerce |
|
||
SavvyLong (2X) Constellation Software ETF |
Common stock |
Constellation Software Inc. |
|
||
SavvyLong (2X) NBC (NA) Equity-Linked ETF |
Common stock |
National Bank of Canada |
|
||
SavvyLong (2X) RBC (RY) Equity-Linked ETF |
Common stock |
Royal Bank of Canada |
|
||
SavvyLong (2X) Shopify ETF |
Class A subordinate voting shares |
Shopify Inc. |
|
||
SavvyLong (2X) TDB (TD) Equity-Linked ETF |
Common stock |
Toronto-Dominion Bank |
|
||
SavvyShort (-2X) Shopify ETF |
Class A subordinate voting shares |
Shopify Inc. |
17. Each ETF will use a ticker symbol that the Filer believes is unlikely to be confused with the ticker symbol for the Portfolio Securities and the Specified Canadian Public Issuer for the ETF.
18. The distribution of ETF Securities (the Distribution) will be conducted without the knowledge or consent of the Specified Canadian Public Issuers and the Filer, as a general matter, will not have direct knowledge or access to material information regarding the Specified Canadian Public Issuers or Portfolio Securities other than publicly available information.
Disclosure
19. The Prospectus will disclose:
(a) the name of each ETF, with language identifying the Target Leverage applicable to the ETFs (for example, an ETF with Target Leverage of 200% will include "2X" or "-2X", as applicable);
(b) the investment objective and investment strategy of each ETF as well as the risk factors associated therewith, including concentration risk;
(c) the fact that the ETF has obtained the Exemption Sought to permit the purchase of the Portfolio Securities on the terms described in therein;
(d) the ways in which, and the extent to which, purchasing and holding the ETF Securities can be expected to be different from directly purchasing and holding the Portfolio Securities and the factors influencing these differences (such as the use of leverage by each ETF), including in respect of performance, returns and securityholder rights;
(e) that the ETF's investment in the Portfolio Securities will be a passive investment;
(f) the Filer's specific policies and procedures for making proxy voting and tender decisions in respect of the Specified Canadian Public Issuer and the expected outcomes for the ETF of such decisions in potential scenarios, such as merger or other restructuring of the Specified Canadian Public Issuer, a sale of part or all of its business, or bankruptcy of the Specified Canadian Public Issuer and other scenarios; and
(g) prominently a statement substantially similar to the following:
Investors investing, or considering investment, in an ETF (which invests in a single underlying corporate issuer) should consider their ongoing obligations with respect to insider trading, insider reporting, and take-over bids under the Ontario Securities Act (the Act) or other relevant securities legislation and national instruments and as explained in national policies. Securities regulators may take the view that these provisions extend to the purchase and sale of securities of ETFs that invest in securities of a single issuer, including on a look-through basis. For example:
• Under section 76(1) of the Act, individuals or entities in a special relationship with an issuer are prohibited from purchasing or selling securities of that issuer with knowledge of a material fact or material change that has not been generally disclosed. Securities regulators may take the view that this prohibition extends to the purchase and sale of securities of ETFs that invest in securities of a single issuer;
• Securities regulators may take the view that the insider reporting requirements in section 107 of the Act apply in respect of purchases of securities of ETFs that invest in securities of a single issuer; and
• Where ETF securities are redeemable for securities of the ETF's single underlying issuer, securities regulators may consider those ETF securities convertible securities under section 1.7 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) that count, on a post conversion-basis in respect of the underlying issuer, towards the early warning reporting thresholds in Part 5 of NI 62-104.
Investors are strongly encouraged to seek legal advice or consult with their compliance officers to fully understand their insider trading, insider reporting, and take-over bids obligations and how they relate to investment in these ETFs. Failure to comply with these obligations may result in regulatory scrutiny and enforcement actions. Purchasing a single-issuer ETF is not equivalent to holding the securities of the underlying issuer directly; investors may not have the same rights and may be subject to additional risks, as further referenced in this prospectus.
20. The Prospectus will provide only abbreviated disclosure in respect of the Portfolio Securities and the Specified Canadian Public Issuer based on publicly available information.
21. The Filer intends to meet the full, true and plain disclosure requirement of the Legislation in connection with the ETF Securities without having responsibility for the accuracy of disclosure issued by the Specified Canadian Public Issuer in respect of the Portfolio Securities. The Prospectus will direct investors to public disclosure made available by the Specified Canadian Public Issuer in respect of the Portfolio Securities in accordance with applicable Canadian securities legislation. The Prospectus will also clarify that such disclosure and other information made publicly available about the Portfolio Securities and the Specified Canadian Public Issuer on the Filer's website and otherwise cannot be expected to contemplate the Distribution. The Prospectus will clearly state that the Filer is not the source of disclosure relating to the Portfolio Securities and the Specified Canadian Public Issuer and will clearly disclaim the Filer's responsibility both for verifying the accuracy of such disclosure and for updating such disclosure.
22. To meet the full, true and plain disclosure requirement, the Prospectus will disclose that the Specified Canadian Public Issuer will not receive a direct or indirect financing benefit from the Distribution.
23. The ETFs cannot pursue their fundamental investment objectives without the Exemption Sought.
24. The Filer submits that each ETF's strategy to acquire Portfolio Securities will be transparent, passive and fully disclosed to investors. An ETF will not invest in securities other than Portfolio Securities. Investors will be aware that each ETF utilizes leverage through the inclusion of language to identify the Target Leverage applicable to the ETFs in its name.
25. The Filer submits that an ETF that relies on the Exemption Sought would be analogous to an investment fund that relies on the exception to the Concentration Restriction in subsection 2.1(2) of NI 81-102 for purchases of equity securities by a "fixed portfolio investment fund", as defined in NI 81-102, in accordance with its investment objectives. The Filer submits that the only difference would be that the ETFs are in continuous distribution and the ETF Securities are redeemable on each trading day, accordingly, the ETFs will buy and sell Portfolio Securities as may be required in connection with subscription and redemption requests received by the ETFs. However, the Filer submits that the existence of the ETF's Designated Broker should mean that the ETF Securities (which are listed on an Exchange) will not trade at a discount to the net asset value per ETF Security which may more likely be the case for a "fixed portfolio investment fund".
26. The Specified Canadian Public Issuers will be among the largest public issuers in Canada. The Portfolio Securities will be some of the most liquid equity securities listed on the TSX and will be less likely to be subject to liquidity concerns than the securities of other issuers.
27. The Filer believes that any risks associated with an investment in only a single Specified Canadian Public Issuer in reliance on the Exemption Sought will be mitigated by the fact that the Portfolio Securities are highly liquid and that there is a robust liquid options market for these securities.
28. The Filer submits that, given the market price per publicly listed security of certain of the Specified Canadian Public Issuers, many investors would be unable to achieve meaningful exposure to such Specified Canadian Public Issuers through direct investment. The ETFs also will meet a need for those investors seeking up to two times investment exposure in a Specified Canadian Public Issuer.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted in respect of each ETF provided that:
(a) But for the fact that ETF Securities may be subscribed for or redeemed on each trading day (i.e. the ETFs being in continuous distribution), the ETF otherwise meets the definition of "fixed portfolio investment fund" in NI 81-102.
(b) Any purchase by the ETF of the Portfolio Securities is in accordance with the investment objectives of the ETF.
(c) At the time that the ETF Securities are listed on an Exchange, the Specified Canadian Public Issuer and its Portfolio Securities satisfy the Canadian Public Issuer Requirements.
(d) The ETF will not purchase Portfolio Securities if the ETF would, as a result of such purchase, become an insider of the Specified Canadian Public Issuer.
(e) The ETF's Prospectus contains the disclosure referred to in representations 19 through 22 above;
(f) The Filer will not permit the ETFs to be used as a financing vehicle by a Specified Canadian Public Issuer or to permit an indirect offering of Portfolio Securities into a jurisdiction of Canada.
(g) No ETF will inter-list in the United States of America or any other foreign Marketplace.
(h) No ETF will purchase securities of the Specified Canadian Public Issuer if, immediately following such purchase, the ETF would hold securities of the Specified Canadian Public Issuer in an amount exceeding 1% of the Specified Canadian Public Issuer's total market capitalization.
Application File #: 2025/0562
SEDAR+ #: 6339873
Application for a decision exempting the Filer, a U.S.-registered broker-dealer, from the dealer registration requirement to permit the Filer to provide an "outsourced trading service" (Trading Services) relating to securities of Canadian issuers to certain institutional permitted clients in Canada. Trading Services refers to the communication of trade orders relating to Canadian securities receive from certain institutional permitted clients (e.g., asset managers) to their executing broker-dealers for execution, clearance, and settlement but does not include the execution of trades in securities -- execution of trades in securities of Canadian issuers will be made by executing brokers that have an existing relationship with the institutional permitted client -- relief is subject to a three (3) year sunset clause.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(1), 25(1), 74.
Multilateral Instrument 11-102 Passport System, s. 4.7.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 1.1, 8.5 8.18, 8.21.
National Instrument 23-102 Use of Client Brokerage Commissions as Payment for Order Execution Services, s. 3.1 and Part 4.
October 15, 2025
The principal regulator in the Jurisdiction has received an application from the Filer (the Application) for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Filer from the dealer registration requirement in the Legislation in respect of providing Trading Services (as defined below) relating to securities of Canadian issuers to Institutional Permitted Clients (as defined below) in the Jurisdictions (as defined below) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (OSC) is the principal regulator for this Application, and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with the Jurisdiction, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
For the purposes of this decision, the following terms have the following meanings:
"Canadian security" means a security that is not a foreign security;
"foreign security" has the meaning ascribed to that term in subsection 8.18(1) of NI 31-103;
"Institutional Permitted Client" means a "permitted client" as defined in section 1.1 of NI 31-103, except for:
(a) an individual,
(b) a person or company acting on behalf of a managed account of an individual,
(c) a person or company referred to in paragraph (p) of that definition unless that person or company qualifies as an Institutional Permitted Client under another paragraph of that definition, or
(d) a person or company referred to in paragraph (q) of that definition unless that person or company has net assets of at least $100 million as shown on its most recently prepared financial statements or qualifies as an Institutional Permitted Client under another paragraph of that definition;
"NI 31-103" means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations; and
"Trading Services" means the communication of trade orders relating to Canadian securities received from Institutional Permitted Clients in the Jurisdictions to their executing broker-dealers for execution, clearance, and settlement. For greater certainty, the term "Trading Services" does not include the execution of trades in securities.
This Decision is based on the following facts represented by the Filer:
1. The Filer is a limited liability company formed under the laws of Connecticut. The head office of the Filer is located in Stamford, Connecticut, United States.
2. The Filer is registered as a broker-dealer with the United States (U.S.) Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization. Under its membership agreement with FINRA, the Filer is approved to perform the following types of business activities:
A. Broker or dealer selling corporate equity securities over-the-counter (OTC);
B. Broker or dealer in selling corporate debt securities;
C. Underwriter or selling group participant (corporate securities other than mutual funds);
D. U.S. government securities broker;
E. Option writer or dealer or option writer;
F. Non-exchange member effecting transactions in listed securities through exchange member;
G. Private placements of securities;
H. Soft-dollar activities, including allowing a customer to add on additional commissions above regular rate charged to execute;
I. Arrange transactions in securities futures products on an agency or riskless principal basis; and
J. Conduct SEC Rule 15(a)-6 business activities, including the distribution of research reports produced by foreign broker dealers, and the execution of securities transactions.
3. The Filer provides outsourced trading services in the U.S. to asset managers and other institutional clients by acting as an intermediary between such clients and their executing broker-dealers, communicating trade orders received from each client on an unsolicited basis to the dealer for execution, clearance, and settlement.
4. The Filer currently relies on section 8.18 [International dealer] of NI 31-103 in each of the Jurisdictions to provide outsourced trading services in respect of foreign securities with Canadian-resident "permitted clients" (as such term is defined in NI 31-103).
5. The Filer has applied for the Exemption Sought as it wishes to provide similar services to Institutional Permitted Clients in the Jurisdictions (the Trading Services Clients) in respect of Canadian securities.
Nature of the Trading Services to be provided to Trading Services Clients
6. The Filer will enter into a written agreement with each Trading Services Client for the provision of Trading Services (Trading Authorization Agreement).
7. The Filer will communicate a Trading Services Client's trading instructions to an investment dealer or other appropriately registered or exempt dealer (the Executing Broker) for execution. The Executing Broker will be an appropriately registered dealer or a person or company relying on an exemption from dealer registration in the Jurisdictions that permits such executing broker to execute the trade for Trading Services Clients.
8. The Filer will communicate trade instructions in respect of Canadian securities on behalf of Trading Services Clients including trade instructions in relation to listed equities and OTC options.
9. Trading Services Clients will provide an "authorized trader" or similar document to their Executing Brokers that designates the Filer as having authority to communicate trade orders on their behalf. Trading Services Clients will deliver trade orders to the Filer, who will then communicate the order to the Executing Broker for execution, clearance and settlement.
10. Instructions in connection with the trading of Canadian securities will be provided by Trading Services Clients pursuant to the Trading Authorization Agreement on an unsolicited basis to the Filer.
11. The Filer does not require its Trading Services Clients to use specific Executing Brokers through whom trades must be executed. Pursuant to the Trading Authorization Agreement, Trading Services Clients will provide the Filer with a list of approved Executing Brokers through whom trading instructions may be executed.
12. A Trading Services Client may provide the Filer with specific instructions (Specific Instructions) regarding, inter alia, the Executing Broker to be utilized for a trade. In such circumstances, the Filer will be obligated to communicate the Trading Services Client's instructions to the Executing Broker in accordance with the Specific Instructions.
Best execution obligations applicable to the Filer
13. In the absence of Specific Instructions from the Trading Services Client, the Filer has discretion with respect to the routing of trade instructions among the Executing Brokers authorized by the client. The choice of Executing Broker will be made in accordance with the Filer's best execution policy (the Best Execution Policy). The Best Execution Policy provides that, in the absence of Specific Instructions, an Executing Broker will be selected from the Trading Services Client's list of authorized Executing Brokers based on factors which include: price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of an order (the Execution Factors).
14. In the circumstances described above in paragraph 13, the Filer will take into account the following specific Execution Factors in selecting an Executing Broker:
(a) the execution price without any costs charged to the Trading Services Client, or the Filer's own commissions;
(b) the speed and/or likelihood of execution;
(c) the impact on market prices of displaying and/or executing an order or part of an order;
(d) the opportunity for an order to be executed at a better price than what is currently quoted publicly; and
(e) any other consideration relevant to the efficient execution of the order.
15. When communicating orders for Canadian securities with the Trading Services Client's Executing Broker, the Filer will take into account the following criteria for determining the relative importance of the Execution Factors in the circumstances:
(a) the characteristics of the Trading Services Client including the regulatory categorization of the Trading Services Client;
(b) the characteristics of the trade order;
(c) the characteristics of Canadian securities that are the subject of the relevant order; and
(d) the characteristics of the Executing Broker to which the relevant order can be directed.
16. The Trading Authorization Agreement will include a provision whereby the Filer agrees that it will be responsible for any loss that arises out of its failure
(a) to exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the Trading Services Client; or
(b) to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.
17. The Filer will accept and track Trading Services Client trading instructions for the purpose of communicating such instructions to Executing Broker(s) for execution and maintaining an audit trail.
18. The Executing Broker will execute transactions on behalf of Trading Services Clients by: (i) accepting the trade orders received from the Filer; (ii) transmitting and executing the securities transactions or acting as counterparty to an OTC transaction; (iii) taking financial responsibility for the completion of the transaction; (iv) making and/or monitoring records related to such transactions, as required by applicable laws, rules, and regulations; (v) effecting settlement of the transaction; and (vi) providing all post trade confirmations and reports directly to the Trading Services Client.
19. The compensation for Trading Services provided by the Filer in relation to trades in Canadian securities on a stock exchange or marketplace will be included in the total commission paid by a Trading Services Client to its Executing Broker and is included as an additional commission for trades pursuant to the terms of a commission sharing or similar agreement entered into between either the Filer and the Executing Broker or the Filer, the Trading Services Client and the Executing Broker. The Filer will receive payment for the Trading Services directly from the Executing Broker.
20. The compensation for Trading Services provided by the Filer in relation to trades in Canadian securities on an OTC market will be directly paid to the Filer by the Trading Services Client pursuant to the terms of the Trading Authorization Agreement.
21. Only investment dealers that are dealer members of the Canadian Investment Regulatory Organization (CIRO) or firms relying on an applicable exemption from the dealer registration requirement are permitted to engage in trading in Canadian securities if the Canadian security is listed, quoted or traded on a marketplace in Canada and if the trade in the Canadian security does not require reliance on a further exemption from the prospectus requirement in the Jurisdictions.
Best execution obligations that may be applicable to Trading Services Clients
22. In the U.S., the Filer is able to offer outsourced trading services to asset managers (including registered investment advisers) and other clients on the basis of an exemption in section 28(e) of the Exchange Act. Specifically, the Filer's outsourced trading services come within the "safe harbor" for "brokerage and research services" that are permitted under section 28(e) of the Exchange Act{1} and asset managers that are registered investment advisers are permitted to use client commissions for such outsourced trading services pursuant to this safe harbor.
23. In Canada, the Trading Services provided by the Filer constitute "order execution goods and services" and "research goods and services" within the meaning of section 3.1(a) of National Instrument 23-102 Use of Client Brokerage Commissions in that the Trading Services are directly related to order execution.
24. To assist Trading Services Clients that are registrants in determining if they are meeting their "best execution" obligation under Part 4 of National Instrument 23-101 Trading Rules, the Filer provides Trading Services Clients at their request with a detailed Trade Cost Analysis report on a quarterly basis which compares trade execution on behalf of the Trading Services Client against benchmarks selected by the Trading Services Client.
Why is relief required?
25. The Filer is not registered under the Securities Act (Ontario) (the Act) and will be in the business of trading in securities by virtue of providing the Trading Services. In the absence of the Exemption Sought, the Filer cannot provide the Trading Services in the Jurisdictions in respect of Canadian securities issuers without registration, except as permitted under section 8.5 [Trades through or to a registered dealer], under the exemptions found in paragraphs (a), (b) and (f) of subsection 8.18(2) [International dealer], and under section 8.21 [Specified debt] of NI 31-103.
26. The Filer does not hold, take custody of, remit or exchange money or Canadian securities on behalf of Trading Services Clients.
27. The Filer will not lend money, extend credit or provide margin to Trading Services Clients.
28. The Filer is subject to regulatory capital requirements under the Securities Exchange Act of 1934, specifically SEC Rule 15c3-1 Net Capital Requirements for Brokers or Dealers (SEC Rule 15c3-1) and SEC Rule 17a-5 Reports to be Made by Certain Brokers and Dealers (SEC Rule 17a-5).
29. SEC Rule 15c3-1 is designed to provide protections that are substantially similar to the protections provided by the capital formula requirements and specifically risk adjusted capital to which dealer members of CIRO are subject, and the Filer is in compliance with SEC Rule 15c3-1 and is in compliance in all material respects with SEC Rule 17a-5. If the Filer's net capital declines below the minimum amount required, the Filer is required to notify the SEC and FINRA pursuant to SEC Rule 17a-11 Notification Provisions for Brokers and Dealers (SEC Rule 17a-11). The SEC and FINRA have the responsibility to provide oversight over the Filer's compliance with SEC Rule 15c3-1 and SEC Rule 17a-5.
30. The Filer is required to prepare and file a financial report, which includes Form X-17a-5 (FOCUS Report) which is a financial and operational report containing a net capital calculation, and a compliance report annually with the SEC and FINRA pursuant to SEC Rule 17a-5(d). The FOCUS Report provides a more comprehensive description of the business activities of the Filer, and more accurately reflects such activities than would otherwise be provided by Form 31-103F1 Calculation of Excess Working Capital (Form 31-103F1). The net capital requirements computed using methods prescribed by SEC Rule 15c3-1 are based on all assets and liabilities on the books and records of a broker-dealer whereas Form 31-103F1 is a calculation of excess working capital, which is a computation based primarily on the current assets and current liabilities on the books and records of the dealer. The Filer is up-to-date in its submissions of annual reports under SEC Rule 17a-5(d), including the FOCUS Report.
31. The Filer is in compliance in all material respects with U.S. securities laws. The Filer is not in default of securities legislation in any jurisdiction in Canada.
32. The Filer is a "market participant" as defined under subsection 1(1) of the Act. As a market participant, among other requirements, the Filer is required to comply with the record keeping and provision of information provisions under section 19 of the Act, which include the requirement to keep such books, records and other documents as are necessary for the proper recording of business transactions and financial affairs and the transactions executed on behalf of others and to deliver such records to the OSC if required.
33. The Filer submits that the Exemption Sought would not be prejudicial to the public interest because:
(a) the Filer is regulated as a broker-dealer under the securities legislation of the U.S., and is subject to the requirements listed in paragraphs 28 to 30.
(b) the availability of, and access to, the Trading Services is important to Canadian institutional investors who are active participants in the international marketplace;
(c) the Filer will provide Trading Services in the Jurisdictions only to Institutional Permitted Clients;
(d) the OSC has entered into a memorandum of understanding with the SEC regarding mutual assistance in the supervision and oversight of regulated entities that operate on a cross-border basis in the U.S. and Canada; and
(e) the OSC has entered into a memorandum of understanding with FINRA to provide a formal basis for the exchange of regulatory information and investigative assistance.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted so long as the Filer:
(a) has its head office or principal place of business in the U.S.;
(b) is registered as a broker-dealer under the securities legislation of the U.S., which permits the Filer to provide the Trading Services in the U.S.;
(c) is a member of FINRA;
(d) limits its provision of Trading Services in the Jurisdictions under this decision in respect of Canadian securities to Institutional Permitted Clients;
(e) enters into a Trading Authorization Agreement with each Trading Services Client;
(f) does not provide Trading Services in relation to Canadian securities with or for Institutional Permitted Clients except as permitted under Canadian securities laws;
(g) does not require its Trading Services Clients to use specific executing brokers through which Trading Services Clients must execute trades;
(h) notifies the OSC of any regulatory action initiated after the date of this decision in respect of the Filer, or any predecessors or specified affiliates of the Filer, by completing and filing with the OSC Appendix "A" hereto within ten days of the commencement of any such action; provided that the Filer may also satisfy this condition by filing with the OSC within ten days of the date of this decision a notice making reference to and incorporating by reference the disclosure made by the Filer pursuant to U.S. federal securities laws that is identified in the FINRA BrokerCheck system, and any updates to such disclosure that may be made from time to time, and by providing notification, in a manner reasonably acceptable to the Director, of any filing of a Form BD "Regulatory Action Disclosure Reporting Page";
(i) submits the financial report and compliance report as described in SEC Rule 17a-5(d) to the OSC on an annual basis, at the same time such reports are filed with the SEC and FINRA;
(j) submits audited financial statements to the OSC on an annual basis, within 90 days of the Filer's financial year end;
(k) submits to the OSC immediately a copy of any notice filed under SEC Rule 17a-11 or under SEC Rule 15c3-3(i) with the SEC and FINRA;
(l) complies with the filing and fee payment requirements applicable to a registrant under OSC Rule 13-502 Fees, including, for clarity, participation fees based on its specified Ontario revenues attributable to capital markets activities conducted in reliance on the "international dealer exemption" under section 8.18 [International dealer] of NI 31-103 and capital markets activities conducted in reliance on the exemption in this Decision;
(m) files in an electronic and searchable format with the OSC such reports as to any or all of its trading activities in Canada as the OSC may, upon notice, require from time to time; and
(n) pays the increased compliance and case assessment costs of the principal regulator due to the Filer's location outside Ontario, including, as required, the reasonable cost of hiring a third party to perform a compliance review on behalf of the principal regulator.
This decision shall expire three (3) years after the date hereof.
This decision may be amended by the OSC from time to time upon prior written notice to the Filer.
OSC File #: 2025/0508
{1} SEC Guidance Regarding Client Commission Practices Under Section 28(e) of the Exchange Act dated July 2006 https://www.govinfo.gov/content/pkg/FR-2006-07-24/pdf/06-6410.pdf
RBC Dominion Securities Inc. et al.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- offering of corporate strip securities; exemption granted from the eligibility requirements of National Instrument 44-102 Shelf Distributions and National Instrument 44-101 Short Form Prospectus Distributions to permit the filing of a shelf prospectus and prospectus supplements qualifying for distribution strip residuals, strip coupons and strip packages to be derived from debt obligations of Canadian corporations and trusts; exemption also granted from the requirements that the prospectus contain a certificate of the issuer and that the prospectus incorporate by reference documents of the underlying issuer.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 58(1).
National Instrument 44-101 Short Form Prospectus Distributions, ss. 2.1 and 8.1.
National Instrument 44-102 Shelf Distributions, ss. 2.1, 5.5 and 11.1.
Form 44-101F1 Short Form Prospectus, item 11.
October 16, 2025
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for the following exemptions (the Exemption Sought):
1. an exemption from Section 2.1 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) and Section 2.1 of National Instrument 44-102 Shelf Distributions (NI 44-102) so that a Prospectus can be filed by the Filers to renew the CARS and PARS Programme and offer Strip Securities in the Jurisdictions; and
2. an exemption from the following requirements in respect of any Underlying Issuer whose Underlying Obligations are purchased by any one or more of the Filers on the secondary market, and Strip Securities derived therefrom and sold under the CARS and PARS Programme:
(i) the requirements of the Legislation under Section 5.5 of NI 44-102 and Section 58(1) of the Securities Act (Ontario) that the Prospectus contain a certificate of the Underlying Issuer; and
(ii) the requirements of the Legislation under Item 11 of Form 44-101F1 Short Form Prospectus that the Prospectus incorporate by reference documents of an Underlying Issuer.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(i) the Ontario Securities Commission is the principal regulator for this application, and
(ii) the Filers have provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Newfoundland and Labrador, New Brunswick, Prince Edward Island, Nova Scotia, Yukon Territory, Northwest Territories and Nunavut (collectively with Ontario, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
CARSTM means strips coupons and strips residuals.
CARS and PARS ProgrammeTM means the strip bond product programme of the Filers to be offered by Prospectus.
CDS means CDS Clearing and Depository Services Inc.
CDS Book-Entry Strip Service means the services provided by CDS to enable Participants to strip, reconstitute and package securities, as set out in the CDSX Procedures and User Guide, or any successor operating rules and procedures.
Offering Date means the time of the closing of the discrete offering in respect of the related Strip Securities.
PARSTM means par adjusted rate strips, comprising an entitlement to receive the principal amount of, and a portion, equal to a market rate (at the applicable time of issuance) of the interest payable under the Underlying Obligations.
Participants means participants in the depository system of CDS.
Prospectus means a short form prospectus which is a base shelf prospectus together with the appropriate prospectus supplements.
SEDAR+ means the System for Electronic Data Analysis and Retrieval +.
Strip Coupons means separate components of interest derived from an Underlying Obligation.
Strip Packages means packages of Strip Securities, including packages of Strip Coupons and packages of PARS.
Strip Residuals means separate components of principal derived from an Underlying Obligation.
Strip Securities means separate components of interest, principal or combined principal and interest components derived from Underlying Obligations using the CDS Book-Entry Strip Service and sold under the CARS and PARS Programme, including Strip Residuals, Strip Coupons and Strip Packages.
Underlying Issuers means Canadian corporate, trust and/or partnership issuers.
Underlying Obligations means publicly-issued debt obligations of Underlying Issuers, which obligations will carry a "designated rating" as such term is defined in NI 44-101 at the Offering Date.
Underlying Obligations Prospectus means a prospectus for which a receipt was issued by the securities regulatory authorities in British Columbia, Alberta, Ontario and Quebec.
This decision is based on the following facts represented by the Filers:
1. Each of the Filers is a corporation incorporated under the laws of Canada, and all the Filers have their head offices in Toronto, except Desjardins Securities Inc. and National Bank Financial Inc., which have their head offices in Montreal.
2. None of the Filers are in default of securities legislation in the Jurisdictions.
3. The CARS and PARS Programme has been in effect since November 19, 2002 in reliance on a MRRS decision document dated October 31, 2002, and has subsequently been renewed and continued in reliance on decision documents dated March 6, 2003, November 19, 2004, December 18, 2006, January 15, 2009, February 17, 2011, April 8, 2013, April 17, 2015, May 29, 2017, June 29, 2019, August 13, 2021 and August 24, 2023.
4. The Filers propose to continue to operate the CARS and PARS Programme.
5. The CARS and PARS Programme will continue to be operated by purchasing, on the secondary market, Underlying Obligations of Underlying Issuers, and deriving separate components therefrom, being Strip Residuals, Strip Coupons, and/or Strip Packages.
6. The relevant Underlying Issuer will, to the best of the knowledge of each Filer participating in the relevant offering under the CARS and PARS Programme, be eligible to file a short form prospectus under NI 44-101 (whether such eligibility results from the specific qualification criteria of NI 44-101 or from the granting of an exemption from those criteria) at the Offering Date.
7. The Underlying Obligations will have been distributed under a prospectus for which a receipt was granted by the regulator in British Columbia, Alberta, Ontario, and Quebec.
8. A single short form base shelf prospectus will be established for the renewed CARS and PARS Programme as a whole, with a separate series of Strip Securities being offered under a discrete prospectus supplement for each distinct series or class of Underlying Obligations.
9. It is expected that the Strip Securities will continue to be predominantly sold to retail customers.
10. It is expected that the Filers, or certain of them, will continue to periodically identify, as demand indicates, series of outstanding debt obligations of Canadian corporations, trusts or partnerships and will purchase and "repackage" individual series of these for sale under the CARS and PARS Programme as discrete series of Strip Securities. In purchasing the Underlying Obligations and creating the Strip Securities, the Filers will not enter into any agreement or other arrangements with the Underlying Issuers.
11. The Prospectus will refer purchasers of the Strip Securities to the SEDAR+ website (currently located at www.sedarplus.ca) where they can obtain the continuous disclosure materials of the Underlying Issuer.
12. The Filers, or certain of them, may, from time to time, form and manage a selling group consisting of other registered securities dealers to solicit purchases of, and sell to the public, the Strip Securities.
13. The Strip Securities will be sold in series, each such series relating to separate Underlying Obligations of an Underlying Issuer. The base shelf prospectus for use with the CARS and PARS Programme will describe the CARS and PARS Programme in detail. The shelf prospectus supplement for any series of Strip Securities that are offered will describe the specific terms of the Strip Securities.
14. Each offering of Strip Securities will be derived from one or more Underlying Obligations of a single class or series of an Underlying Issuer. The Filer(s) participating in each offering under the CARS and PARS Programme intend to use the CDS Book-Entry Strip Service to separate the Underlying Obligations for such series into separate principal and interest components, or strip bonds. These components will, in connection with each series, be re-packaged using the CDS Book-Entry Strip Service if and as necessary to create the Strip Securities.
15. The Strip Residuals of a particular series, if any, will consist of the entitlement to receive payments of a portion of the principal amounts payable under the Underlying Obligations, if, as and when paid by the Underlying Issuer on the Underlying Obligations, in accordance with their respective terms.
16. The Strip Coupons of a particular series will consist of the entitlement to receive a payment of a portion of the interest payable under the Underlying Obligations, if, as and when paid by the Underlying Issuer on the Underlying Obligations, in accordance with their respective terms.
17. The Strip Packages will consist of the entitlement to receive (a) in the case of PARS, both payments of a portion of the principal amounts payable and periodic payments of a portion equal to a market rate (at the time of issuance of the PARS) of the interest payable under the Underlying Obligations, and/or (b) in the case of packages consisting of Strip Coupons, periodic payments of portions of the interest payable, or the principal amounts payable, under the Underlying Obligations, in each case, if, as and when paid by the Underlying Issuer on the Underlying Obligations, in accordance with their respective terms.
18. Holders of a series of Strip Securities will be entitled to payments from cash flows from the related Underlying Obligations if, as and when made by the respective Underlying Issuer. The Strip Securities of one series will not be entitled to receive any payments from the cash flows of Underlying Obligations related to any other series. As the Underlying Issuers will be the sole obligors under the respective Underlying Obligations, holders of Strip Securities will be entirely dependent upon the Underlying Issuers' ability to perform their respective obligations under their respective Underlying Obligations.
19. The Strip Securities will be sold at prices determined by the Filers from time to time and, as such, these may vary as between purchasers of the same series and during the offering period of Strip Securities of the same series. In quoting a price for the Strip Securities, the Filers will advise the purchaser of the annual yield to maturity thereof based on such price.
20. The Underlying Issuers will not receive any proceeds, and the Filers will not be entitled to be paid any fee or commission by the Underlying Issuers, in respect of the sale by the Filers, or the members of any selling group, of the Strip Securities. Each Filer's overall compensation will be increased or decreased by the amount by which the aggregate price paid for a series of the Strip Securities by purchasers exceeds or is less than the aggregate price paid by such Filer for the related Underlying Obligations.
21. The payment dates of any particular series of Strip Coupons and the interest component of Strip Packages will be coincident with the interest payment dates for the Underlying Obligations for the series, with terms of up to 30 years or longer. The maturity date of a particular series of Strip Residuals and the principal component of Strip Packages, if any, will be the maturity date of the Underlying Obligations for the series.
22. The Strip Securities will be issuable in Canadian and U.S. dollars and in such minimum denomination(s) and with such maturities as may be described in the applicable shelf prospectus supplement.
23. The Underlying Issuers will be Canadian corporations, trusts or partnerships. The Underlying Obligations are securities of the Underlying Issuers. The Strip Securities will be derived without regard, except as to ratings and eligibility to file a short form prospectus under NI 44-101, for the value, price, performance, volatility, investment merit or creditworthiness of the Underlying Issuers historically or prospectively.
24. To be eligible for inclusion in the CARS and PARS Programme, (i) the Underlying Obligations must have been qualified for distribution under a prospectus for which a receipt was issued by the regulators in British Columbia, Alberta, Ontario and Quebec, (ii) at least four months must have passed from the date of closing of the original issue of the relevant class or series of Underlying Obligations and (iii) the distribution of the Underlying Obligations must be complete.
25. The Filers will cause all Underlying Obligations from which the Strip Securities will be derived and which are not already in the CDS system to be delivered to CDS and registered in the name of CDS. The Underlying Obligations from which the Strip Securities will be derived will, except in very limited circumstances, be held by CDS until their maturity and will not otherwise be released or removed from the segregated account used by CDS to maintain the Underlying Obligations. A separate security identification number or ISIN will be assigned by CDS to each series of Strip Securities.
26. Pursuant to the operating rules and procedures of its CDSX Procedures and User Guide, or any successor operating rules and procedures, CDS will maintain book based records of ownership for the Strip Securities, entering in such records only the names of Participants. No purchaser of Strip Securities will be entitled to any certificate or other instrument from the Underlying Issuer, the Filers or CDS evidencing the Strip Securities or the ownership thereof, and no purchaser of Strip Securities will be shown on the records maintained by CDS except through the book entry account of a Participant. Upon the purchase of Strip Securities, the purchaser will receive only the customary confirmation slip that will be sent to such purchaser by one of the Filers or another Participant.
27. Transfers of beneficial ownership in Strip Securities will be effected through records maintained for Strip Securities by CDS or its nominee (with respect to interests of Participants) and on the records of Participants (with respect to interests of persons other than Participants). Beneficial holders who are not Participants, but who desire to purchase, sell or otherwise transfer beneficial ownership of, or any other interest in, such Strip Securities of a series, may do so only through Participants.
28. Payments in respect of a principal component (if any), interest component(s) (if any), or other amounts (if any) owing under a series of Strip Securities will be made from payments received by CDS in respect of the related Underlying Obligations from the relevant Underlying Issuer. Amounts payable on the maturity of the Strip Securities will be payable by the Underlying Issuer to CDS as the registered holder of the Underlying Obligations. Following receipt thereof, CDS will pay to each of its Participants shown on its records as holding matured Strip Securities the amount to which such Participant is entitled. The Filers will, and the Filers understand that each other Participant, who holds such Strip Securities on behalf of a purchaser thereof will, pay or otherwise account to such purchaser for the amounts received by it in accordance with the instructions of the purchaser to such Participant. Holders of a series of Strip Securities will not have any entitlement to receive payments under any Underlying Obligations acquired in connection with the issue of any other series of Strip Securities.
29. As the registered holder of the Underlying Securities, CDS will receive any voting rights in respect of the Underlying Obligations for the Strip Securities. CDS will allocate these rights to the holders of the Strip Securities in accordance with the operating rules and procedures of its CDSX Procedures and User Guide, or any successor operating rules and procedures, in effect at the time. These procedures currently provide for the distribution of the voting rights based on the "proportionate economic interest", determined as to be described in the base shelf prospectus for use with the CARS and PARS Programme. Such voting rights will be vested on a series by series basis. In order for a holder of Strip Securities to have a legal right to attend a meeting of holders of Underlying Obligations, or to vote in person, such holder of Strip Securities must be appointed as proxyholder for the purposes of the meeting by the CDS Participant through whom he or she holds Strip Securities.
30. In the event that an Underlying Issuer repays a callable Underlying Obligation prior to maturity in accordance with its terms, CDS will allocate the amount of proceeds it receives as the registered holder of the Underlying Obligations to the holders of the Strip Securities in accordance with the operating rules and procedures of its CDSX Procedures and User Guide, or any successor operating rules and procedures, in effect at the time. These procedures currently provide for the distribution of proceeds on the repayment of a callable Underlying Obligation based on the "proportionate economic interest".
31. Any other entitlements received by CDS with respect to the Underlying Obligations upon the occurrence of an event other than in respect of maturity, including entitlements on the insolvency or winding-up of an Underlying Issuer, the non-payment of interest or principal when due, or a default of the Underlying Issuer under any trust indenture or other agreement governing the Underlying Obligations, will be processed by CDS in accordance with the operating rules and procedures of its CDSX Procedures and User Guide, or any successor operating rules and procedures, in effect at the time. These procedures also currently provide for CDS to distribute the resulting cash and/or securities to the holders of the Strip Securities based on "proportionate economic interest". In addition, if the Underlying Issuer offers an option to CDS as the registered holder of the Underlying Obligations in connection with the event, the Filers understand that CDS will attempt to offer the same option to the holders of the Strip Securities, where feasible.
32. The Filers acknowledge that the nature and scope of the Exemption Sought and the terms and conditions imposed by the principal regulator may change in subsequent renewal decisions as a result of the principal regulator's monitoring of developments in international and domestic capital markets or as a result of any changes to the laws in the Jurisdictions affecting trading in derivatives, commodity futures or securities.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:
(a) the Underlying Obligations were qualified for distribution under the Underlying Obligations Prospectus, at least four months have passed from the date of closing of the original issue of the relevant class or series of Underlying Obligations and the distribution of the Underlying Obligations is complete;
(b) to the best of the knowledge of the Filer(s) participating in a relevant offering under the CARS and PARS Programme, the relevant Underlying Issuer is eligible to file a short form prospectus under NI 44-101 (whether such eligibility results from the specific qualification criteria of NI 44-101 or from the granting of an exemption from those criteria) at the Offering Date;
(c) a receipt issued for the Prospectus filed in reliance on this decision document is not effective after November 25, 2027;
(d) the offering and sale of the Strip Securities complies with all the requirements of NI 44-102 and NI 44-101 as varied by NI 44-102, other than those from which an exemption is granted by this decision document or from which an exemption is granted in accordance with Part 11 of NI 44-102 by the securities regulatory authority or regulator in each of the Jurisdictions as evidenced by a receipt for the Prospectus;
(e) each offering of Strip Securities will be derived from one or more Underlying Obligations of only a single class or series of an Underlying Issuer and only through the CDS Book-Entry Strip Service;
(f) the Filers issue a press release and file a material change report in respect of:
(i) a material change to the CARS and PARS Programme which affects any of the Strip Securities other than a change which is a material change to an Underlying Issuer; and
(ii) a change in the operating rules and procedures of the CDSX Procedures and User Guide of CDS, or any successor operating rules and procedures in effect at the time, which may have a significant effect on a holder of Strip Securities; and
(g) the Filers file the Prospectus, the material change reports referred to above, and all documents related thereto on SEDAR+ under a SEDAR+ profile for the CARS and PARS Programme and pay all filing fees applicable to such filings.
OSC File #: 2025/0563
RBC Global Asset Management Inc. et al.
National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions -- relief granted to permit investment funds subject to NI 81-102 to invest in securities of related underlying investment funds not subject to NI 81-102 and that are not reporting issuers -- relief subject to conditions.
National Instrument 81-102 Investment Funds, ss. 2.5(2)(a) and (c) and 19.1.
October 20, 2025
The principal regulator in the Jurisdiction has received an application (the Application) from the Filer on behalf of the Filer and each existing and future mutual fund managed by RBC GAM and advised by the Filer that is, or will be, a reporting issuer to which National Instrument 81-102 Investment Funds (NI 81-102) and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) apply (the Top Funds).
The Filer intends for one or more Top Funds to invest, as the Filer considers in the best interest of the Top Fund and in accordance with its investment objectives and strategies, in securities of Phillips, Hager & North Private Placement Corporate Debt Fund (the Initial Underlying Fund), and/or in any future investment fund that is, or will be, managed by RBC GAM and advised by the Filer and that is not subject to NI 81-102 or NI 81-107 (the Future Underlying Funds and, together with the Initial Underlying Fund, the Underlying Funds), and therefore has applied for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Top Funds from the following prohibitions in NI 81-102:
(a) subsection 2.5(2)(a) of NI 81-102, which prohibits an investment fund from purchasing or holding a security of another investment fund unless, if the investment fund is a mutual fund, other than an alternative mutual fund, either of the following applies:
(i) the other investment fund is a mutual fund, other than an alternative mutual fund, that is subject to this Instrument; (ii) the other investment fund is an alternative mutual fund or a non-redeemable investment fund that is subject to this Instrument and, at the time of the purchase of that security, the investment fund holds no more than 10% of its net asset value in securities of alternative mutual funds and non-redeemable investment funds; and
(b) subsection 2.5(2)(c) of NI 81-102, which prohibits an investment fund from purchasing or holding a security of another investment fund unless the other investment fund is a reporting issuer in a jurisdiction
(collectively, the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for the Application; and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with the Jurisdiction, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
The Filer
1. RBC GAM is a corporation formed by amalgamation under the federal laws of Canada and its head office is located in Toronto, Ontario.
2. RBC GAM is registered as an adviser in the category of portfolio manager and as a dealer in the category of exempt market dealer under the securities legislation of each Jurisdiction, is registered as an investment fund manager in each of British Columbia, Ontario, Québec and Newfoundland and Labrador, and is also registered in Ontario as a commodity trading manager.
3. The Filer is not in default of the securities legislation of any Jurisdiction.
The Top Funds
4. Each Top Fund is, or will be, an investment fund to which NI 81-102 applies, and is, or will be, organized and governed by the laws of a Jurisdiction.
5. RBC GAM is, or will be, the manager of the Top Funds and the Filer is, or will be, the portfolio adviser of the Top Funds.
6. The securities of each of the Top Funds are, or will be, qualified for distribution in one or more of the Jurisdictions and distributed to investors pursuant to a simplified prospectus or long form prospectus (each, a Top Fund Prospectus) and fund facts or ETF facts document, prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) or National Instrument 41-101 General Prospectus Requirements (NI 41-101), as applicable.
7. Each Top Fund is, or will be, a reporting issuer under the securities legislation of one or more Jurisdictions.
8. Each existing Top Fund is not in default of the securities legislation of any Jurisdiction.
9. Each Top Fund Prospectus discloses, or will disclose, in its description of the Top Fund's investment strategies that the Top Fund may invest up to 10% of its assets directly or indirectly in the Underlying Funds. This limit is consistent with the classification of the Underlying Funds as illiquid assets for purposes of NI 81-102.
10. Each Top Fund is, or will be, subject to NI 81-107 and the Filer has established, or will establish, an independent review committee (IRC) in order to review conflict of interest matters pertaining to its management of the Top Funds as required by NI 81-107.
The Underlying Funds
11. The Initial Underlying Fund falls, and each Future Underlying Fund will fall, within the definition of "investment fund" under the Securities Act (Ontario).
12. RBC GAM is, and will be, the manager of the Initial Underlying Fund and any Future Underlying Fund and the Filer is, and will be, the portfolio adviser of the Initial Underlying Fund and any Future Underlying Fund. To the extent that RBC GAM is the manager and the Filer is the portfolio adviser of any Future Underlying Fund, the representations set out in this decision will apply to the same extent to such Future Underlying Fund.
13. The Initial Underlying Fund is an investment fund structured as a trust to which NI 81-102 and NI 81-107 does not apply, and is organized and governed by the laws of a Jurisdiction. Future Underlying Funds may be structured as trusts, limited partnerships or corporations to which NI 81-102 and NI 81-107 will not apply, and will be organized and governed by the laws of a Jurisdiction.
14. No Underlying Fund has prepared or will prepare a simplified prospectus in accordance with NI 81-101 or a long form prospectus in accordance with NI 41-101.
15. The Underlying Funds are not, or will not be, reporting issuers in any of the Jurisdictions or listed on any recognized stock exchange.
16. Securities of the Underlying Funds will be distributed solely to investors pursuant to exemptions from the prospectus requirements in accordance with National Instrument 45-106 Prospectus Exemptions and the securities legislation of a Jurisdiction.
17. The Initial Underlying Fund is not in default of the securities legislation of any of the Jurisdictions.
18. The investment objective of the Initial Underlying Fund is to provide a relatively high level of income and reasonable stability of capital by investing primarily in a well-diversified portfolio of fixed-income securities issued primarily by Canadian corporations by way of private placement.
19. The securities of each Underlying Fund are generally considered illiquid assets for purposes of NI 81-102. Securities of the Initial Underlying Fund are redeemable daily.
20. The Filer has one valuation policy that is utilized in the calculation of net asset value (NAV), which applies to both the Top Funds and the Underlying Funds managed by it. The Filer calculates NAV for the Underlying Funds in accordance with Part 14 of National Instrument 81-106 Investment Fund Continuous Disclosure.
21. The value of the underlying portfolio assets of the Initial Underlying Fund, which consist of assets that are classified as levels 1, 2 and 3 under IFRS 13 (Fair Value Measurement), is determined utilizing a framework (the Valuation Framework) that, depending on the level classification, considers arm's length broker quotes and/or fair value price as calculated by multiple third-party pricing vendors and, for level 3 private debt assets that are bonds, a valuation methodology developed by the Filer that uses significant third party inputs that are not observable market data (the Level 3 Private Debt Valuation Methodology).
22. Under the Level 3 Private Debt Valuation Methodology, the Filer generally follows the following two approaches in determining the fair value price of private debt assets that are bonds and considered level 3 assets under IFRS 13:
(1) obtaining the price and/or spread from an arm's length broker/dealer and where only the spread is available, calculating the price using the broker/dealer's bond calculator or the Filer's internal bond calculator; or
(2) where the spread is not available from the broker/dealer, obtaining an independent valuation from at least one third-party vendor and using the Filer's internal bond calculator to determine or verify the third-party vendor's pricing information.
23. The Filer's internal bond calculator is a valuation method developed by the Filer that uses third-party input values such as the benchmark, amortization schedule (if applicable) and general deal terms sourced from the term sheet for the bond. A spread that is provided by an arm's length broker/dealer or third-party vendor is combined with the input values to calculate the price of the bond.
24. The Valuation Framework, including the Level 3 Private Debt Valuation Methodology, is overseen and administered by the fund and portfolio operations group of the Filer, whose members do not include the portfolio management teams who make the investment decisions for the Initial Underlying Fund. The Valuation Framework may be adjusted from time to time by the Filer in its discretion.
25. A Future Underlying Fund will utilize the Valuation Framework similar to that of the Initial Underlying Fund. The value of any level 3 portfolio assets of each Future Underlying Fund will be determined (a) by the Filer utilizing the Level 3 Private Debt Valuation Methodology, or (b) independently by an arm's length third party.
26. Each Underlying Fund produces, and will produce, audited financial statements on an annual basis, in accordance with generally accepted accounting principles with a qualified auditing firm as the auditor of those financial statements.
27. No Top Fund will actively participate in the business or operations of an Underlying Fund.
Investments by Top Funds in the Underlying Funds
28. An investment by a Top Fund in an Underlying Fund will only be made if the investment is, or will be, compatible with the investment objectives of the Top Fund and allows, or will allow, the Top Fund to obtain exposure to asset classes in which the Top Fund may otherwise invest directly. Each Top Fund will comply with the investment restrictions and practices provided for in Part 2 of NI 81-102 in making such investments except where exempted pursuant to the Exemption Sought or other exemptive relief.
29. The Filer believes that the investment by a Top Fund in an Underlying Fund will provide the Top Fund with an efficient and cost-effective manner of pursuing portfolio diversification and asset diversification instead of purchasing securities directly.
30. Investments by a Top Fund in an Underlying Fund will be effected at an objective price. The Filer's policies and procedures provide that an objective price, for this purpose, will be the NAV per security of the applicable Underlying Fund.
31. A Top Fund will not invest in an Underlying Fund unless the portfolio adviser of the Top Fund believes that the liquidity of the Top Fund's portfolio is adequately managed through other strategies.
Generally
32. Since the Underlying Funds are not reporting issuers and are not subject to NI 81-102, the Top Funds are unable to rely upon the exemption codified under subsection 2.5(7) of NI 81-102 for investments by investment funds subject to NI 81-102 in other investment funds.
33. Absent the Exemption Sought, a Top Fund would be prohibited by subsections 2.5(2)(a) and 2.5(2)(c) from purchasing or holding securities of an Underlying Fund because the Underlying Funds (i) are not subject to NI 81-102, and (ii) are not reporting issuers in the Jurisdictions.
34. The Filer considers that investments in the Underlying Funds by the Top Funds raise "conflict of interest matters" within the meaning of NI 81-107 and therefore if the Exemption Sought is granted, the Filer will request approvals of the IRC for the proposed investments of the Top Funds in the Underlying Funds, including by way of standing instructions. No such investments will be made until the IRC provides its approvals under section 5.2 of NI 81-107.
35. The decision to permit the Top Funds to invest in the Underlying Funds represents the Filer's business judgment and is not influenced by factors other than the best interests of the Top Funds.
36. On an annual basis, the financial statements of each Underlying Fund are, or will be, audited by the Underlying Fund's external auditors, which audit includes independent confirmation of the fair value of all or substantially all portfolio investments. Such appointed auditor also audits the value of the portfolio investments to ensure that they are accurately valued in accordance with the Underlying Fund's valuation policy. Such financial statements will be accessible in the ordinary course by the Filer.
37. Aside from the sections covered by the Exemption Sought, the Top Funds will comply with section 2.5 of NI 81-102 with respect to any investment in an Underlying Fund.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, provided that:
(a) no Top Fund will actively participate in the business or operations of any Underlying Fund;
(b) each Top Fund will be treated as an arm's-length investor when making investments in each Underlying Fund, with each investment being accepted by the Underlying Fund on a fair and equitable basis as compared to all other third-party investors;
(c) the investment by a Top Fund in an Underlying Fund is compatible with the fundamental investment objectives of the Top Fund;
(d) the investments in the Underlying Funds are included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of NI 81-102 for a Top Fund;
(e) in respect of an investment by a Top Fund in an Underlying Fund, no management fees or incentive fees will be payable by the Top Fund that, to a reasonable person, would duplicate a fee payable by an Underlying Fund for the same service;
(f) in respect of an investment by a Top Fund in an Underlying Fund, no sales or redemption fees will be paid as part of the investment in the Underlying Fund;
(g) where applicable, a Top Fund's investment in an Underlying Fund, will be disclosed to investors in such Top Fund's quarterly portfolio holding reports, financial statements and fund facts or ETF facts documents;
(h) the Top Fund Prospectus of a Top Fund that is relying on the Exemption Sought discloses, or will disclose in the next renewal or amendment thereto following the date of a decision evidencing the Exemption Sought, the fact that the Top Fund may invest in a related Underlying Fund, which are investment funds managed by the Filer;
(i) the IRC of a Top Fund will review and provide its approval, including by way of standing instructions, prior to the purchase of an Underlying Fund by the Top Fund in accordance with subsection 5.2(2) of NI 81-107. The Filer will comply with section 5.1 of NI 81-107 and the Filer and the IRC of the Top Fund will comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions;
(j) the Filer does not cause the securities of an Underlying Fund held by a Top Fund to be voted at any meeting of the holders of such securities, except that the Filer may arrange for the securities the Top Fund holds of an Underlying Fund to be voted by the beneficial owners of the securities of the Top Fund who are not the Filer or an officer, director or substantial securityholder of the Filer;
(k) a Top Fund will invest in, and redeem, each Underlying Fund at the NAV per security of the Underlying Fund; and
(l) a Top Fund will invest in an Underlying Fund only where:
i. the Underlying Fund is managed by the Filer;
ii. the Underlying Fund is structured in similar ways to the Initial Underlying Fund; and
iii. the NAV of the Underlying Fund is based on the valuation of the Underlying Fund's portfolio assets determined in accordance with the Valuation Framework (including for any level 3 assets, the Level 3 Private Debt Valuation Methodology or independent valuations obtained by an arm's length third party).
Application File #: 2025/0349
SEDAR+ File #: 6295976
Temporary, Permanent & Rescinding Issuer Cease Trading Orders
Company Name |
Date of Temporary Order |
Date of Hearing |
Date of Permanent Order |
Date of Lapse/Revoke |
|
||||
THERE IS NOTHING TO REPORT THIS WEEK. |
||||
Company Name |
Date of Order |
Date of Revocation |
|
||
THERE IS NOTHING TO REPORT THIS WEEK. |
||
Temporary, Permanent & Rescinding Management Cease Trading Orders
Company Name |
Date of Order |
Date of Lapse |
|
||
THERE IS NOTHING TO REPORT THIS WEEK. |
||
Outstanding Management & Insider Cease Trading Orders
Company Name |
Date of Order or Temporary Order |
Date of Hearing |
Date of Permanent Order |
Date of Lapse/Expire |
Date of Issuer Temporary Order |
|
|||||
Performance Sports Group Ltd. |
19 October 2016 |
31 October 2016 |
31 October 2016 |
__________ |
__________ |
Company Name |
Date of Order |
Date of Lapse |
|
||
Agrios Global Holdings Ltd. |
September 17, 2020 |
__________ |
|
||
Sproutly Canada, Inc. |
June 30, 2022 |
__________ |
|
||
iMining Technologies Inc. |
September 30, 2022 |
__________ |
|
||
Alkaline Fuel Cell Power Corp. |
April 4, 2023 |
__________ |
|
||
mCloud Technologies Corp. |
April 5, 2023 |
__________ |
|
||
FenixOro Gold Corp. |
July 5, 2023 |
__________ |
|
||
HAVN Life Sciences Inc. |
August 30, 2023 |
__________ |
|
||
Perk Labs Inc. |
April 4, 2024 |
__________ |
|
||
Dye & Durham Limited |
September 30, 2025 |
__________ |
CSA Notice of Publication and Request for Comment -- Proposed Coordinated Blanket Order 51-933 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers; Proposed Ontario Securities Commission Rule 51-507 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers
October 23, 2025
The Canadian Securities Administrators (the CSA or we) intend to introduce a multi-year pilot project to allow eligible venture issuers to voluntarily adopt semi-annual financial reporting (the SAR Pilot). We intend to introduce the SAR Pilot through a coordinated blanket order which would include exemptions from certain continuous disclosure requirements and establish a voluntary semi-annual reporting framework for a subset of venture issuers, subject to certain terms and conditions.
We are publishing for a 60-day comment period proposed Coordinated Blanket Order 51-933 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers (the Blanket Order) to seek comment on the scope of the SAR Pilot.
The CSA also intends to engage in a broader rule-making project related to voluntary semi-annual reporting (SAR) and will use learnings from the SAR Pilot to inform this initiative. In the interim, we will continue to monitor international developments relating to SAR.
The public comment period expires on December 22, 2025.
This Notice outlines the terms of the SAR Pilot and includes a request for comment on specific issues.
The Blanket Order is attached as Annex A to this Notice. A summary of the terms and conditions of the SAR Pilot and relevant CSA commentary is attached as Annex B to this Notice. Where applicable, Annex C is also attached to this Notice and includes any additional information that is relevant to the local jurisdiction publishing the Annex. The Blanket Order will also be available on websites of CSA jurisdictions, including:
www.lautorite.qc.cawww.albertasecurities.comwww.bcsc.bc.canssc.novascotia.cawww.fcnb.cawww.osc.cawww.fcaa.gov.sk.cambsecurities.ca
Upon adoption, Ontario's local Blanket Order will include an 18-month expiry date based on the statutory term limits for blanket orders{1}. Therefore, the Ontario Securities Commission is concurrently publishing for a 60-day comment period a proposed local rule to maintain the continuous disclosure exemptions that are in Ontario's local Blanket Order after its expiry{2}. For additional information, please refer to Annex C in Ontario. The Blanket Orders in the other CSA jurisdictions do not have an expiry date and therefore local rules are not required.
Reporting issuers in Canada are currently required to file quarterly interim financial reports and accompanying management's discussion and analysis (MD&A). While quarterly reporting may provide timely information to investors and intermediaries, some stakeholders are of the view that there may be instances in which the cost of preparing such frequent reporting for smaller venture issuers exceeds the benefit to investors and the market.
The SAR Pilot responds to strategic goal 1.6 of the 2025-2028 CSA Business Plan, which recommends developing a proposal for SAR and consulting on the relative benefits and risks associated with allowing certain reporting issuers to report semi-annually rather than quarterly.
In developing the SAR Pilot, we considered the commentary received on prior public proposals put forward by the CSA in 2011, 2017 and 2021 (collectively, the Prior CSA Proposals), which sought to amend National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) to permit SAR for certain reporting issuers.
Stakeholders that commented on the Prior CSA Proposals generally agreed that smaller venture issuers face a disproportionate burden through ongoing quarterly reporting requirements. Cost reduction was a factor raised by many stakeholders in each of the Prior CSA Proposals.
Several commentators of the Prior CSA Proposals raised concerns that a shift to SAR will harm our public markets as investors will have less timely financial information available. We note the existing continuous disclosure regime and the ongoing requirement to report material changes, as well as exchange listing requirements can help to mitigate this risk.
We believe that optional SAR would provide a material benefit for smaller venture issuers and that the benefits to be derived from the SAR Pilot outweigh the concerns raised.
The SAR Pilot would provide an exemption for certain issuers listed on the TSX Venture Exchange Inc. (TSXV) or the CNSX Markets Inc. (CSE) from the requirement to file an interim financial report for each of the three and nine-month interim periods of a financial year under NI 51-102 (collectively, the First and Third Quarter Financial Disclosures).
The SAR Pilot would reduce administrative burden and costs associated with the preparation of the First and Third Quarter Financial Disclosures.
Participation in the SAR Pilot would be voluntary.
Pursuant to the terms and conditions of the Blanket Order, to report on a semi-annual basis, issuers must be venture issuers that have, among other things,
• securities listed on the TSXV or the CSE;
• revenue of no more than $10 million;
• at least a 12-month continuous disclosure record;
• filed all periodic and timely continuous disclosure documents required to be filed; and
• issued and filed a news release on SEDAR+ announcing adoption of SAR.
A summary of the SAR Pilot including a description of terms and conditions and relevant CSA commentary is attached as Annex B to this Notice.
In circumstances where an issuer determines it can no longer rely on the Blanket Order or chooses to opt out of the SAR Pilot, it should consider issuing and filing a news release on SEDAR+ informing investors and intermediaries that it will opt out of the SAR Pilot and indicate the timing for the next expected interim period for which interim financial reports and related MD&As will be filed.
Once an issuer opts out of the SAR Pilot, it would be required to comply with all quarterly financial reporting requirements including comparative financial information for the corresponding period in the immediately preceding financial year as required by NI 51-102.
In 2021, the CSA proposed amendments to streamline the continuous disclosure requirements for non-investment fund reporting issuers (the Proposed CD Amendments){3}. The Proposed CD Amendments included, as part of the publication for comment, a proposed framework for SAR. In light of the SAR Pilot, the CSA does not anticipate that the final amendments will include a framework for SAR. The CSA plans to provide a further market update on the Proposed CD Amendments in the coming months.
This notice contains the following annexes:
• Annex A -- Blanket Order
• Annex B -- Summary of the Terms and Conditions of the SAR Pilot and CSA Commentary
• Where applicable, Annex C -- Local Matters (including any local amendments)
The CSA anticipates the SAR Pilot will be in force prior to the end of March 2026.
We welcome your comments on the scope of the SAR Pilot. In addition to any general comments you may have, we also invite comments on the following specific questions.
1. Do you agree with the eligibility criteria and conditions in the Blanket Order for the SAR Pilot? Are there any other eligibility criteria that should disqualify issuers from participating in the SAR Pilot? Are there any other conditions that issuers participating in the SAR Pilot should be subject to?
2. The SAR Pilot is intended to be a multi-year pilot project. The CSA intends to engage in a formal rule-making project to consider whether the SAR Pilot should be adjusted in terms of scope, eligibility and conditions. Please provide any feedback in respect of criteria or conditions that could be considered as part of the future rule-making project. Please note that the planned rule-making project related to SAR will include a request for comment.
Please submit your comments in writing on or before December 22, 2025.
Address your submission to all of the CSA as follows:
British Columbia Securities CommissionAlberta Securities CommissionFinancial and Consumer Affairs Authority of SaskatchewanManitoba Securities CommissionOntario Securities CommissionAutorité des marchés financiersFinancial and Consumer Services Commission of New BrunswickSuperintendent of Securities, Department of Justice and Public Safety, Prince Edward IslandNova Scotia Securities CommissionOffice of the Superintendent of Securities, Newfoundland and LabradorNorthwest Territories Office of the Superintendent of SecuritiesOffice of the Yukon Superintendent of SecuritiesSuperintendent of Securities, Nunavut
Deliver your comments only to the addresses below. Your comments will be distributed to the other participating CSA jurisdictions.
The SecretaryOntario Securities Commission20 Queen Street West22nd FloorToronto, Ontario M5H 3S8Fax: 416-593-2318E-mail: comments@osc.gov.on.caMe Philippe LebelCorporate Secretary and Executive Director, Legal AffairsAutorité des marchés financiersPlace de la Cité, tour PwC2640, boulevard Laurier, bureau 400Québec (Québec) G1V 5C1Fax: 514 864-8381E-mail: consultation-en-cours@lautorite.qc.ca
We cannot keep submissions confidential because securities legislation in certain provinces requires publication of a summary of the written comments received during the comment period. All comments received will be posted on the websites of each of the Ontario Securities Commission at www.osc.ca and Autorité des marches financiers at www.lautorite.qc.ca. You should not include personal information directly in comments to be published. It is important that you state on whose behalf you are making the submission.
Please refer your questions to any of the following:
British Columbia Securities Commission |
|
|
|
Elliott Mak |
Grace Zheng |
Senior Legal Counsel, Corporate Finance |
Senior Securities Analyst, Corporate Finance |
(604) 899-6501 |
(604) 899-6917 |
emak@bcsc.bc.ca |
gzheng@bcsc.bc.ca |
|
|
Ian Fong |
|
Legal Counsel, Corporate Finance |
|
(604) 899-6758 |
|
ifong@bcsc.bc.ca |
|
|
|
Alberta Securities Commission |
|
|
|
Danielle Mayhew |
Nicole Law |
Senior Legal Counsel, Corporate Finance |
Senior Securities Analyst, Corporate Finance |
(403) 355-3876 |
(403) 355-4865 |
Danielle.Mayhew@asc.ca |
Nicole.Law@asc.ca |
|
|
Financial and Consumer Affairs Authority of Saskatchewan |
|
|
|
Heather Kuchuran |
|
Director, Corporate Finance |
|
(306) 787-1009 |
|
Heather.kuchuran@gov.sk.ca |
|
|
|
Manitoba Securities Commission |
|
|
|
Patrick Weeks |
|
Deputy Director, Corporate Finance |
|
(204) 945-3326 |
|
Patrick.weeks@gov.mb.ca |
|
|
|
Ontario Securities Commission |
|
|
|
Matthew Au |
Katrina Janke |
Senior Accountant |
Senior Legal Counsel |
Corporate Finance Division |
Corporate Finance Division |
(416) 593-8132 |
(416) 593-8297 |
mau@osc.gov.on.ca |
kjanke@osc.gov.on.ca |
|
|
Jessie Gill |
Mandy Tam |
Senior Legal Counsel |
Senior Accountant |
Corporate Finance Division |
Corporate Finance Division |
(416) 593-8114 |
(437) 783-0147 |
jessiegill@osc.gov.on.ca |
mtam@osc.gov.on.ca |
|
|
Autorité des marchés financiers |
|
|
|
Nadine Gamelin |
Martin Latulippe |
Senior Analyst |
Senior Policy Advisor |
(514) 395-0337, ext. 4417 |
(514) 395-0337, ext. 4331 |
nadine.gamelin@lautorite.qc.ca |
martin.latulippe@lautorite.qc.ca |
|
|
Nova Scotia Securities Commission |
|
|
|
Jack Jiang |
Valerie Tracy |
Securities Analyst |
Securities Analyst |
(902) 424-7059 |
(902) 424-5718 |
Jack.Jiang@novascotia.ca |
Valerie.Tracy@novascotia.ca |
|
|
Financial and Consumer Services Commission of New Brunswick |
|
|
|
Ray Burke |
|
Manager, Corporate Finance |
|
(506) 643-7435 |
|
ray.burke@fcnb.ca |
|
{1} See subsection 143.11(3) of the Securities Act (Ontario).
{2} The Ontario Securities Commission local rule would take effect after the initial 18-month expiration of Ontario's local Blanket Order and is intended to ensure the implementation of the multi-year SAR Pilot.
{3} The Proposed CD Amendments were developed in anticipation of the CSA implementing a model for electronic access to certain continuous disclosure documents. Accordingly, the project to implement the Proposed CD Amendments was temporarily paused while the CSA reconsidered how to implement a model for electronic access to certain continuous disclosure documents.
Date: [•], 2025
1. Terms defined in the Securities Act (Ontario) (the Act) and National Instrument 14-101 Definitions have the same meaning if used in this Order.
2. In this Order:
"base shelf prospectus" has the meaning ascribed to that term in National Instrument 44-102 Shelf Distributions;
"exchange listed security" means a security of a reporting issuer that is listed and posted for trading on TSX Venture Exchange Inc. or CNSX Markets Inc.;
"Form 51-102F1" means Form 51-102F1 Management's Discussion & Analysis;
"interim period" has the meaning ascribed to that term in NI 51-102;
"MD&A" has the meaning ascribed to that term in NI 51-102;
"NI 51-102" means National Instrument 51-102 Continuous Disclosure Obligations;
"revenue" means income arising in the course of an issuer's ordinary activities determined in accordance with the accounting principles applied to the preparation of the issuer's annual financial statements;
"shelf prospectus supplement" has the meaning ascribed to that term in National Instrument 44-102 Shelf Distributions; and
"venture issuer" has the meaning ascribed to that term in NI 51-102.
3. The purpose of this Order is to exempt a specified class of reporting issuers from certain three and nine-month continuous disclosure requirements. While quarterly financial statements provide timely information to investors, for certain reporting issuers there can be instances in which the regulatory and internal cost of preparing such frequent reporting exceeds their benefit.
4. The Commission, considering that to do so would not be prejudicial to the public interest, orders under subsection 143.11(2) of the Act that a reporting issuer is exempt from the requirement to file an interim financial report for each of the three and nine-month interim periods of its financial year, as required by section 77 of the Act and subsection 4.3(1) of NI 51-102 provided that the issuer satisfies all of the following conditions at the end of each such three and nine-month interim period, as applicable:
(a) the issuer has been a reporting issuer in at least one jurisdiction of Canada for at least 12 months;
(b) the issuer is a venture issuer;
(c) the issuer has exchange listed securities;
(d) the issuer has revenue, as shown on the issuer's most recently filed audited annual financial statements, of no more than $10 million;
(e) the issuer has filed with the regulator or securities regulatory authority in each jurisdiction in which it is a reporting issuer all periodic and timely disclosure documents that it is required to have filed in that jurisdiction
(i) under applicable securities legislation;
(ii) pursuant to an order issued by the regulator or securities regulatory authority;
(iii) pursuant to an undertaking to the regulator or securities regulatory authority;
(f) during the preceding 12 months, none of the following applied:
(i) the issuer was the subject of a penalty or sanction, including a restriction on the use by the issuer of any type of prospectus, or exemption, imposed by a court relating to securities legislation or by a regulator or securities regulatory authority, other than an administrative monetary penalty for late filings;
(ii) the issuer was the subject of a cease trade order or order similar to a cease trade order in a jurisdiction of Canada that was not revoked within 30 days of its issuance;
(iii) the issuer stopped relying on Section 4;
(g) the issuer issued and filed a news release that
(i) states "This news release is being filed pursuant to CSA Coordinated Blanket Order 51-933 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers", and
(ii) specifies the initial interim period for which the issuer does not intend to file an interim financial report and related MD&A in reliance on this Order.
5. A reporting issuer must cease relying on Section 4 if either of the following apply:
(a) the issuer changes its financial year end;
(b) the issuer files a base shelf prospectus.
6. A reporting issuer that is relying on Section 4 must not file a shelf prospectus supplement.
7. The exemptions in this Order do not apply to the disclosure requirements in respect of interim financial reports and related MD&A, pursuant to any of the following:
(a) item 11.1 of Form 44-101F1 Short Form Prospectus;
(b) item 14.2 of Form 51-102F5 Information Circular;
(c) item 19 of Form 62-104F1 Take-Over Bid Circular;
(d) item 21 of Form 62-104F2 Issuer Bid Circular.
8. A reporting issuer that has filed a short form prospectus must not rely on the exemptions in this Order during the period of distribution.
9. A reporting issuer relying on Section 4 is exempt from the requirement under paragraph 4.3(2)(c) of NI 51-102 to provide a statement of comprehensive income for the three-month period ending on the last day of the interim period and comparative financial information for the corresponding period in the immediately preceding financial year.
10. A reporting issuer relying on Section 4 is exempt from the requirements under subsections 4.6(3) and 5.6(1) of NI 51-102 to send a copy of the issuer's interim financial report and interim MD&A for any interim period where such interim financial report and interim MD&A were not filed in reliance on this Order.
11. A reporting issuer relying on Section 4 is exempt from the requirement under item 1.5 of Form 51-102F1 to provide information for each of the eight most recently completed quarters.
12. A reporting issuer relying on Section 4 is exempt from the requirement under item 1.10 of Form 51-102F1 to provide in its annual MD&A a discussion and analysis of fourth quarter events or items that affected its financial condition, financial performance or cash flows, year-end and other adjustments, seasonal aspects of the issuer's business and dispositions of business segments.
13. A reporting issuer relying on Section 4 is exempt from the requirement under item 2.2(a)(i) of Form 51-102F1 to provide in its interim MD&A a discussion of its analysis of current quarter results including a comparison of financial performance to the corresponding period in the previous year.
14. A reporting issuer relying on Section 4 can satisfy the instruction under item 2.2.1(iv) of Form 51-102F1, by titling its six-month interim period highlights "Interim MD&A -- Semi-Annual Highlights".
This Order comes into effect on [•], 2026.
Eligibility Criteria
Key Element |
Commentary |
||
|
|||
The issuer is, and has been, a reporting issuer in at least one jurisdiction of Canada for at least 12 months |
The intent of this condition is to address concerns related to less frequent reporting in circumstances where an issuer has recently become a reporting issuer and has not demonstrated a history of compliant continuous disclosure. Accordingly, we have included a condition to limit eligibility to issuers who have been reporting issuers in at least one jurisdiction of Canada for at least 12 months. |
||
|
|||
See preamble in section 4 and subsection 4(a) of the Blanket Order |
|
||
|
|||
The issuer has securities listed on a Canadian venture exchange |
The intent of this condition is to limit eligibility for the purposes of the SAR Pilot solely to venture issuers with listed securities on the TSXV or CSE that are subject to exchange listing requirements. |
||
|
|||
See subsections 4(b) and (c) of the Blanket Order |
|
||
|
|||
The issuer has revenue, as shown on the issuer's most recently filed audited annual financial statements, of no more than C$10 million |
The intent of this condition is to limit eligibility to certain smaller venture issuers. |
||
|
|||
See subsection 4(d) of the Blanket Order |
|
||
|
|||
The issuer has filed all periodic and timely disclosure documents that it is required to have filed |
The intent of this condition is to address concerns related to issuers who are non-compliant with existing requirements in respect of periodic and timely reporting requirements from participating in the SAR Pilot. |
||
|
|||
See subsection 4(e) of the Blanket Order |
|
||
|
|||
The issuer cannot have been, in the 12 months prior to the issuer relying on the exemptions in the Blanket Order, the subject of any |
The intent of this condition is to limit eligibility to issuers that are generally in good standing. We have concerns related to less frequent reporting in circumstances where an issuer has recently been the subject of any penalties, sanctions or cease trade order. |
||
|
• |
penalties or sanctions, including restrictions on the use by the issuer of any type of prospectus, or exemption, imposed by a court relating to securities legislation or by a securities regulatory authority |
|
|
• |
cease trade order in any jurisdiction of Canada that was not revoked within 30 days of its issuance |
|
|
|||
See paragraphs 4(f)(i) and (ii) of the Blanket Order |
We note that, for the purposes of this condition, a late filing fee (or administrative monetary penalty for late filings) is not a "penalty or sanction". |
||
Requirements From Which an Eligible Issuer is Exempt
Key Element |
Commentary |
||
|
|||
An eligible issuer is exempt from the requirement to file an interim financial report for each of the three and nine-month interim periods of its financial year |
Three and Nine-Month Interim Period |
||
|
|||
|
The Blanket Order provides an exemption from the requirement in NI 51-102 to file an interim financial report for each of the three and nine-month periods, subject to certain terms and conditions as described in the chart below. |
||
|
|||
See section 4 of the Blanket Order |
Issuers relying on the exemptions in respect of filing interim financial reports for the three and nine-month periods are not required to file MD&As in respect of such interim periods. The Blanket Order does not include a specific exemption from the MD&A requirements for the three and nine-month interim periods as there is no trigger for an issuer to file an MD&A for any interim period for which it did not file an interim financial report. |
||
|
|||
See also: |
|
||
|
• |
Subsection 4.3(1) of NI 51-102 |
|
|
• |
Paragraph 4.2(b)(i) of NI 51-102 |
|
|
• |
Subsection 5.1(1) of NI 51-102 |
|
|
• |
Subsection 5.1(2) of NI 51-102 |
|
|
• |
Subsection 5.1(2) of NI 52-109 |
|
|
|||
|
The Blanket Order does not include a specific exemption from the interim certificate requirements for the three and nine-month interim periods as there is no trigger for an issuer to file an interim certificate for any interim period for which it did not file an interim financial report. |
||
|
|||
|
Six-Month Interim Period |
||
|
|||
|
Issuers must comply with the filing deadline in NI 51-102 when filing an interim financial report and related MD&A for the six-month interim period and certification of the foregoing filings as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109). |
||
|
|||
An eligible issuer is exempt from the requirement to deliver interim financial reports and MD&As for each of the three and nine-month interim periods of its financial year |
The Blanket Order provides an exemption to issuers from the requirement to deliver an interim financial report and related MD&A where such documents are not required to be filed. |
||
|
|||
See section 10 of the Blanket Order |
|
||
|
|||
See also: |
|
||
|
• |
Subsection 4.6(3) of NI 51-102 |
|
|
• |
Subsection 5.6(1) of NI 51-102 |
|
|
|||
An eligible issuer is exempt from including, in the interim financial report for the six-month interim period, a statement of comprehensive income for the current quarter to date and comparative financial information for the corresponding three-month period in the immediately preceding financial year |
The Blanket Order provides an exemption to issuers for the interim financial report for the six-month interim period. |
||
|
|||
See section 9 of the Blanket Order |
For example, an issuer with a December 31 year end will only be required to include in its interim financial report for the six-month interim period, a statement of comprehensive income for the six-months ended June 30 and comparative financial information for the corresponding period in the immediately preceding financial year (i.e. a statement of comprehensive income for the three-months ended June 30 and comparative financial information for the corresponding three-month period in the immediately preceding financial year will not be required). |
||
|
|||
See also: |
|
||
|
• |
Paragraph 4.3(2)(c) of NI 51-102 |
|
|
|||
An eligible issuer is exempt from certain MD&A form requirements |
Item 1.5 and Item 1.10 |
||
|
|||
See sections 11-14 of the Blanket Order |
We are of the view that it is appropriate to exempt issuers participating in the SAR Pilot from these requirements in their entirety to further reduce burden for such issuers. |
||
|
|||
|
Therefore, an issuer that opts into the SAR Pilot will not be required to provide (i) a summary of quarterly results, and related discussion, for each of the eight most recently completed quarters and (ii) a discussion and analysis of events or items in the fourth quarter. |
||
|
|||
See also: |
|
||
|
• |
Item 1.5 of Form 51-102F1 |
|
|
• |
Item 1.10 of Form 51-102F1 |
|
|
• |
Item 2.2(a)(i) of Form 51-102F1 |
|
|
|||
|
Item 2.2(a)(i) |
||
|
|||
|
This exemption is applicable to the MD&A for the six-month interim period. |
||
|
|||
|
For example, an issuer with a December 31 year end will only be required to include in its MD&A for the six-month interim period, a discussion of its analysis of year-to-date results including a comparison of financial performance to the corresponding period in the previous year for the six-months ended June 30. |
||
|
|||
|
Therefore, an issuer that opts into the SAR Pilot will not be required to include in its interim MD&A a discussion of its analysis of current quarter results including a comparison of financial performance to the corresponding period in the previous year for the three-months ended June 30. |
||
Additional Conditions and Restrictions
Key Element |
Commentary |
|
|
An issuer cannot rely on the exemptions in the Blanket Order if in the last 12 months it had stopped relying on the exemptions in the Blanket Order |
The intent of this condition is to prohibit issuers from opting in and out of the SAR Pilot. We think it would create confusion in the market, especially for investors, if an issuer frequently changes the cadence of when it reports interim financial results. |
|
|
See paragraph 4(f)(iii) of the Blanket Order |
|
|
|
An issuer must file a news release announcing its adoption of the SAR Pilot |
An issuer intending to rely on the Blanket Order must file a news release with the information specified in the Blanket Order. The news release will provide transparency to the market about the issuer's future filings and allows investors and intermediaries to set their expectations for the timing of future interim financial reporting. As a result, issuers should consider filing the news release as soon as possible after the end of the initial interim period for which they do not intend to file an interim financial report and related MD&A. |
|
|
See subsection 4(g) of the Blanket Order |
|
|
|
An issuer must cease relying on the exemptions in the Blanket Order if it has changed its financial year-end |
Changes in financial year-end while relying on the Blanket Order may result in significant periods with no financial disclosure. |
|
|
See subsection 5(a) of the Blanket Order |
We understand that in connection with certain restructuring transactions an issuer may intend to change its financial year-end. If an issuer has been relying on the Blanket Order and intends to change its financial year-end, such issuer is encouraged to contact their principal regulator to discuss staff's expectations for financial disclosure post-transaction. |
|
|
The exemptions in the Blanket Order do not apply in respect of financial disclosure required in a short form prospectus, an information circular, take-over bid circular or an issuer bid circular |
The SAR Pilot is intended to be a pilot project to reduce burden in respect of continuous disclosure requirements. The SAR Pilot is not meant to alter prospectus or prospectus-level disclosure required in the context of a prospectus offering or a circular. |
|
|
See section 7 of the Blanket Order |
The conditions of the Blanket Order require an issuer that files a short form prospectus, information circular, take-over bid circular or issuer bid circular to include the most recent interim financial disclosure in the form required by NI 51-102. |
|
|
|
We believe this approach will maintain the integrity of the short form prospectus disclosure system, facilitate comparisons between similar issuers and provides issuers with flexibility to raise capital and conduct business operations during the life of the SAR Pilot. |
|
|
|
Issuers planning to file a short form prospectus or a circular while relying on the Blanket Order are encouraged to contact their principal regulator to discuss staff's expectations for financial disclosure. |
|
|
An issuer that has filed a short form prospectus must not rely on the exemptions in the Blanket Order during the period of distribution |
As outlined above, the SAR Pilot is not meant to alter disclosure required in the context of a prospectus offering. |
|
|
See section 8 of the Blanket Order |
Accordingly, if an issuer has filed a short form prospectus and has not closed its offering by the filing deadline for a subsequent interim period, the issuer must prepare, and file interim financial disclosure required under NI 51-102 without regard to the exemptions included in the Blanket Order. Such interim financial disclosure would be deemed incorporated by reference into the issuer's prospectus by virtue of the language required to be included in a short form prospectus under item 11.2 of Form 44-101F1 Short Form Prospectus. |
|
|
An issuer must cease relying on the exemptions in the Blanket Order if it has filed a base shelf prospectus |
As outlined above, the SAR Pilot is not meant to alter disclosure required in the context of a prospectus offering. Accordingly, the SAR Pilot is not compatible with continuous distributions under shelf prospectuses. |
|
|
See subsection 5(b) of the Blanket Order |
A shelf prospectus supplement can be filed at any time over the life of a base shelf prospectus i.e. 25 months. Further, base shelf prospectuses are used by issuers to, among other things, conduct continuous offerings (e.g., at-the-market distributions). Accordingly, the SAR Pilot is not compatible with the filing of shelf prospectus supplements. |
|
|
An issuer relying on the exemptions in the Blanket Order must not file a shelf prospectus supplement under a base shelf prospectus that was filed prior to its adoption of the SAR Pilot |
|
|
|
See section 6 of the Blanket Order |
|
This Annex to the accompanying CSA Notice of Publication and Request for Comment (the CSA Notice) sets out matters required to be addressed by the Securities Act (Ontario) (the Act). The Ontario Securities Commission (the Commission) is publishing this Annex to supplement the CSA Notice and to publish for comment proposed OSC Rule 51-507 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers (the OSC Local Rule).
Securities regulators have a role to play in promoting disclosures that yield decision-useful information for investors. However, we also must be mindful of challenges reporting issuers face in preparing their disclosure. Regulatory requirements and the associated compliance costs should be balanced against the significance of the regulatory objectives sought to be realized and the value provided by such regulatory requirements to investors and other stakeholders. As noted in the 2025-2028 CSA Business Plan, we are committed to maintaining an effective and efficient regulatory framework that supports the development of internationally competitive Canadian capital markets. As our markets evolve, so too must our approach to regulation.
As a result, the CSA is publishing for comment proposed Coordinated Blanket Order 51-933 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers (the Blanket Order) that introduces a framework for semi-annual reporting (the SAR Pilot). This SAR Pilot would apply to a subset of "venture issuers", as defined in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). The CSA intends to initiate a broader rule-making project related to semi-annual reporting (SAR) and will use learnings from the SAR Pilot to inform this initiative. In the interim, we will continue to monitor international developments relating to SAR.
Please refer to the main body of the CSA Notice.
Concurrent with publishing for comment the Blanket Order, the Commission is also publishing for a 60-day comment period the OSC Local Rule. Blanket orders made by the Commission have no effect as of 18 months after the day on which such order comes into force, with the option of a one-time, 18-month extension. The local blanket orders published by other CSA jurisdictions do not have a similar sunset clause and may continue to be in effect until repealed. Given the nature of the exemptions provided in the SAR Pilot, we believe that the OSC Local Rule is necessary to provide the market with certainty on the availability of the exemptions in Ontario after 18 months.
The OSC Local Rule would effectively extend the exemptions provided in the Blanket Order so that reporting issuers and investors have certainty on frequency of reporting for the duration of the SAR Pilot, which is expected to be longer than 18 months. The OSC Local Rule does not introduce any new elements that are not in the Blanket Order.
The OSC Local Rule is included as Schedule I to this Annex.
A. Current regulatory framework and rationale for intervention
The SAR Pilot responds to strategic goal 1.6 of the 2025-2028 CSA Business Plan, which recommends developing a proposal for SAR and consulting on the relative benefits and risks associated with allowing certain reporting issuers to report semi-annually rather than quarterly.
Currently, all reporting issuers must file an interim financial report and related management's discussion and analysis (MD&A) for each interim period, which is generally a period commencing on the first day of the financial year and ending nine, six or three months before the end of the financial year (the first, second and third quarter, respectively). The CSA has received feedback from market participants and other stakeholders that the interim reporting requirements may cause undue regulatory burden for smaller venture issuers with limited investor benefit.{1}
B. Proposed regulatory intervention
The SAR Pilot would allow certain venture issuers listed on the TSX Venture Exchange (TSXV) or the Canadian Securities Exchange (CSE) to report semi-annually rather than quarterly to reduce the time and costs of preparing certain first and third quarter periodic continuous disclosure documents on a voluntary basis.
The SAR Pilot provides for the following specific exemptions, subject to certain conditions:
• Requirement to file or deliver first and third quarter interim financial reports and related MD&As and certificates;
• Requirements specifically relating to the second quarter interim financial report and related MD&A, including
• Requirement to include, in the interim financial report for the six-month interim period, a statement of comprehensive income for the current quarter to date and comparative financial information for the corresponding three-month period in the immediately preceding financial year, and
• Requirement to provide, in the interim MD&A for the six-month interim period, a discussion and analysis of current quarter results, including a comparison of financial performance to the corresponding three-month period in the immediately preceding financial year;
• Requirement to provide information for each of the eight most recently completed quarters in its MD&A; and
• Requirement to provide a discussion and analysis of fourth quarter events or items that affected financial condition, financial performance or cash flows, year-end and other adjustments, seasonal aspects of the issuer's business and dispositions of business segments in its annual MD&A.
An eligible issuer that adopts SAR must file a news release announcing its transition into the SAR Pilot.
We expect the SAR Pilot to reduce regulatory burden for eligible issuers and support the efficiency and competitiveness of Canada's public capital markets.
C. Stakeholders affected by the proposed Blanket Order and OSC Local Rule
The major stakeholders expected to be affected by the SAR Pilot include investors and venture issuers. Since the impact of the OSC Local Rule is to extend the exemptions provided in the Blanket Order beyond 18 months, the stakeholders affected by the Blanket Order and the OSC Local Rule will generally be the same.
a) Investors
Currently, all reporting issuers must file an interim financial report and related MD&A for each interim period. Investors will no longer have the interim financial report and related MD&A for the first and third quarters for an eligible issuer that voluntarily adopts the SAR Pilot. This may result in less information for investors making their investment decisions.
b) Venture issuers
Currently, all venture issuers must file an interim financial report and related MD&A for each interim period. Under the SAR Pilot, a large subset of venture issuers may no longer file the interim financial report and related MD&A for the first and third quarters. The eligibility criteria for voluntary adoption of the SAR Pilot generally require that a venture issuer be listed on the TSXV or the CSE and have annual revenues of no more than $10 million.{2} As a result, the number of venture issuers that are eligible will fluctuate year over year.
A revenue threshold of $10 million was determined to be an appropriate threshold to ensure that the smaller venture issuers most likely to benefit from the SAR Pilot would be eligible to participate. This threshold is consistent with the Taskforce Proposal.
Eligible issuers that voluntarily adopt the SAR Pilot may benefit from reduced disclosure costs. While ineligible issuers would not be able to use the SAR Pilot, there may still be an indirect impact on such issuers as it relates to competitiveness and cost of doing business as the SAR Pilot would provide exemptions to a subset of listed venture issuers that may be disadvantageous to ineligible issuers.
As of September 2025, we estimate there are approximately 1,461 venture issuers listed on the TSXV or the CSE with annual revenues less than $10 million that are reporting issuers in Ontario.{3} These eligible issuers account for approximately 89% of all listed venture reporting issuers in Ontario (see Figure 1).
Figure 1 -- Venture Listed Ontario Reporting Issuers by Revenue Groups
FY24 Revenue |
Issuers |
% Issuers |
Avg. Market Capitalization ($M) |
Median Market Capitalization ($M) |
% Market Capitalization |
|
|||||
<$10M |
1,461 |
89% |
39 |
7 |
47% |
|
|||||
$10M-$25M |
63 |
4% |
69 |
18 |
4% |
|
|||||
$25M-$50M |
51 |
3% |
86 |
39 |
4% |
|
|||||
>$50M |
65 |
4% |
860 |
130 |
46% |
|
|||||
Grand Total |
1,460 |
100% |
74 |
9 |
100% |
|
|||||
Source: OSC Internal data and S&P Capital IQ. Data as of September 2025, and based on staff analysis of Ontario reporting issuers that met the following criteria: i) active security status; ii) not cease-traded; and iii) listed on CSE or TSXV. |
|||||
Among the eligible issuers, the top sectors based on issuer counts by industry are Materials (58%), Financials (12%), Information Technology (7%) and Health Care (6%) (see Figure 2).{4}
Figure 2 -- Eligible Ontario Reporting Issuers by GICS Sector
GICS Sector |
Issuers |
% Issuers |
Avg. Market Capitalization ($M) |
Median Market Capitalization ($M) |
% Market Capitalization |
|
|||||
Materials |
849 |
58% |
54.1 |
9.1 |
80% |
|
|||||
Financials |
181 |
12% |
3.7 |
0.3 |
1% |
|
|||||
Information Technology |
96 |
7% |
31.5 |
9.3 |
5% |
|
|||||
Health Care |
93 |
6% |
31.6 |
11.3 |
5% |
|
|||||
Other |
242 |
17% |
19.8 |
6.0 |
8% |
|
|||||
Grand Total |
1,461 |
100% |
39.3 |
6.9 |
100% |
|
|||||
Source: OSC Internal data and S&P Capital IQ. Data as of September 2025, and based on staff analysis of Ontario reporting issuers that met the following criteria: i) active security status; ii) not cease-traded; and iii) listed on CSE or TSXV; and iv) fiscal year 2024 revenue below $10 million or not available. |
|||||
c) Other stakeholders
The SAR Pilot is expected to have minimal impact on other stakeholders, such as auditors and external counsel.
D. Impact of the proposed Blanket Order and OSC Local Rule on each of the Commission's mandate components
As part of any policy process, Commission staff consider all components of the Commission's mandate on a holistic basis. The first fundamental principle of the Act{5} states that there will be specific cases requiring staff to balance the importance to be given to each of the mandate components. Any balancing involves consideration of interests reflected in all the applicable mandate components, with a view to the best interests of Ontario capital markets.
The SAR Pilot will impact the following components of the Commission's mandate as follows:
i. Provide protection to investors from unfair, improper or fraudulent practices
• Less frequent reporting by eligible issuers may result in less timely information for investors. This may increase the likelihood of selective disclosure and hence impact the price discovery process for investors.
• We note existing prohibitions regarding selective disclosure and insider trading together with requirements in respect of timely, continuous disclosure of accurate and complete material information by reporting issuers will remain to mitigate selective disclosure risks.
• There may be less comparability with peers as a result of applying the eligibility criteria. For example, an investor may no longer have an interim financial report and related MD&A for an otherwise comparable company when comparing results and trends across a peer group.
ii. Foster fair, efficient, and competitive capital markets and confidence in the capital markets
• The ability to voluntarily adopt SAR by eligible issuers reflects a flexible regulatory environment, which allows smaller venture issuers to benefit from lower costs of reporting.
• The SAR Pilot could lower barriers to entry through lower reporting costs, which may result in more private issuers going public. New entrants in the market may potentially increase competition.
• A voluntary SAR regime could negatively impact the market's perception of eligible issuers that decide to report semi-annually. The market and investors may view less frequent reporting by eligible issuers as a potentially negative market signal, resulting in higher cost of capital, reduced market value and reduced liquidity for the issuer's securities.
• A voluntary SAR regime may also harm the broader venture market and increase the cost of capital for all issuers since it is difficult to compare or evaluate issuers that continue to report quarterly against their peers that choose only SAR.{6}
• There is a potential dampening effect on competition because the proposal lowers the cost of complying with disclosure obligations for only a subset of venture issuers. It also potentially impacts the competition for capital among venture issuers because investors will have less information on which to base their investment decisions.
• Market efficiency refers to the extent to which an asset's price reflects all available information. The SAR Pilot may impact the price discovery process for smaller issuers and hence potentially reducing market efficiency.{7}
iii. Foster capital formation
• Generally, less frequent reporting may affect an issuer's ability to raise capital or their cost of capital.
• However, the SAR Pilot will facilitate capital formation by:
• providing eligible issuers with flexibility to reallocate resources from reporting to operational matters and to determine the appropriate frequency of their reporting based on needs, available resources and expectations of investors,
• reducing administrative burden and costs associated with certain interim filings, and
• providing certainty to issuers and investors on reporting frequency as a result of the extension of the exemptions provided by the Blanket Order through the OSC Local Rule.
iv. Contribute to the stability of the financial system and the reduction of systemic risk
• The SAR Pilot should not have any impact on the stability of the financial system.
E. Analysis of the anticipated costs and benefits of the proposed Blanket Order and OSC Local Rule
The following section analyzes the anticipated costs and benefits to the affected stakeholders described above. When considering the costs related to adopting the SAR Pilot, it is important to recognize that the SAR Pilot provides an optional, alternative interim reporting framework for eligible venture issuers, and that the framework does not impose a direct regulatory cost on affected stakeholders. Issuers are free to elect to continue to report on a quarterly basis with no additional costs.
Since the impact of the OSC Local Rule is to extend the exemptions provided in the Blanket Order, the costs and benefits to stakeholders of the Blanket Order and the OSC Local Rule will generally be the same.
a) Investors
Benefits
i. More efficient allocation of capital resources -- By allowing eligible issuers the flexibility to reallocate resources from reporting to operational matters, investors may benefit as this may contribute to lower operational costs, allowing for more efficient allocation of capital resources by eligible issuers.
Costs
i. Less timely financial information and increase likelihood of selective disclosure -- We note that several commentators in the Prior CSA Proposals and the Taskforce Proposal have raised concerns that a shift to SAR may harm our public markets as investors will have less timely financial information and may increase the likelihood of selective disclosure. While we acknowledge these concerns, it is important to note that our continuous disclosure regime -- including existing prohibitions regarding selective disclosure and insider trading, the ongoing requirement to report material changes and other timely disclosure requirements -- would continue to apply. Further, we note that eligible issuers must be listed on either the TSXV or CSE, both of which have their own timely disclosure rules and exchange listing requirements. This is an issue that we intend to monitor carefully during the SAR Pilot.
ii. Less comparability -- As eligible issuers may no longer provide interim financial reports and related MD&A for the first and third quarters, investors may experience less comparability within a peer group of issuers when evaluating performance and making investment decisions.
b) Eligible listed venture Ontario reporting issuers{8}
Eligible issuers will need to assess the cost and benefits of adopting the SAR Pilot. Eligible issuers may ultimately choose not to adopt the SAR Pilot if the information needs or expectations of key stakeholders rely on quarterly reporting.{9} For example, analysts may require quarterly information for their assessment of progress on projected operating targets or financial covenant compliance. Such issuers may continue to provide quarterly reporting if they believe that key stakeholders, including investors, perceive less frequent reporting as an indicator of information asymmetry or an overall lack of transparency.{10}
Benefits
i. Lower financial reporting costs -- The quarterly reporting regime imposes a proportionately greater regulatory burden on smaller venture issuers with limited resources. Eliminating two quarterly reporting periods may meaningfully reduce burden for some of the venture issuers listed on the TSXV or the CSE, allowing these issuers to reallocate resources from reporting to operational matters.
Quantitative data regarding cost savings from adopting SAR is not readily available from public sources. To estimate the potential cost savings for eligible issuers who choose to adopt the SAR Pilot, data would need to be collected from issuers and/or other stakeholders.
The data that would need to be collected may include getting an estimate of the number of hours it takes to prepare interim financial statements and related MD&A, broken down by staff level (e.g. CFO, management, analyst, clerk, in house legal counsel). However, we note that the estimates should only relate to the actual preparation and approval of the interim financial statements and related MD&A. We do not anticipate any cost savings on month-end or quarter-end close processes (e.g. closing procedures, consolidation, adjustments and reconciliations, etc.) as issuers are still expected to do their monthly and quarterly processes for internal purposes.
ii. Provides choice -- The SAR regime would be voluntary and provide participating venture issuers with the choice of semi-annual or quarterly reporting, based on their available resources, the expectations of their investors and other business considerations.
iii. Better balance between regulatory burden and investor protection -- While quarterly financial statements provide timely information to investors, there can be instances in which the regulatory and internal cost of preparing such frequent reporting exceeds the benefit. This is particularly true for smaller issuers and issuers at the pre-revenue stage that may not experience significant changes to their operations that would be reflected in the financial statements. For these types of smaller venture issuers, material change reporting can be more tangible and useful to investors who may struggle to distill the relevant information included in quarterly reports. The SAR Pilot seeks to introduce a better balance between regulatory burden and investor protection.
Costs
i. Little to no incremental costs to adoption -- The SAR Pilot gives eligible issuers the option to adopt SAR. Eligible venture issuers who do not adopt SAR will not incur any direct costs as a result of the SAR Pilot. Eligible venture issuers who adopt SAR may incur minimal costs associated with certain requirements (e.g., the costs associated with issuing a press release). However, these costs would be offset by the savings from not doing quarterly reporting.
ii. May reduce liquidity -- The adoption of the SAR Pilot may reduce liquidity for eligible issuers. As most venture issuers trade infrequently, the impact on market efficiency and investors could be minimal. However, we acknowledge that the reduced reporting frequency may result in less trading activity and reduce market liquidity for issuers that adopt SAR. We note that issuers would most likely weigh the costs and benefits of quarterly versus SAR, including the impact on the issuer's market perception, price discovery and cost of capital prior to adoption of the SAR Pilot.
c) Other stakeholders
The SAR Pilot is expected to have minimal costs and benefits on other stakeholders, such as auditors and external counsel. As noted above, ineligible issuers would not be able to use the SAR Pilot and there may be an indirect impact on such issuers as it relates to competitiveness and cost of doing business. Any indirect impact on ineligible issuers would need to be assessed during the SAR Pilot.
d) Conclusion
Based on the analysis above, we believe that the benefits to be derived from the SAR Pilot are proportionate to the potential costs.
F. Description of alternatives considered
The following alternatives to rule-making were considered.
i. Status Quo
We think that it is important to propose changes rather than maintain the status quo. As noted in the CSA Notice, we received comments in response to Prior CSA Proposals and the Taskforce Proposal that stakeholders generally agreed that smaller venture issuers face a disproportionate burden through ongoing quarterly reporting requirements.
The SAR Pilot is intended to be a project to assess uptake and impact. The CSA intends to initiate a broader rule-making project related to SAR and will use learnings from the SAR Pilot to inform this initiative.
ii. Other existing SAR frameworks
In preparing the SAR Pilot, we reviewed SAR frameworks in certain foreign jurisdictions and the proposed framework for SAR in Annex G of the CSA Notice and Request for Comment Proposed Amendments to National Instrument 51-102 Continuous Disclosure Obligations and Other Amendments and Changes Relating to Annual and Interim Filings of Non-Investment Fund Reporting Issuers and Seeking Feedback on a Proposed Framework for Semi-Annual Reporting -- Venture Issuers on a Voluntary Basis published on May 20, 2021 (theProposed CD Amendments).
In developing the SAR Pilot, we considered alternative approaches, including replicating the SAR frameworks used in certain foreign jurisdictions and the Proposed CD Amendments. However, we are of the view that the SAR Pilot better responds to stakeholder feedback, is more suitable for a pilot project, and presents a benefit over the status quo.
We will continue to monitor international developments to further inform our approach to reducing regulatory burden for reporting issuers while balancing investor protections.
iii. Alternative eligibility criteria
In evaluating eligibility criteria, we considered alternatives such as using a market capitalization threshold instead of a revenue threshold, or allowing all listed venture issuers to participate without any threshold. However, we are of the view that a revenue threshold is more responsive to stakeholder feedback and is more suitable for the SAR Pilot.
IV. Rule-making Authority
The following provisions of the Act provide the Commission with the authority to adopt the OSC Local Rule:
• Paragraph 143(1)22 authorizes the Commission to prescribe requirements in respect of the preparation and dissemination and other use, by reporting issuers, of documents providing for continuous disclosure that are in addition to the requirements under the Act;
• Paragraph 143(1)23 authorizes the Commission to exempt reporting issuers from any requirement of Part XVIII (Continuous Disclosure) of the Act under circumstances that the Commission considers justify the exemption;
• Paragraph 143(1)25 authorizes the Commission to prescribe requirements in respect of financial accounting, reporting and auditing for purposes of the Act; and
• Paragraph 143(1)39 authorizes the Commission to make rules requiring or respecting the media, format, preparation, form, content, execution, certification, dissemination and other use, filing and review of all documents required under or governed by the Act, the regulations or the rules and all documents determined by the regulations or the rules to be ancillary to the documents, including financial statements.
1. Terms defined in the Securities Act (Ontario) (the Act) and National Instrument 14-101 Definitions have the same meaning if used in this Rule.
2. In this Rule:
"base shelf prospectus" has the meaning ascribed to that term in National Instrument 44-102 Shelf Distributions;
"exchange listed security" means a security of a reporting issuer that is listed and posted for trading on TSX Venture Exchange Inc. or CNSX Markets Inc.;
"Form 51-102F1" means Form 51-102F1 Management's Discussion & Analysis;
"interim period" has the meaning ascribed to that term in NI 51-102;
"MD&A" has the meaning ascribed to that term in NI 51-102;
"NI 51-102" means National Instrument 51-102 Continuous Disclosure Obligations;
"revenue" means income arising in the course of an issuer's ordinary activities determined in accordance with the accounting principles applied to the preparation of the issuer's annual financial statements;
"shelf prospectus supplement" has the meaning ascribed to that term in National Instrument 44-102 Shelf Distributions; and
"venture issuer" has the meaning ascribed to that term in NI 51-102.
3. A reporting issuer is exempt from the requirement to file an interim financial report for each of the three and nine-month interim periods of its financial year, as required by section 77 of the Act and subsection 4.3(1) of NI 51-102 provided that the issuer satisfies all of the following conditions at the end of each such three and nine-month interim period, as applicable:
(a) the issuer has been a reporting issuer in at least one jurisdiction of Canada for at least 12 months;
(b) the issuer is a venture issuer;
(c) the issuer has exchange listed securities;
(d) the issuer has revenue, as shown on the issuer's most recently filed audited annual financial statements, of no more than $10 million;
(e) the issuer has filed with the regulator or securities regulatory authority in each jurisdiction in which it is a reporting issuer all periodic and timely disclosure documents that it is required to have filed in that jurisdiction
(i) under applicable securities legislation;
(ii) pursuant to an order issued by the regulator or securities regulatory authority;
(iii) pursuant to an undertaking to the regulator or securities regulatory authority;
(f) during the preceding 12 months, none of the following applied:
(i) the issuer was the subject of a penalty or sanction, including a restriction on the use by the issuer of any type of prospectus, or exemption, imposed by a court relating to securities legislation or by a regulator or securities regulatory authority, other than an administrative monetary penalty for late filings;
(ii) the issuer was the subject of a cease trade order or order similar to a cease trade order in a jurisdiction of Canada that was not revoked within 30 days of its issuance;
(iii) the issuer stopped relying on Section 3;
(g) the issuer issued and filed a news release that:
(i) states "This news release is being filed pursuant to CSA Coordinated Blanket Order 51-933 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers and OSC Rule 51-507 Exemptions to Permit Semi-Annual Reporting for Certain Venture Issuers";
(ii) specifies the initial interim period for which the issuer does not intend to file an interim financial report and related MD&A in reliance on this Rule.
4. A reporting issuer must cease relying on Section 3 if either of the following apply:
(a) the issuer changes its financial year end;
(b) the issuer files a base shelf prospectus.
5. A reporting issuer that is relying on Section 3 must not file a shelf prospectus supplement.
6. The exemptions in this Rule do not apply to the disclosure requirements in respect of interim financial reports and related MD&A, pursuant to any of the following:
(a) item 11.1 of Form 44-101F1 Short Form Prospectus;
(b) item 14.2 of Form 51-102F5Information Circular;
(c) item 19 of Form 62-104F1 Take-Over Bid Circular;
(d) item 21 of Form 62-104F2 Issuer Bid Circular.
7. A reporting issuer that has filed a short form prospectus must not rely on the exemptions in this Rule during the period of distribution.
8. A reporting issuer relying on Section 3 is exempt from the requirement under paragraph 4.3(2)(c) of NI 51-102 to provide a statement of comprehensive income for the three-month period ending on the last day of the interim period and comparative financial information for the corresponding period in the immediately preceding financial year.
9. A reporting issuer relying on Section 3 is exempt from the requirements under subsections 4.6(3) and 5.6(1) of NI 51-102 to send a copy of the issuer's interim financial report and interim MD&A for any interim period where such interim financial report and interim MD&A were not filed in reliance on this Rule.
10. A reporting issuer relying on Section 3 is exempt from the requirement under item 1.5 of Form 51-102F1 to provide information for each of the eight most recently completed quarters.
11. A reporting issuer relying on Section 3 is exempt from the requirement under item 1.10 of Form 51-102F1 to provide in its annual MD&A a discussion and analysis of fourth quarter events or items that affected its financial condition, financial performance or cash flows, year-end and other adjustments, seasonal aspects of the issuer's business and dispositions of business segments.
12. A reporting issuer relying on Section 3 is exempt from the requirement under item 2.2(a)(i) of Form 51-102F1 to provide in its interim MD&A a discussion of its analysis of current quarter results including a comparison of financial performance to the corresponding period in the previous year.
13. A reporting issuer relying on Section 3 can satisfy the instruction under item 2.2.1(iv) of Form 51-102F1, by titling its six-month interim period highlights "Interim MD&A -- Semi-Annual Highlights".
This Rule comes into force on [•].
{1} The feedback is from prior proposals put forward by the CSA in 2011, 2017 and 2021 (collectively, Prior CSA Proposals), to amend the Canadian regulatory requirements under NI 51-102 to permit semi-annual financial reporting for certain reporting issuers. We have also considered the commentary and recommendation 14 of the Ontario Capital Markets Modernization Taskforce Final Report in 2021 (the Taskforce Proposal).
{2} Currency is in Canadian dollars.
{3} Based on staff analysis of S&P Capital IQ and OSC internal data for Ontario reporting issuers that met the following criteria: i) active security status; ii) not cease-traded; iii) listed on CSE or TSXV; and iv) fiscal year 2024 revenue below $10 million or not available.
{4} The sectors are based on the Global Industry Classification Standard (GICS), which is an industry analysis framework that helps investors understand the key business activities for companies around the world. "Materials" includes chemicals, packaging, metals, mining, and paper products. "Financials" includes banks, asset management, REITs, and insurance.
{5} See section 2.1(1).
{6} Hao, Jinji, Disclosure Regulation, Cost of Capital, and Firm Values (January 20, 2023). Hao, Jinji, 2024, Disclosure Regulation, Cost of Capital, and Firm Values, Journal of Accounting and Economics, 77 (1), 101605., Available at SSRN: https://ssrn.com/abstract=4393031 or http://dx.doi.org/10.2139/ssrn.4393031
{7} Lee, Charles M.C., Market Efficiency with Costly Information (January 30, 2025). Available at SSRN: https://ssrn.com/abstract=5118220 or http://dx.doi.org/10.2139/ssrn.5118220
{8} We did not include the following as costs or benefits for eligible issuers: (1) cost savings on auditor reviews of first and third quarter financial statements as eligible issuers generally would not have the interim financial statements reviewed, and (2) cost savings on external counsel engagement as eligible issuers generally would not allocate funds to consult with external counsel for interim matters. We also note that we do not have information regarding the estimate of uptake of issuers adopting the SAR Pilot. This data would be available over the duration of the SAR Pilot.
{9} Bornemann, Tobias and Moosmann, Anna-Lena and Novotny-Farkas, Zoltán, The Consequences of Abandoning the Quarterly Reporting Mandate in the Prime Market Segment (July 14, 2023). European Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3881711 or http://dx.doi.org/10.2139/ssrn.3881711
{10} Behrmann, Vanessa and Hornuf, Lars and Vrankar, Daniel and Zimmermann, Jochen and Zimmermann, Jochen, The Deregulation of Quarterly Reporting and Its Effects on Information Asymmetry and Firm Value (2021). CESifo Working Paper No. 9344, Available at SSRN: https://ssrn.com/abstract=3943027 or http://dx.doi.org/10.2139/ssrn.3943027
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06293531
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06343328
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06339254
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06301400
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06294738
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #6348408
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06347689
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06342449
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06339475
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06289493
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Filing #06199785
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
-
Underwriter(s) or Distributor(s):
-
Promoter(s):
-
Filing # 06189646
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Principal Regulator -- Saskatchewan
Type and Date:
Offering Price and Description:
Filing # 06341716
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Principal Regulator -- Alberta
Type and Date:
Offering Price and Description:
Filing # 06345626
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Principal Regulator -- Manitoba
Type and Date:
Offering Price and Description:
Filing # 06347237
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Principal Regulator -- Ontario
Type and Date:
Offering Price and Description:
Filing # 06297719
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Principal Regulator -- British Columbia
Type and Date:
Offering Price and Description:
Filing # 06348191
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Principal Regulator -- British Columbia
Type and Date:
Offering Price and Description:
Filing # 06347121
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Type |
Company |
Category of Registration |
Effective Date |
|
|||
THERE IS NOTHING TO REPORT THIS WEEK. |
|||
Cboe Canada Inc. -- Housekeeping Rule Amendment to the Trading Policies -- Net Asset Value Order -- Notice
In accordance with the Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 and the Exhibits Thereto (the Exchange Protocol), which is attached as Schedule 4 to Cboe Canada Inc.'s (Cboe Canada or the Exchange) recognition order, as amended, the Exchange is proposing to adopt certain amendments to its trading rules (the Trading Policies) that are of a housekeeping nature (the Housekeeping Rule Amendment). The Ontario Securities Commission has not disagreed with the housekeeping categorization. The Housekeeping Rule Amendment comprises the amendments described below.
The Housekeeping Rule Amendment is reflected in amendments to Sections 1.01 and 10.03(3) of the Trading Policies. A blackline of the amendments is provided as Appendix A.
The Housekeeping Rule Amendment is being made in response to the notice recently published by the Canadian Investment Regulatory Organization (CIRO) announcing the approval by the Canadian Securities Administrators of certain amendments to CIRO's Universal Market Integrity Rules (UMIR). See CIRO Rules Bulletin, Amendments Respecting Net Asset Value Orders and Intentional Crosses (July 17, 2025) (available at https://www.ciro.ca/newsroom/publications/amendments-respecting-net-asset-value-orders-and-intentional-crosses) (the CIRO Notice). For the reasons explained in the CIRO Notice, all CIRO members, as of the effective date of the UMIR amendments (January 13, 2026), will be required, under UMIR 6.2 as amended, to report each order for an Exchange Traded Fund (ETF) where the execution price of the order references the net asset value (NAV) of the ETF (a NAV Order) using the new mandatory "designation" (sometimes referred to as an order "marker") with a new FIX tag value to be included in the relevant intentional cross order and trade messages. See CIRO Notice, section 2. Accordingly, CIRO called upon all marketplaces that choose to offer participants the ability to execute a NAV Order "to undertake technology work to accommodate the new order type." Ibid.
Please note that the amendment to Section 10.03(3) includes a re-ordering and other clarifying edits to more closely align the rule with existing language in UMIR (and, in particular, the definition of "last sale price" in UMIR 1.1).
The Housekeeping Rule Amendment is being made in response to the UMIR amendments announced in the CIRO Notice and/or to clarify an existing exchange rule. As such, the amendment is "necessary to conform to applicable regulatory or other legal requirements" and/or is comparable to a "change[] in the routine processes, policies, practices, or administration of the marketplace," as contemplated in, respectively, subparagraphs (iv) and (i) of paragraph 6.1(5)(b) of the Companion Policy to National Instrument 21-101 Marketplace Operation. Therefore, pursuant to paragraph 2(f)(ii) of the Exchange Protocol, the pending amendment should be considered to be of a "housekeeping" nature.
The Housekeeping Rule Amendment will be effective on January 13, 2026.
Once the Housekeeping Rule Amendment has become effective, the amended Trading Policies will be available in the "Trading Resources" section of the "Document Library" page of the Exchange's website (at https://www.cboe.com/ca/equities/support/policies/).
[...]
"Special Terms trade" means a trade resulting from a Basis Order, Call Market Order, Closing Price Order, Special Terms Order (unless one part is not a Special Terms Order), or a Volume-Weighted Average Price Order, or a Net Asset Value Order.
[...]
(1) A Member may report crosses made outside the Trading Books, subject to any regulatory provisions applicable to the entry of crosses.
(2) Regular Crosses entered during the Continuous Trading Session must be made at a price that is at or within the NBBO.
(3)
Bypass Crosses and specialty priceThe following types of crossessuch as Basis, Special Terms and Volume-Weighted Average Pricewill not be reflected in the Last Traded Price.:(a) Bypass Crosses; and
(b) Crosses resulting from:
(i) a Basis Order;
(ii) a Special Terms Order (unless the Special Terms Order has executed with an order or orders other than a Special Terms Order);
(iii) a Volume-Weighted Average Price Order; or
(iv) a Net Asset Value Order.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Commentary
If at the time of entry of a Regular Cross the security does not have an NBBO, the Exchange will accept the cross at any price. If the security has an NBB, but no NBO, the cross will be accepted as long as the price is greater or equal to the NBB. If the security has an NBO, but no NBB, the cross will be accepted as long as the price is less or equal to the NBO.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Canadian Securities Exchange -- Significant Change Subject to Public Comment -- Introduction of CSE2 Odd Lot Liquidity Allocating (OLLA) Order Type -- Notice and Request for Comments
CNSX Markets Inc., operator of the Canadian Securities Exchange (CSE or Exchange) is filing this Notice in accordance with the process for the Review and Approval of Rules and Information Contained in Form 21-101F1 and the Exhibits Thereto attached as Appendices to the Exchange's recognition orders (the Protocol). CSE is proposing to introduce a new order type -- Odd Lot Liquidity Allocating (OLLA) -- on its CSE2 trading book, which is described in further detail below (Significant Change).
The CSE is proposing to introduce a mechanism designed to address existing inefficiencies in the Canadian trading landscape related to odd lot liquidity provision outside of standard continuous trading hours.
Currently, from 9:30 a.m. to 4:00 p.m., Market Makers{1} play a critical role in facilitating automated fills for odd lot orders. However, the Canadian markets lack a robust solution for odd lot liquidity during pre-market and post-market sessions. The OLLA order type would offer Dealers a streamlined, automated method to support odd lot execution during these underserved timeframes, thereby enhancing market continuity and reducing execution disparities.
High-Level Design and Functionality
The OLLA order is a dark pegged order that rests on the same side of the National Best Bid and Offer (NBBO) and executes against incoming odd lot orders until fully depleted. OLLA orders exclusively interact with odd lots, but can be submitted in board lot, mixed lot, or odd lot sizes, allowing Dealers to allocate substantial liquidity at the NBBO for passive execution against odd lots during supported times.
Timing
CSE2 supports continuous trading from 8:00 a.m. to 5:00 p.m., while odd lot market making is currently limited to 9:30 a.m. to 4:00 p.m. The OLLA order type fills the gap by enabling odd lot liquidity provision during the following windows:
• Pre-market: 8:00 a.m. -- 9:30 a.m.
• Post-market: 4:00 p.m. -- 5:00 p.m.
To preserve the integrity of existing market making operations, OLLA orders will only be eligible for matching during these designated periods and will not match and trade between 9:30 a.m. and 4:00 p.m. All OLLA orders will be marked as Day Orders and may be entered starting at 8:00 a.m. Any unfilled orders will be automatically cancelled at 5:00 p.m. The table below summarizes the timing of OLLA orders:
Time |
Description |
|
|
8:00 a.m. |
OLLA orders can be entered starting at 8:00 a.m. |
|
|
8:00 a.m. -- 9:30 a.m. |
OLLA orders can be entered, match and trade with odd lots |
|
|
9:30 a.m. -- 4:00 p.m. |
At 9:30 a.m., existing OLLA orders remain active and new OLLA orders can be entered. OLLA orders will not match and trade with odd lots during this time. |
|
|
4:00 p.m. -- 5:00 p.m. |
At 4:00 p.m., existing OLLA orders resume matching and trading with odd lots. New OLLA orders can be entered. |
|
|
5:00 p.m. |
All open and unfilled OLLA orders are cancelled. |
Functionality and Tradability
OLLA orders will be available exclusively on CSE2 for all symbols supported on the trading book. OLLA orders will not be accessible on CSE Book 1. While OLLA orders may be submitted in board lot, mixed lot, or odd lot sizes, they will only interact only with CSE2 odd lot orders on the CSE2 odd lot book. The primary function is to enhance liquidity for odd lot executions during designated trading windows.
Importantly, OLLA orders will not match against other OLLA orders, as they are explicitly engineered to serve as liquidity providers for incoming odd lot orders. OLLA orders are non-displayed (dark) and are pegged to the same side of the National Best Bid or Offer (NBBO), ensuring that odd lot executions occur at a fair and transparent price.
The tradable price of an OLLA order is determined by the NBBO, inclusive of the Best Bid or Offer (BBO) on CSE2. For example, given the top two Central Limit Order Book (CLOB) orders on symbol ABC, and the following NBBO:
Example 1.
Bid |
Ask |
||||
|
|||||
Order Type |
Limit Price |
Volume |
Order Type |
Limit Price |
Volume |
|
|||||
CLOB |
10.01 |
500 |
CLOB |
10.03 |
700 |
1. An OLLA Buy order is pegged to the Bid, and tradeable at 10.01
2. An OLLA Sell order is pegged to the Offer, and tradeable at 10.03
As the NBBO moves, since the OLLA order is pegged, it's tradable price also moves. For example, if the best Bid of 10.01 and best Offer of 10.03 on symbol ABC in example 1, moves to the following:
Bid |
Ask |
||||
|
|||||
Order Type |
Limit Price |
Volume |
Order Type |
Limit Price |
Volume |
|
|||||
CLOB |
10.07 |
500 |
CLOB |
10.09 |
700 |
1. OLLA Buy orders are now tradable at 10.07
2. OLLA Sell orders are now tradable at 10.09
Limit Price
Additionally, when OLLA orders are entered, they are required to have a Limit Price, and OLLA orders will not trade outside of that Limit Price. For example, given the following market conditions (combination of lit CLOB, OLLA, and odd lot book orders):
Example 2.
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.05 |
500 |
CLOB2 |
10.07 |
700 |
|
|||||
OLLA1 |
10.04 |
750 |
OLLA2 |
10.06 |
816 |
|
|||||
OL1 |
10.03 |
66 |
OL2 |
10.10 |
51 |
1. OLLA Buy orders are tradeable at 10.05 (best Bid)
2. OLLA Sell orders are tradeable at 10.07 (best offer)
Note that the examples in items 3 to 5 below occur independently and do not overlap.
3. A 40-share odd lot Sell order is entered with a Limit Price of $10.04:
a. It will not match and trade with OLLA1 since OLLA1 can only match and trade at the best Bid of 10.05, and OLLA1's Buy Limit Price of 10.04 is outside the best Bid.
b. The new odd lot Sell order books passively at 10.05, since it cannot match and trade with OLLA1, and OL1 is outside of both the NBBO and the Limit Price of the new order.
4. A 51-share odd lot Buy order is entered with a Limit Price of 10.09:
a. It will match and trade with OLLA2 at 10.07, since OLLA2 is tradeable in the dark at 10.07 (best Offer), and 10.07 is at or within OLLA2's Sell Limit Price of 10.06.
b. The new odd lot Buy will receive a fill for all 51 shares at 10.07. OLLA2 will have 765 shares remaining and will remain tradeable at 10.07.
5. An 18-share market odd lot Sell is entered:
a. Similar to example 1, it will not match and trade with OLLA1 since OLLA1's Limit Price of 10.04 is below the National Best Bid.
b. This new odd lot market order would instead book at 10.05 (best Bid). Current odd lot behavior on CSE2 is unchanged, in that odd lot orders can only trade at or between the NBBO.
Outside of the OLLA functionality, there are no changes to the existing CSE2 mechanisms that facilitate matching and execution between odd lot orders. Odd lot orders will continue to be eligible to trade in any part as per the current protocol. Additionally, odd lot orders on CSE2 will continue to trade only at or between the NBBO (inclusive of CSE2 BBO), or at the Standard Odd lot Price (SOP).
As mentioned above, OLLA orders are Day Orders and any open and unfilled OLLA orders are cancelled at 5:00 p.m.
Order Entry
OLLA orders are primarily designed to execute against active (incoming) odd lot orders, but they may also interact with passive (resting) odd lot orders under specific conditions. Upon entry, if there are resting odd lot orders at the NBBO, and the NBBO is at or within the OLLA order's Limit Price, the OLLA order will immediately match and trade against those orders before passively pegging to the same side of the NBBO.
This behavior serves to enhance market liquidity while mitigating the risk of locked market scenarios, where resting odd lot orders could otherwise remain unfilled despite matching prices. By allowing newly entered OLLA orders to interact with resting odd lots at the NBBO, the mechanism ensures that both counterparties receive a fair and transparent execution.
Example 3.
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
OL1 |
10.08 |
66 |
CLOB2 |
10.08 |
700 |
|
|||||
CLOB1 |
10.07 |
500 |
OL2 |
10.09 |
51 |
1. If an OLLA Sell order for 1000 shares is entered with a Limit Price of 10.08:
a. It will match and trade with OL1 since the entered OLLA order is tradeable at 10.08 (best Offer), and the tradeable price of 10.08 is at or within the new* OLLA order's Limit Price.
The new order book would be:
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.07 |
500 |
CLOB2 |
10.08 |
700 |
|
|||||
|
|
|
OLLA1* |
10.08 |
934 |
|
|||||
|
|
|
OL2 |
10.09 |
51 |
To safeguard both odd lot liquidity providers and participants submitting odd lot orders, OLLA orders will not execute under the following market conditions:
• When the NBBO is zero-sided (No NBBO)
• When the NBBO is one-sided
• When there is a Locked or crossed NBBO
These restrictions are intentionally structured to ensure that odd lot liquidity provision occurs only under conditions of market liquidity and a protected, two-sided NBBO. This design helps safeguard incoming odd lot and OLLA orders from sub-optimal pricing outcomes.
Priority
OLLA orders will have firm priority and will match in a firm/time priority to maximize cost effectiveness for Dealers participating in odd lot liquidity provision. Further, when an odd lot is entered, booked lit odd lots have matching priority over booked OLLA orders at the same price, regardless of firm/time priority. This is to ensure that existing resting odd lots do not miss out on a potential match due to bulky OLLA orders that are also tradable at the same price. Once any resting odd lots are removed at the same tradable price, incoming odd lots will match with OLLA orders in firm priority. Once any firm priority matches are satisfied, or if there are no resting orders from the firm to be matched with, the next priority is time (orders that have been resting for longer have priority).
The following example illustrates these mechanics (assume the NBBO is 10.02 -- 10.04):
Example 4. (assume the NBBO is 10.02 -- 10.04)
Offer |
||||
|
||||
Order Number |
Limit Price |
Volume |
Order Type |
Firm |
|
||||
OLLA1 |
10.04 |
15 |
OLLA |
Firm B |
|
||||
OLLA2 |
10.04 |
14 |
OLLA |
Firm A |
|
||||
OL1 |
10.04 |
60 |
Lit Odd Lot |
Firm B |
Based on the NBBO and booked orders above, if Firm A enters a Market odd lot Buy order of 99, then:
a. The incoming order fills 60 shares against OL1 due to preferencing of lit odd lots at the same tradable price as an OLLA, and has 39 remaining shares;
b. The incoming order then fills 14 shares against OLLA2 due to firm priority as both orders belong to Firm A, and has 25 remaining shares; and,
c. The incoming order then fills 15 shares against OLLA1 (time priority), leaving the remaining 10 shares booked on the bid at 10.04.
Additionally, every time an OLLA order matches with an odd lot, its time priority is reset, moving it to the bottom of the queue. This functionality also applies where amendments to increase volume will reset time priority for OLLA orders. Time priority resets ensure that OLLA orders from different Dealers have equal opportunity to participate in providing liquidity to odd lots. Amendments that reduce order volume will not reset time priority.
Example 5. (assume the NBBO is 10.02 -- 10.04)
Offer |
||||
|
||||
Order Number |
Limit Price |
Volume |
Order Type |
Firm |
|
||||
OLLA1 |
10.04 |
700 |
OLLA |
Firm B |
|
||||
OLLA2 |
10.04 |
800 |
OLLA |
Firm A |
|
||||
OLLA3 |
10.04 |
300 |
OLLA |
Firm C |
Based on the above order book, if Firm D enters an odd lot Market buy for 67 shares:
a) The new odd lot order will match and trade with OLLA1, since there is no firm priority and OLLA1 has the highest time priority, filling all 67 shares at 10.04.
b) Since OLLA1 received a fill, its time priority is reset, moving it to the bottom of the queue and changing the order book to the following:
Offer |
||||
|
||||
Order Number |
Limit Price |
Volume |
Order Type |
Firm |
|
||||
OLLA2 |
10.04 |
800 |
OLLA |
Firm A |
|
||||
OLLA3 |
10.04 |
300 |
OLLA |
Firm C |
|
||||
OLLA1 |
10.04 |
633 |
OLLA |
Firm B |
Using the same order book above, if OLLA3 is amended from 300 to 400 shares, OLLA3s time priority will reset, moving it to the bottom of the queue and changing the order book to the following:
Offer |
|||||
|
|||||
Order Number |
Limit Price |
Volume |
Order Type |
Firm |
|
|
|||||
OLLA2 |
10.04 |
800 |
OLLA |
Firm A |
|
|
|||||
OLLA1 |
10.04 |
633 |
OLLA |
Firm B |
|
|
|||||
OLLA3 |
10.04 |
400 |
OLLA |
Firm C |
|
There is no change to priority matching logic for odd lots trading with other odd lots. Odd lots that trade with other odd lots do not have firm priority. The firm priority illustration in example 4 above applies exclusively to OLLA and odd lot orders matching with each other.
Similar to existing functionality, a newly entered Limit odd lot order can only trade against an OLLA order if the tradeable price is at the odd lot's Limit Price or better. For market odd lot orders, they will match and trade with OLLA orders at the OLLA orders tradable price, if a match is available.
To maintain consistency with current odd lot behavior, there are no Account Type (e.g., CL, IN, etc.) restrictions that limit how OLLA orders and odd lot orders can interact. For example, an OLLA order with Account Type 'NC' can interact with an odd lot order that has Account Type 'CL'.
Continuous Example with Multiple Orders:
Example 6.
Assume the following order book and NBBO spread:
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.07 |
500 |
CLOB2 |
10.08 |
700 |
1. A new OLLA Buy order (OLLA1*) of 700 shares is entered with a Limit Price of 10.06. OLLA1* is not tradable at 10.07 (NBBO) since OLLA1's Limit Price of 10.06 is outside the NBBO. The new order book is as follows:
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.07 |
500 |
CLOB2 |
10.08 |
700 |
|
|||||
OLLA1* |
10.06 |
700 |
|
|
|
2. If CLOB1 price changes from 10.07 to 10.06, OLLA1* is now tradable at 10.06 since its Limit Price is at or within the NBBO. The new order book is as follows:
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.06 |
500 |
CLOB2 |
10.08 |
700 |
|
|||||
OLLA1* |
10.06 |
700 |
|
|
|
3. A new odd lot Sell order (OL1) entered for 56 shares with a Limit Price of 10.07, it is booked at its Limit Price of 10.07 since it cannot trade. Note that the NBBO is still 10.06 -- 10.08. The new order book is as follows:
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.06 |
500 |
OL1 |
10.07 |
56 |
|
|||||
OLLA1* |
10.06 |
700 |
CLOB2 |
10.08 |
700 |
4. Assume OLLA1* Limit Price is amended to 10.07. Note that OLLA1* will not match with OL1 since OLLA1* can only match and trade at the best Bid (10.06).
5. Next, if the NBBO moves from 10.06 to 10.07, OLLA1* will now match and trade with OL1 since OLLA1* Limit Price is at or within the NBBO of 10.07. OL1 is fully filled. The new order book is as follows:
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.07 |
500 |
CLOB2 |
10.08 |
700 |
|
|||||
OLLA1* |
10.07 |
644 |
|
|
|
6. An odd lot Buy order for 16 shares is entered (OL2) with a Limit Price of 10.08. The new order book is as follows (NBBO 10.07 -- 10.08):
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
OL2 |
10.08 |
16 |
CLOB2 |
10.08 |
700 |
|
|||||
CLOB1 |
10.07 |
500 |
|
|
|
|
|||||
OLLA1* |
10.07 |
644 |
|
|
|
7. A new OLLA Sell order (OLLA2*) for 300 shares is entered with a Limit Price of 10.08. OLLA2* will immediately match and trade with OL2, since OLLA2* is tradeable at 10.08 (NBBO) and 10.08 is at or within OLLA2* Limit Price of 10.08. OL2 is fully filled. The new order book is as follows:
Bid |
Offer |
||||
|
|||||
Order Type/# |
Limit Price |
Volume |
Order Type/# |
Limit Price |
Volume |
|
|||||
CLOB1 |
10.07 |
500 |
CLOB2 |
10.08 |
700 |
|
|||||
OLLA1* |
10.07 |
644 |
OLLA2* |
10.08 |
284 |
8. Assume OLLA1* belongs to Firm A, and the following new orders are entered:
a. A new OLLA Buy order (OLLA3*) of 200 shares with a Limit Price of 10.07. This OLLA order belongs to Firm B.
b. Next, a new odd lot Buy order (OL3) with a Limit Price of 10.07 for 78 shares. This odd lot order belongs to Firm C. The order book is now as follows:
Bid |
Offer |
|||||
|
||||||
Order Type/# |
Limit Price |
Volume |
Firm |
Order Type/# |
Limit Price |
Volume |
|
||||||
CLOB1 |
10.07 |
500 |
N/A |
CLOB2 |
10.08 |
700 |
|
||||||
OLLA1* |
10.07 |
644 |
Firm A |
OLLA2* |
10.08 |
284 |
|
||||||
OLLA3* |
10.07 |
200 |
Firm B |
|
|
|
|
||||||
OL3 |
10.07 |
78 |
Firm C |
|
|
|
9. A new odd lot Sell Market order (OL4) for 99 shares is entered belonging to Firm B. The following trades occur:
a. OL4 first matches and trades with OL3 at 10.07 (due to priority of resting Lit odd lots), fully depleting OL3 and leaving 21 remaining shares for OL4.
b. The remaining 21 shares next fill against OLLA3*, due to firm priority as both OL4 and OLLA3* belong to Firm B. Note that since OLLA3* received a fill, its time priority is reset, and it remains at the bottom of the queue. The order book is now as follows:
Bid |
Offer |
||||||
|
|||||||
Order Type/# |
Limit Price |
Volume |
Firm |
Order Type/# |
Limit Price |
Volume |
|
|
|||||||
CLOB1 |
10.07 |
500 |
N/A |
CLOB2 |
10.08 |
700 |
|
|
|||||||
OLLA1* |
10.07 |
644 |
Firm A |
OLLA2* |
10.08 |
284 |
|
|
|||||||
OLLA3* |
10.07 |
179 |
Firm B |
|
|
|
|
10. A new odd lot Market Sell order (OL5) is entered from Firm A for 48 shares. OL5 will immediately match and trade with OLLA1*, since both OLLA1* and OL5 belong to firm A (firm priority). OL5 is fully depleted. Again, since OLLA1* received a fill, its time priority is reset, and it moved to the bottom of the queue.
11. Finally, a new odd lot Market Sell order (OL6) is entered from Firm C for 51 shares. OL6 matches and trades with OLLA3* due to time priority. OL6 is fully depleted. OLLA3* moves to the bottom of the time priority list since it receives a fill. The final order book is as follows:
Bid |
Offer |
|||||
|
||||||
Order Type/# |
Limit Price |
Volume |
Firm |
Order Type/# |
Limit Price |
Volume |
|
||||||
CLOB1 |
10.07 |
500 |
N/A |
CLOB2 |
10.08 |
700 |
|
||||||
OLLA1* |
10.07 |
596 |
Firm A |
OLLA2* |
10.08 |
284 |
|
||||||
OLLA3* |
10.07 |
128 |
Firm B |
|
|
|
Thresholds
There will be no monitored or enforced threshold limits on OLLA orders. We anticipate that Limit Prices will protect against negative price outcomes for OLLA orders themselves, and there are currently no threshold limits on odd lot orders outside of 9:30 a.m. to 4:00 p.m. on CSE2. Additionally, threshold limits may prevent OLLA orders from trading when a trader would expect it to, leading to a sub-optimal outcome.
Summary
OLLA orders:
• Are only supported on CSE2.
• Can be board lot, mixed lot, or odd lot sized.
• Only interact with odd lot order sizes.
• Only match and trade from 8:00 a.m. to 9:30 a.m. and from 4:00 p.m. to 5:00 p.m.
• Are dark pegged orders (i.e. do not rest visibly).
• Only trade at, and are pegged to the NBBO, with OLLA buy orders pegged to the Best Bid, and OLLA sell orders pegged to the Best Offer.
• Only trade when there is a two-sided market.
• Have firm/time priority.
The CSE expects to implement this Significant Change in Q2 of 2026 following receipt of regulatory approval.
Currently, there are facilities set up to accommodate odd lot liquidity provision during normal trading hours of 9:30 a.m. to 4:00 p.m. Dealers have expressed an interest in a low touch solution that allows them to make markets against odd lots outside of these normal hours. The OLLA order provides a streamlined and effective way for Dealers to facilitate liquidity provision against odd lots, while maintaining marketplace integrity. Additionally, since a two-sided NBBO is required for OLLA orders to match and trade, it will encourage Dealers to build spreads for more symbols during illiquid hours.
As part of the solution design, the CSE worked directly with Dealers and clients that would use this new facility, and they provided insight and feedback. Dealers involved in the solution design expressed support, noting that it would significantly reduce overhead and the active trader management requirements to provide liquidity for odd lots outside normal market hours.
This solution also improves odd lot fill speed and quality for retail clients that enter odd lot orders outside normal market hours. Since OLLA orders are only permitted to fill at the NBBO, the interests and protections of retail traders are ensured. With OLLA order usage, there is a much higher likelihood of an immediate fill for retail client odd lot orders.
Furthermore, since OLLA orders will not match and trade from 9:30 a.m. to 4:00 p.m., there will be no interference with typical odd lot provisional services across the market.
Market Structure: The new OLLA order will have a positive impact on Canadian market structure by way of improving execution quality and speed for odd lot orders outside of normal market hours. It will enable Dealers to facilitate significant and consistent liquidity provision for odd lots during these times.
Members and Dealers: In developing the new CSE2 OLLA order, CSE consulted with CSE Dealers who see the Significant Change as a way to improve liquidity in the market. Impact to Dealers is minimal as they may only opt-in to using OLLA orders if they see value.
Investors, Issuers, and the Capital Markets: The CSE OLLA order will facilitate odd lot price transparency and liquidity in the CSE2 trading book outside of normal market hours, and potentially increase the attractiveness of all Canadian Listed issuers for a wider range of investors and market participants.
There is no expected impact on the CSE's compliance with Ontario or British Columbia securities laws. The Significant Change will not affect fair access or the maintenance of fair and orderly markets. The Significant Change is consistent with the fair access requirements set out in section 5.1 of NI21-101.
The OLLA order will be equally accessible to all marketplace participants and may, in fact, increase participation and provide stability for opening prices.
F. Technology Changes
As an optional service, participants that opt-in will be required to conduct modifications to their system to provide liquidity using the OLLA order. Liquidity taking participants are not required to make any changes to interact with an OLLA order. The estimated amount of time necessary for participation is reasonable, given the optional nature and minimal-effort modifications required for participants.
G. Discussion of any Alternatives Considered
The CSE considered alternative solutions to improve odd lot liquidity provision outside of normal hours, but after conversations with various participants, the OLLA order represented a holistic solution that aligned with the needs of all participants.
H. Other Markets and Jurisdictions
The OLLA solution is similar to the existing Odd Lot Liquidity Providing (OLP) solution on Nasdaq CXD, as both are pegged to the NBBO and match exclusively against odd lot orders. The key difference is that OLLA orders are available outside the regular 9:30 a.m. to 4:00p.m. trading hours, whereas OLP orders are a complementary offering to existing market-making facilities that operate during normal hours.
Additionally, there is no Trader ID limit for OLLA orders, and Dealers may enter as many OLLA orders are they choose.
Please submit comments on the proposed amendments no later than November 24, 2025 to:
Ugo Mbakogu |
Trading and Markets Division |
Legal Counsel |
Ontario Securities Commission |
CNSX Markets Inc. |
20 Queen Street West, 20th Floor |
100 King Street West, Suite 7210 |
Toronto, ON, M5H 3S8 |
Toronto, ON, M5X 1E1 |
Email: TradingandMarkets@osc.gov.on.ca |
Email: GeneralCousel@thecse.com |
|
|
|
Michael Grecoff |
|
Securities Market Specialist |
|
British Columbia Securities Commission |
|
701 West Georgia Street |
|
P.O. Box 10142, Pacific Centre |
|
Vancouver, BC V7Y 1L2 |
|
Email: MGrecoff@bcsc.bc.ca |
|
{1} "Market Maker" means any Dealer approved as such for a particular listed security (see Rule 1 -- Interpretation and General Provisions of CSE's Trading Rules; available at: https://thecse.com/trading/trading-resources/#trading-rules).