Ontario Securities Commission Bulletin
Issue 49/13 - April 02, 2026
Ont. Sec. Bull. Issue 49/13
• Ontario Securities Commission and Christopher Candusso -- s. 127(1)
• Ontario Securities Commission et al. -- ss. 127(1), 127.1
• Ontario Securities Commission and KPMG LLP -- ss. 127(1), 127.1
• Ontario Securities Commission and Andre Itwaru
• Ontario Securities Commission and Christopher Candusso
• Ontario Securities Commission and Christopher Candusso
• Ontario Securities Commission and Christopher Candusso -- s. 127(1)
• Ontario Securities Commission and Christopher Candusso -- s. 127(1)
• CSA Staff Notice 11-349 Notice of Local Amendments in Certain Jurisdictions
• Guardian Capital Group Limited and Desjardins Global Asset Management Inc.
• RBC Global Asset Management Inc. and The Funds
• Temporary, Permanent & Rescinding Issuer Cease Trading Orders
• Temporary, Permanent & Rescinding Management Cease Trading Orders
• TSX Inc. and TSX Venture Exchange Inc. -- Notice of Approval
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Ontario Securities Commission and Christopher Candusso -- s. 127(1)
FILE NO.: 2026-5
BETWEEN:
Subsection 127(1) of the Securities Act, RSO 1990, c S.5)
PROCEEDING TYPE: Public Settlement Hearing
HEARING DATE AND TIME: March 30, 2026, at 2:30 p.m.
LOCATION: By videoconference
The purpose of this hearing is to consider whether it is in the public interest for the Capital Markets Tribunal to approve the Settlement Agreement dated March 24, 2026, between the Ontario Securities Commission and Christopher Candusso in respect of the application filed by the Commission dated March 25, 2026.
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 27th day of March, 2026.
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
BETWEEN:
(Subsection 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. Christopher Candusso contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated January 20, 2023 (the January 2023 Order). The January 2023 Order required Candusso to immediately resign from any positions that he held as a director or officer of an issuer and prohibited him from becoming or acting as a director or officer of any issuer for a period of three years. Candusso remained a director and officer of one non-reporting issuer and became the director and officer of an additional non-reporting issuer 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. Compliance with Tribunal orders is essential to maintaining the integrity of Ontario's capital markets. 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. Candusso is a resident of Etobicoke, Ontario.
5. Candusso was a respondent in Kitmitto (Re), file number 2018-70. On January 20, 2023, the Tribunal made the January 2023 Order. Among other things, the Order required Candusso to immediately resign from any positions that he held as a director or officer of an issuer and prohibited him from becoming or acting as a director or officer of any issuer for a period of three years (D&O Ban).
6. Candusso became a director and officer of Deuceville Inc. (Deuceville) on May 6, 2020, incorporated in Ontario on the same date. Candusso remained an officer and director of Deuceville after the January 2023 Order.
7. On January 11, 2023, Candusso initiated the process of incorporating a new corporation. On January 23, 2023, following the January 2023 Order, Candusso signed incorporation documents, including the consent to act as a director and officer of Caymus Mortgage Capital Inc. (Caymus). Caymus was incorporated in Ontario on January 24, 2023, and Candusso became a director of the corporation on the same date. In addition, on February 15, 2023, Candusso became an officer of Caymus.
8. The two corporations are issuers within the meaning of the Securities Act, R.S.O. 1990, c. S.5 (the Act).
9. Candusso failed to comply with the D&O Ban for approximately two years.
10. On December 20, 2024, the Commission requested Candusso to provide any evidence of his compliance with the D&O Ban.
11. Following the Commission's request, Candusso resigned as a director and officer of Deuceville effective January 16, 2025, and dissolved Caymus effective January 24, 2025.
The Commission alleges the following breach of Ontario securities law:
12. By remaining a director and officer of Deuceville and becoming a director and officer of Caymus after the date of the January 2023 Order, Candusso 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 an order pursuant to subsection 127(1) of the Act to approve the settlement agreement between the Commission and Candusso with respect to the matters set out herein.
DATED this 25th day of March, 2026.
ONTARIO SECURITIES COMMISSION |
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20 Queen Street West, 22nd Floor |
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Toronto, ON M5H 3S8 |
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Susan Kimani |
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Litigation Counsel |
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Tel: 416-263-7717 |
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Email: skimani@osc.ca |
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Matthew McMurray |
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Litigation Counsel |
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Tel: 416-595-8775 |
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Email: mmcmurray@osc.ca |
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Ontario Securities Commission et al. -- ss. 127(1), 127.1
FILE NO.: 2026-16
BETWEEN:
Subsection 127(1) and section 127.1 Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: May 7, 2026 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 March 27, 2026.
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 30th day of March, 2026.
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. This matter involves a reporting issuer and its directing minds who committed securities fraud. In 2020 and 2021, SponsorsOne Brands Inc. (SPO) and its directing minds, Gary and Myles Bartholomew, issued approximately 1.2 billion SPO treasury shares to five purported marketing consultants, representing that these issuances were compensation for marketing consultancy work ostensibly in furtherance of the company's business of building its brands. However, little to no substantive marketing consultancy work was performed. Instead, the consultants sold the shares on the open market and then funneled approximately CAD $24 million to or for the benefit of SPO and the Bartholomews.{1}
2. In a series of continuous disclosure filings between 2020 and 2022, SPO and the Bartholomews made misleading statements and concealed the truth about these stock issuances to the investing public. These disclosures represented that SPO was making large investments in marketing consulting services to further its new brands when, in fact, it was not.
3. This scheme also involved an illegal distribution of shares to the public. While SPO claimed to rely on the consultant exemption to the prospectus requirement, in reality, the purported consultants operated as de facto underwriters who were used to illegally distribute shares to the public. Each of SPO, Gary and Myles Bartholemew and one of the purported consultants, WestCan Energy Ltd., along with its directing mind John Cameron Cunningham, engaged in illegal distributions of SPO shares.
4. Finally, during the Commission's investigation, Gary Bartholomew made misleading statements to the Commission about his knowledge of the activities of an individual named E.I., who was a key intermediary in the scheme.
The Ontario Securities Commission (OSC or Commission) makes the following allegations of fact:
5. Between at least April 2019, and August 29, 2022 (the Material Time),{2} SPO, and its principals engaged in breaches of the Ontario Securities Act, RSO 1990, c S.5 (the Act) as described below.
6. SPO was incorporated in Ontario and was later continued under the laws of the province of British Columbia. Its head office is in Uxbridge, Ontario. SPO was a reporting issuer in the provinces of Ontario, British Columbia, and Alberta. During the Material Time, SPO's shares traded on the Canadian Stock Exchange (CSE) under the symbol "SPO," on the US OTC markets under the symbol "SPONF", and on the Frankfurt Stock Exchange under the symbol "5SO." Since May 5, 2023, SPO's shares on the CSE have been subject to a cease trade order and a regulatory halt.
7. During the Material Time, Gary Bartholomew (GB) was a director, the Executive Chairman, and a directing mind of SPO. He is an Ontario resident and is Myles Bartholomew's father.
8. During the Material Time, Myles Bartholomew (MB) was the President, Chief Executive Officer, director, and a directing mind of SPO. He is an Ontario resident and is GB's son.
9. Prior to the spring of 2020, SPO represented that it was in the business of building the brands of external parties. On March 27, 2020, SPO announced that it had decided to "shift" its business from building "external brands," to "creating and building brands in-house with a focus on the Beverage and CBD market."
10. Throughout 2020 and 2021, SPO was in perpetual need of operating capital. SPO had no revenue in 2020 and reported only CAD 256,017 in revenue in 2021.
11. SPO's financial struggles continued following its acquisition of a U.S. based alcohol beverage company, Premium Beverage Consortium LLP (PBC), in November 2020.
12. SPO, GB, and MB (collectively the SPO Respondents) engaged in acts of deceit, falsehood, or other fraudulent means through the issuance of SPO treasury shares to purported "marketing consultants," as well as the reporting of purported "marketing consultancy expenses" in SPO's public filings.
The Consulting Agreement Scheme
13. Between March 18, 2020 and January 26, 2021, SPO entered into purported consulting agreements (the Agreements) with five entities (the Consultants).{3} Under these Agreements, the Consultants were purportedly to provide services in relation to SPO's new "internal brand-building" direction. The Consultants were incorporated in one of Alberta, British Columbia, Switzerland, or the Cayman Islands.
14. The Agreements were nearly identical to each other in substance. They stated that the services to be performed by the Consultants included assisting SPO in securing new funding and providing strategic marketing services including influencer marketing, social media strategies, content creation and engagement.
15. Each of the Agreements contemplated that SPO could satisfy the Consultants' invoices in cash or free-trading common shares, or a combination of cash and shares.
Consultants used as Vehicles to Raise Capital
16. The Consultants performed little to no actual marketing consultancy work. Instead, the Consultants were used simply as vehicles by SPO to distribute the SPO Shares to the investing public then funnel the proceeds of those sales to or for the benefit of SPO, GB and MB.
17. Between March 26, 2020 and December 15, 2021, SPO issued over 1.2 billion treasury common shares to the Consultants (the SPO Shares). Each time SPO Shares were issued to a Consultant, the Consultant would sell them on the secondary market. In many cases these sales began within days of receiving the SPO Shares. In total, between April 3, 2020 and February 24, 2022, the Consultants generated net proceeds of approximately CAD $21 million and USD $7 million through the sale of the SPO Shares (the SPO Share Proceeds).{4}
18. The Consultants then funneled the bulk of the SPO Share Proceeds to or for the benefit of SPO and the Bartholomews as follows:
i. at least USD $14 million and CAD $260,000 of SPO Share Proceeds was used to fund stock promotion campaigns for SPO. The stock promotion campaigns were managed by individual, E.I., who lived in the United States. At the direction of GB, three of the Consultants (B.M.C., K.G.L., and I.S.) transferred SPO Share Proceeds to E.I., E.I.'s company, and other third parties to fund stock promotion activities. These activities predominantly involved stock-related subscription e-mail newsletter blasts touting SPO and its purported business operations; and
ii. approximately CAD 3.5 million and USD 2 million of SPO Share Proceeds was directed to or for the benefit of SPO, GB or MB in the following ways:
a. to third parties to pay SPO or PBC expenses and/or expenses of GB's other companies;
b. to GB's other companies;
c. to or for the benefit of MB;
d. to SPO, as cash advances/loans, and/or in exchange for promissory notes; and
e. to SPO as private placement investments by WestCan, L.A.G.'s principal A.A., and two nominee investors who were used as part of the scheme.
19. The flow of SPO Share Proceeds to or for the benefit of SPO allowed GB and MB to receive compensation, in the form of consulting fees, from SPO totalling CAD $380,613 for GB and CAD $216,250 for MB between 2020 and 2021, at a time when SPO had little to no revenue.
Misleading Disclosure in SPO's 2020 and 2021 interim and final MD&A filings
20. SPO reported "marketing consultancy" expenses of CAD $6,005,690 in 2020 and CAD $19,424,345 in 2021 in its Consolidated Financial Statements for the years ended December 31, 2020 and 2019 and its Consolidated Financial Statements for the years ended December 31, 2021 and 2020. These expenses were comprised almost entirely of the value SPO recorded for the SPO Shares issued to the Consultants, who performed little to no substantive marketing consultancy work.
21. In seven different Management Discussion & Analysis (MD&A) filings between August 19, 2020 and April 30, 2021, as well as a Revised Management Discussion & Analysis for the year ended December 31, 2021 and 2020 (Revised MD&A), SPO represented that its growing marketing expenditures were related to branding initiatives, brand development, and/or product launches.
22. SPO misrepresented these so-called "marketing consultancy" expenses by failing to disclose that these expenses actually arose from a scheme to use the Consultants as vehicles to flow SPO Share Proceeds back to or for the benefit of SPO, GB, and MB, and to fund SPO stock promotion campaigns.
23. In respect of each of these eight MD&A filings, MB, as SPO's CEO, signed certifications pursuant to NI 52-109 -- Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109) and Form 52-109 in which he falsely certified for each of the eight MD&A filings referred to above (the MD&A Certifications), that based on his knowledge, having exercised reasonable diligence, the MD&A did not contain any untrue statement of a material fact, or omit to state a material fact required to be stated or that was necessary to make the statement not misleading in light of the circumstances under which it was made.
The SPO Respondents Compounded the Deception in SPO's Revised MD&A
24. On June 23, 2022, the Corporate Finance Branch of the OSC (CF) notified SPO that it had been selected for a full review of its continuous disclosure record pursuant to s. 20.1 of the Act. As part of that review, CF identified material non-compliances with SPO's continuous disclosure obligations, including in relation to the disclosure of SPO's marketing consultancy expenses in its 2021 Year End MD&A. As a result, SPO was required to provide a breakdown of these marketing consultancy expenses and refile its 2021 Year End MD&A.
25. On August 29, 2022, SPO filed its Revised MD&A. The Revised MD&A broke down the approximately CAD $19.4 million of marketing consultancy expenses purportedly incurred by SPO in 2021 into the following five categories:{5}
i. Brand Creation Marketing: approximately $3 million;
ii. Brand Marketing through Paid Social Advertising: approximately $500,000;
iii. Brand Marketing through Paid Influence: approximately $5 million;
iv. Brand Marketing Corporate: approximately $5 million;
v. Corporate Promotion and Investor Awareness: approximately $6 million.
26. This breakdown was false and misleading. In the activities described in categories i to iii above, SPO purported to allocate a total of CAD $8.5 million. At best, however, only approximately CAD $250,000 of SPO's 2021 marketing consultancy expenses could actually be attributed to those categories. The remaining approximately CAD $8.25 million was in fact SPO's recorded expenses for the Consultants, none of whom performed any work under any of these categories.
27. The Consultants also did not directly engage in the activities described in categories iv and v above. To the extent these two categories were intended to encompass the SPO stock promotional activities: (i) the descriptions were still misleading because they disguised the true nature of those expenses; and (ii) in any event, would have accounted for only CAD $11 million of the at least USD $12.8 million in SPO Share Proceeds that were directed by the Consultants to EI in 2021 and 2022 for the purpose of funding the stock promotion campaigns.
28. Despite including these additional details on its purported marketing consultancy expenses, the Revised MD&A again failed to disclose that the vast majority of the expenses, actually arose from a scheme to use the Consultants as vehicles to flow SPO Share Proceeds back to or for the benefit of SPO, GB, and MB.
29. By misleading investors as to the true nature of SPO's purported marketing consultancy expenditures in its eight MD&A filings referred to above, the SPO Respondents exposed investors to undisclosed risks.
The Role of GB and MB in the Fraud
30. GB was the architect of the scheme. He signed documents and agreements that implemented the scheme, sourced and directed the Consultants including in relation to their use of SPO Share Proceeds and drafted and/or reviewed the misleading disclosure referred to above.
31. MB also participated in the scheme. He signed documents and agreements that implemented the scheme and certified the MD&A filings referred to above without conducting reasonable efforts to verify the accuracy of the statements contained in the MD&A filings and/or when he knew or ought to have known that some of the MD&A statements were misleading or false.
32. During his compelled examination, GB made false and misleading statements to the OSC investigation team about his knowledge of the activities of E.I., who was a key intermediary in the scheme. E.I., a U.S. based stock promoter, along with his company, received approximately USD 14 million in SPO Share Proceeds from three of the Consultants, B.M.C., K.G.L. and I.S.
33. GB was examined by the OSC investigation team on May 31, and June 1, 2023. During that examination:
i. when asked whether he dealt with E.I. from the summer of 2020 onwards, GB said "I haven't dealt with him. If the consultants dealt with him, they might have. I don't know. That's not for me to guess. I dealt with the five consulting firms, and whoever they dealt with, again, they don't tell me."
ii. in response to whether GB "instructed any of the consultants to use E.I. or to use his services", GB answered "no".
iii. GB also represented that E.I. was not involved in any work for SPO and that he never dealt with E.I. on the business side.
34. In fact:
i. GB instructed B.M.C., I.S., and/or K.G.L. to work with E.I. and knew that these Consultants were dealing with E.I.
ii. GB consulted with E.I. on a broad range of issues, including but not limited to:
a. SPO press releases prior to their publication;
b. media and purported investor relations;
c. capital raising and funding for SPO;
d. SPO's audit fees;
e. preparing agreements for SPO; and
f. introducing alcoholic drinks to a Las Vegas casino.
Illegal Distributions by the SPO Respondents
35. The SPO Respondents engaged in an illegal distribution in relation to the approximately 1.2 billion SPO Shares issued to the Consultants by using the Consultants as intermediaries (de facto underwriters) to sell the SPO Shares on the open market for capital raising purposes. This indirect distribution of shares to the public is sometimes called a "backdoor underwriting."
36. No prospectus or preliminary prospectus was filed for any of the SPO Shares and no exemption from the prospectus requirement applied.
37. SPO advised the OSC in response to its investigation that it relied on the "Employee, executive officer, director and consultant" prospectus exemption under s. 2.24 (Consultant Exemption) in National Instrument 45-106 -- Prospectus Exemptions (NI 45-106) in relation to its distribution of SPO Shares to the Consultants.
38. However, in reality none of the Consultants was in fact a "consultant" as defined in s. 2.22 of NI 45-106 because they were engaged to provided services to SPO, "in relation to a distribution," thus making these distributions ineligible for the Consultant Exemption.
39. GB orchestrated the illegal distribution scheme. GB and MB's actions furthered the illegal distributions of SPO Shares to the public. These actions include, but are not limited to:
i. GB or MB signing each of the Agreements;
ii. GB and MB signing SPO resolutions authorizing the issuance of the SPO Shares;
iii. GB or MB signing certificates of compliance with the CSE in relation to the issuance of the SPO Shares, certifying to the CSE that SPO was in compliance with the requirements of applicable securities legislation and all exchange requirements;
iv. GB arranging for and signing private placement subscription agreements in connection with the flow of SPO Share Proceeds back to SPO; and
v. GB directing the Consultants on the use of the SPO Share Proceeds to or for the benefit of SPO, GB and/or MB and to fund SPO stock promotions.
Illegal Distributions by WestCan and Cunningham
40. WestCan and its principal, John Cameron Cunningham (Cunningham) (collectively the WestCan Respondents), participated in these illegal distributions in relation to the sales of SPO Shares issued to WestCan.
41. As part of the over 1.2 billion SPO Shares issued to the Consultants, WestCan received 50 million SPO Shares to settle a $500,000 "retainer" purportedly owed to it under WestCan's Agreement with SPO.
42. WestCan, through its principal and directing mind, Cunningham, acted as an agent and de facto underwriter for SPO in connection with the sale of WestCan's SPO Shares to the public. WestCan did not receive its SPO Shares as compensation for actual services rendered as a Consultant. Instead, the WestCan Respondents acquired and sold the SPO Shares to the public in relation to a distribution.
43. From on or about January 26 to February 20, 2021, the WestCan Respondents received the first 40 million of the 50 million SPO Shares in tranches of 10 million shares. The WestCan Respondents began selling these SPO Shares within days of receipt of each tranche. Prior to, and during this period, the WestCan Respondents performed no marketing consultancy work for SPO under their Agreement.
44. Rather, shortly after liquidating the 40 million SPO Shares for approximately CAD $2.4 million, the WestCan Respondents sent CAD $1,250,000 in proceeds from the sale of those SPO Shares directly back to SPO through a March 15, 2021, private placement investment. On March 17, 2021, the WestCan Respondents sent a further CAD $250,000 in proceeds from the sale of these SPO Shares back to SPO, in exchange for a promissory note.
45. The Commission alleges the following breaches of Ontario securities law and/or conduct contrary to the public interest during the Material Time:
i. By engaging in the conduct described in paras 13-31 above, the SPO Respondents directly or indirectly engaged in or participated in acts, practices or courses of conduct relating to securities that they each knew or reasonably ought to have known perpetrated a fraud on persons or companies, contrary to subsection 126.1(1)(b) of the Act;
ii. By engaging in the conduct described in paragraphs 20-28 above, SPO made statements in documents required to be filed or furnished under Ontario securities law that, in a material respect and at the time and in the light of the circumstances under which they were made, were misleading or untrue, or did not state a fact that was required to be stated or that was necessary to make the statements not misleading, contrary to subsection 122(1)(b) of the Act;
iii. MB signed the MD&A Certifications described in paragraph 23 above, which contained statements in documents required to be filed or furnished under Ontario securities law that, in a material respect and at the time and in the light of the circumstances under which they were made, were misleading or untrue, or did not state a fact that was required to be stated or that was necessary to make the statements not misleading, contrary to subsection 122(1)(b) of the Act and NI 52-109;
iv. GB misled the OSC investigation team by making statements that, in a material respect and at the time and in the light of the circumstances under which they were made, were misleading or untrue, or did not state facts that were required to be stated or that were necessary to make the statements not misleading, contrary to subsection 122(1)(a) of the Act;
v. The Respondents participated in distributions of securities without filing a preliminary prospectus or a prospectus and without an applicable exemption to the prospectus requirement, contrary to subsection 53(1) of the Act;
vi. As directors and/or officers of SPO, GB and MB authorized, permitted, or acquiesced in SPO's breaches of Ontario securities law and, pursuant to section 129.2 of the Act, are deemed to have also not complied with Ontario securities law; and
vii. As a director and/or officer of WestCan, Cunningham authorized, permitted, or acquiesced in WestCan's breaches of Ontario securities law and, pursuant to s. 129.2 of the Act, is deemed to have also not complied with Ontario securities law.
viii. In addition to breaching Ontario securities law, by engaging in the conduct described above, the Respondents acted in a manner contrary to the animating principles of the Act, such that it would be in the public interest for the Tribunal to make an order. Specifically:
a. the SPO Respondents made misleading statements to the public that concealed the truth about issuances of SPO shares to the investing public; and
b. the Respondents acted together to improperly funnel proceeds from the sale of SPO shares back to SPO, thereby failing to protect investors from unfair or improper practices and failing to foster confidence in capital markets.
46. These allegations may be amended, and further and other allegations may be added as counsel may advise, and the Capital Markets Tribunal (the Tribunal) may permit.
47. The Commission requests that the Tribunal make the following orders:
As against all the Respondents:
i. that they cease trading in any securities or derivatives permanently or for such period as is specified by the Tribunal, pursuant to paragraph 2 of subsection 127(1) of the Act;
ii. that they be prohibited from acquiring any securities permanently or for such period as is specified by the Tribunal, pursuant to paragraph 2.1 of subsection 127(1) of the Act;
iii. that any exemptions contained in Ontario securities law not apply to them permanently or for such period as is specified by the Tribunal, pursuant to paragraph 3 of subsection 127(1) of the Act;
iv. that they be reprimanded, pursuant to paragraph 6 of subsection 127(1) of the Act;
v. that they be prohibited from becoming or acting as a registrant or promoter, permanently or for such period as is specified by the Tribunal, pursuant to paragraph 8.5 of subsection 127(1) of the Act;
vi. that they pay an administrative penalty of not more than $5 million for each failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act;
vii. that they 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;
viii. that they pay costs of the Commission investigation and the hearing, pursuant to section 127.1 of the Act; and
ix. such other order as the Tribunal considers appropriate in the public interest.
As against GB, MB, and Cunningham:
x. that they resign any position they may hold as a director or officer of an issuer pursuant to paragraph 7 of subsection 127(1) of the Act;
xi. that they be 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;
xii. that they resign any positions that they may hold as a director or officer of any registrant, pursuant to paragraph 8.1 of subsection 127(1) of the Act;
xiii. that they be prohibited from becoming or acting as a director or officer of any registrant permanently or for such period as is specified by the Tribunal, pursuant to paragraph 8.2 of subsection 127(1) of the Act; and
xiv. such other order as the Tribunal considers appropriate in the public interest.
DATED this 27 day of March, 2026 |
ONTARIO SECURITIES COMMISSION |
20 Queen Street West, 22nd Floor |
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Toronto, ON M5H 3S8 |
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Robin McKechney |
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Senior Litigation Counsel |
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Enforcement Division |
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Tel: 437-333-0588 |
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rmckechney@osc.ca |
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Christine Gorgi |
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Litigation Counsel |
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Enforcement Division |
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Tel: 416-263-7717 |
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cgorgi@osc.ca |
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{1} The net SPO share proceeds, as well as the funnelled amounts, include a combination of CAD and USD as set out in paragraphs 17 and 18 below.
{2} All activities described occurred during the Material Time unless otherwise indicated.
{3} The Consultants included the following entities: B.M.C.; K.G.L.; I.S.; L.A.G.; as well as WestCan Energy Ltd. (WestCan).
{4} Portions of the approximately CAD 21 million in SPO Share Proceeds were converted to USD in USD accounts before flowing onward as described in paragraph 18 below.
{5} The total marketing consultancy expenses in the breakdown provided in the revised 2021 MD&A is CAD $19.5M, notwithstanding the fact that SPO reported "marketing consultancy" expenses of CAD $19,424,345 in 2021 in its Consolidated Financial Statements for the year ended December 31, 2021.
Ontario Securities Commission and KPMG LLP -- ss. 127(1), 127.1
FILE NO.: 2026-18
BETWEEN:
Subsection 127(1) and section 127.1 Securities Act, RSO 1990, c S.5
PROCEEDING TYPE: Enforcement Proceeding
HEARING DATE AND TIME: May 5, 2026, 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 March 31, 2026.
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 31st day of March, 2026.
For more information
Please visit capitalmarketstribunal.ca or contact the Registrar at registrar@capitalmarketstribunal.ca.
BETWEEN:
(Subsections 127(1) and 127.1 of the Securities Act, RSO 1990 c S.5)
1. This proceeding highlights the importance of audited financial statements to investors in the capital markets. Audited financial statements for investment vehicles enhance the credibility of those vehicles, attracting and building trust with investors, and assuring investors that they have a true and fair view of the investment's financial condition. It is crucial for the integrity of capital markets that audits comply with generally accepted auditing standards.
2. KPMG LLP was engaged to be the independent auditor for the financial statements of four funds managed by Bridging Finance Inc. for the fiscal years ended December 31, 2019 and December 31, 2020. For each of the eight audits, KPMG issued an independent auditor's report directed to the unitholders of each fund, stating KPMG's opinion that the financial statements presented fairly, in all material respects, the financial position of the respective fund. In each of the eight auditor's reports, KPMG represented to fund unitholders that KPMG had conducted its audits in accordance with Canadian generally accepted auditing standards. These representations were false.
3. KPMG failed to perform fundamental audit procedures over the most critical aspect of the financial statements -- the valuation of the loans held within each of the funds. Without sufficient appropriate audit evidence over the valuation of loans, an audit of funds comprised of loans is flawed. KPMG did not obtain sufficient audit evidence to support the audit opinions that KPMG issued.
4. KPMG failed to conduct its audit work with an adequate degree of professional skepticism by failing to consistently challenge and validate audit evidence it gathered. KPMG failed to subject Bridging Finance management's judgments and estimates to effective scrutiny, even where those judgements and estimates appeared unreasonable and suggested potential management bias.
5. KPMG failed to consider, adequately or at all, the audit implications of evidence that methodologies used by Bridging Finance to value the loans in its portfolio were unreliable and that the collective value of the loans could be materially overstated. When KPMG identified that certain loans were overstated, KPMG inappropriately assumed that those findings were isolated to those loans, without considering whether those findings were in fact indicators of material overstatements of the overall balance of the loans contained within the funds whose financial statements KPMG audited.
6. KPMG failed to gather sufficient appropriate audit evidence to support its opinions that the financial statements were representative of the true financial position of the funds. Had KPMG expanded the depth and scope of its testing, it would likely have discovered significant, material misstatements in the financial statements of the funds.
7. KPMG's actions had consequences for investors, who bought units of the funds at inflated prices and made investment decisions regarding their positions that they may not otherwise have made.
8. In addition, KPMG's representations that it had audited the funds in accordance with Canadian generally accepted auditing standards would have given investors a false sense of confidence in the funds' financial statements and in the value of their investment.
9. As gatekeepers, auditors contribute to public confidence in the integrity of financial reporting, a cornerstone of Ontario's capital markets. The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements being audited. In conducting audits of financial statements and reporting thereon, it is critical that auditors comply with generally accepted auditing standards. Auditors who falsely represent that they have complied with those standards harm investors and undermine the framework for proper disclosure and therefore undermine the public interest.
The Commission makes the following allegations of fact.
10. Bridging Finance Inc. (BFI) was an investment management firm based in Toronto and founded in 2012. BFI managed certain privately issued investment vehicles. These included four BFI funds whose financial statements were audited by KPMG in 2019 and 2020 (the Four Funds).{1} The Four Funds reported a collective net asset value (NAV) of approximately $1.7 billion at both December 31, 2019 and 2020.
11. The Four Funds raised money from investors who purchased units of the Four Funds (the Unitholders). Units in the Four Funds were sold without a prospectus, to accredited investors only.
12. Subscriptions for new units of the Four Funds could be made on the last business day of each month (Valuation Date), with an unlimited number of eligible subscribers. Redemptions of units could be made at the NAV per unit on a Valuation Date and at other times for certain funds, subject in certain cases to acceptance by the general partner of the applicable fund.
13. Investors purchased and redeemed units of the Four Funds before and after the issuance of KPMG's auditor's reports for the financial statements of the Four Funds for 2019 and 2020.
14. Investor money was used to originate loans (the Loan Portfolio). The Loan Portfolio was syndicated across one or more funds, including the Four Funds. Most of the loans were issued to Canadian companies unable to secure financing from traditional lenders.
15. For each of the Four Funds, the NAV of the fund represented the aggregate fair market value of the assets of the fund, including the portion of the Loan Portfolio allocated to that fund, cash and receivables, less total liabilities of the fund, with all values determined by BFI. The portion of the Loan Portfolio allocated to the Four Funds constituted approximately 80% of the Four Funds' aggregate NAV.
16. For the relevant audit years, the Loan Portfolio was comprised of approximately seventy loans to borrowers across various industries, including manufacturing, financial services, consumer retail, real estate, and cannabis. The Loan Portfolio included unique loans requiring special consideration from an audit and valuation perspective.
17. There were multiple risks embedded in the Loan Portfolio, including the following.
(a) BFI's business model involved lending to higher-risk companies as compared to traditional lenders and charging a higher rate of interest in return. The higher interest rate was meant to compensate for the higher risk of the loan.
(b) A number of loans were set up so that interest would be "paid-in-kind" (PIK), meaning interest that accrued on the loan would be added to the balance of the loan repayable on maturity rather than paid in cash at intervals through the life of the loan. This allowed BFI to record interest accruals as revenue while not collecting any cash. While some loans were structured as PIK loans from the start, others were converted into PIK loans later as borrowers failed to make interest payments.
(c) As particularized below, when certain loans were in arrears (including for more than 90 days), BFI restructured the loan, including through extending the term of the loan, adding uncollected accrued interest to the balance of the loan, and/or increasing the principal amount of the loan.
(d) BFI was a closely-held private company with a small senior management team, including related family members (BFI Management).
(e) BFI Management exercised significant discretion and judgment in approving loans, assessing the collateral provided for loans, and valuing the loans held by the Four Funds. BFI Management therefore had the opportunity to inflate NAV by inflating the value of the loans. They also had the incentive to do so, as BFI was compensated from the Four Funds through management and incentive fees, both derived from NAV.
18. For each loan in the Loan Portfolio, BFI calculated the loan value by recording the book value of each loan (the principal amount of the loan plus any accrued interest), minus the expected credit loss (the ECL) for each loan.
19. For each loan in the Loan Portfolio, BFI applied an ECL estimation process which included a mathematical formula to calculate its ECL (the ECL Model): the book value of each loan (outstanding principal plus accumulated accrued interest) was multiplied by the percentage of Loss Given Default (LGD) and the percentage of probability of default (PD).
(a) For calculating LGD (used to estimate the loss on a loan's collateral in the event of default), BFI used external LGD data obtained from Schedule 1 banks to estimate the anticipated losses on each category of collateral assets for which such data was available. For categories of collateral assets for which this data was not available (such as promissory notes and personal guarantees from individuals associated with a borrower), BFI simply determined its own LGD rates.
(b) For estimating the PD (defined as "the probability that a borrower or account will default within a performance period"), BFI used global corporate default rates from third-party rating agencies including Standard & Poor's and Moody's (collectively, Rating Agencies) based upon the borrower's industry of operation. BFI used the Rating Agencies' average default rate plus the Rating Agencies' standard deviation, intended to reflect the higher credit risk within the Four Funds' Loan Portfolio. In addition, BFI multiplied the total Rating Agencies' default rate by a subjective factor between 1 and 10, which was intended to reflect the unique credit risks of each loan, as assessed by BFI Management.
20. The ECL calculated by BFI for each loan had a direct impact on the net book value of that loan. The net book value of the loan had an impact on the NAV of any fund to which that loan belonged. A lower ECL would result in a higher NAV, and a higher ECL would result in a lower NAV. A higher NAV could drive higher management and incentive fees earned by BFI and charged to Unitholders of the Four Funds.
21. In Canada, Canadian Auditing Standards (CAS) constitute generally accepted auditing standards (GAAS). CAS are modelled on the International Standards on Auditing issued by the International Auditing and Assurance Standards Board.
22. The objective of an audit of an entity's financial statements is to express an opinion on whether the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of the entity in accordance with generally accepted accounting principles.
23. An audit conducted in accordance with GAAS requires an auditor to:
(a) plan and perform the audit to obtain reasonable assurance that the financial statements, as a whole, are free from material misstatement, whether due to fraud or error;
(b) obtain sufficient appropriate audit evidence, on a test basis, supporting the amounts and disclosures in the financial statements;
(c) evaluate the appropriateness of the accounting principles used and the reasonableness of significant accounting estimates made by management; and
(d) evaluate the overall financial statement presentation.
24. To conduct an audit in accordance with GAAS, the auditor seeks reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. "Reasonable assurance" is a concept relating to the accumulation of the audit evidence necessary for the auditor to conclude that there are no material misstatements in the financial statements taken as a whole.
25. GAAS requires that an auditor must conclude whether sufficient and appropriate audit evidence has been obtained to reduce the risk of material misstatement in the financial statements to an acceptably low level. In arriving at an audit opinion, the auditor must apply professional skepticism and consider all relevant audit evidence, regardless of whether it appears to corroborate or contradict management's assertions in the financial statements. Sufficiency is the measure of the quantity of the audit evidence. Appropriateness is the measure of the quality of audit evidence.
26. The quantity of audit evidence needed is affected by identification and assessment of the risks of material misstatement (the greater the risk, the more audit evidence is likely to be required) and also by the quality of such audit evidence (the higher the quality, the less may be required). Accordingly, the sufficiency and appropriateness of audit evidence are interrelated. However, merely obtaining more audit evidence may not compensate for its poor quality.
27. An auditor is required to plan and perform an audit with an attitude of professional skepticism, recognizing that circumstances may exist that may cause the financial statements to be materially misstated. The auditor should make a critical assessment, with a questioning mind, of the sufficiency and appropriateness of the audit evidence obtained, and should be alert for evidence that contradicts or brings into question the reliability of documents or representations of management or those charged with governance.
28. Professional skepticism includes being alert to, for example:
(a) audit evidence that contradicts other audit evidence obtained;
(b) information that brings into question the reliability of documents and responses to inquiries to be used as audit evidence;
(c) conditions that may indicate possible fraud; and
(d) circumstances that suggest the need for additional audit procedures.
29. While there was no requirement under Ontario securities law for the Four Funds to obtain audited financial statements, BFI chose to retain KPMG to act as the independent auditor for the Four Funds for the fiscal years ended December 31, 2019 and December 31, 2020 (the 2019 Audits and the 2020 Audits, respectively; and the Audits, collectively). The Audits were intended to build trust with actual and potential investors, to attract and retain investment, and give Unitholders the confidence to reasonably assume they had a true and fair view of the Four Funds' financial position.
30. KPMG is an audit, tax and advisory firm incorporated under the laws of Ontario. It has offices in Ontario and throughout Canada. KPMG is known as one of the largest four accounting firms in Canada. KPMG is a member firm of KPMG International, a global organization known as one of the largest four accounting firms in the world.
31. KPMG was paid approximately $400,000 for its work on the eight Audits, which was recorded as an expense to the Four Funds.
32. The 2019 and 2020 Audits were led by KPMG's audit and assurance division (KPMG Audit). KPMG Audit sought assistance and support from KPMG's valuation services division (KPMG Valuation) and from KPMG's financial risk management division (KPMG FRM). At all times, KPMG Audit was ultimately responsible for the Audits of the Four Funds.
33. The objective of the Audits was for KPMG to obtain a reasonable level of assurance about whether each of the financial statements as a whole was free from material misstatement, whether due to fraud or error. In conducting the Audits, KPMG applied an overall materiality threshold of 3% of NAV (Materiality Threshold). This meant that if KPMG discovered that the financial statements for any of the Four Funds were misstated by more than 3% of a particular fund's NAV, then KPMG's own assessment was that those misstatements could reasonably be expected to influence a reasonable user's decision-making with respect to that fund.
34. At the outset of the Audits, KPMG was required by GAAS to identify risks of material misstatement and determine whether any of the identified risks were significant.
35. KPMG identified a significant audit risk that BFI's ECL provisions may be understated, resulting in an overstatement of the portion of the Loan Portfolio allocated to the Four Funds, and a corresponding overstatement of the NAV of the Four Funds. This significant risk included the risk that the ECL provisions could be understated through fraud. The calculation of ECL involved BFI's judgments and assumptions and provided BFI Management an opportunity to inflate the NAV of the Four Funds. BFI was compensated through management and incentive fees, both derived from NAV, which created an incentive to inflate the NAV of the Four Funds.
36. KPMG was required to plan and conduct the Audits to obtain sufficient appropriate audit evidence to address these identified risks of material misstatement, through designing and conducting appropriate audit work. This includes ensuring that the nature, timing and extent of audit procedures were sufficient to gain the level of assurance required by an audit opinion. KPMG failed to do so.
37. KPMG was also required to revisit its overall strategy and plan for the Audits in the event identified misstatements and the circumstances of their occurrence indicated that other misstatements may exist that, when aggregated with misstatements accumulated during the audit, could be material. KPMG failed to do so.
38. Because of KPMG's audit failures, particularized below, KPMG failed to obtain reasonable assurance that the financial statements of the Four Funds were free from material misstatement.
39. Throughout the 2019 Audits, KPMG failed to collect sufficient and appropriate audit evidence over the most critical aspect of the financial statements -- the valuation of loans.
KPMG's Review of the ECL Model was Inadequate
40. KPMG relied on the ECL Model as fundamentally sound despite evidence to the contrary.
41. Throughout the Audits, KPMG repeatedly uncovered evidence that BFI's ECL Model did not reliably estimate appropriate and accurate expected credit losses for loans in the Loan Portfolio. Nevertheless, KPMG failed to collect sufficient and appropriate audit evidence to assess the key data elements and assumptions included in the ECL Model.
42. To test the ECL Model, KPMG Audit engaged a team from KPMG FRM to, among other things, review the theoretical soundness of BFI's ECL Model for compliance with the financial asset impairment requirements of International Financial Reporting Standards. KPMG FRM's work did not test the essential question of whether the ECL Model was appropriately tailored to the credit risks of each loan. KPMG FRM did not audit, evaluate or consider any loan in the Loan Portfolio in its review of the ECL Model.
43. KPMG failed to identify that the ECL Model was incapable of appropriately valuing loans in the Loan Portfolio, particularly those that were in financial distress.
44. KPMG Audit failed to evaluate whether KPMG FRM's findings were consistent with other audit evidence gathered and failed to assess whether KPMG FRM's work was sufficient and appropriate for audit purposes.
45. KPMG did not ask fundamental questions such as whether the LGD and PD rates were appropriate for any particular loan given the characteristics of the borrower, whether BFI's subjective factor was appropriate for any particular loan, whether the collateral supporting the loan existed and was valued appropriately, and whether the overall ECL provision was sufficient to cover the risks of default of the borrower.
KPMG's Response to Testing of High-Risk Loans was Flawed
46. KPMG Audit selected loans and engaged a team from KPMG Valuation to assess the recoverability of those loans. The selection consisted of four loans that KPMG Audit considered complex and high-risk from a valuation perspective, which included loans due from borrowers that were bankrupt or facing liquidation (the High-Risk Loans). Those four loans represented 17.5% of the collective NAV of the Four Funds at December 31, 2019.
47. KPMG uncovered problems with BFI's calculations and methodologies for valuing all four High-Risk Loans. The findings of KPMG were as follows.
(a) Two of the High-Risk Loans were found to have been improperly recorded by BFI as Stage 1 loans (loans performing without indicators of a significant increase in credit risk) when they should have been recorded as Stage 2 loans (loans performing with indicators of a significant increase in credit risk).
(b) The other two High-Risk Loans were found to have been improperly recorded by BFI as Stage 2 loans (loans performing with indicators of a significant increase in credit risk) when they should have been recorded as Stage 3 loans (loans which are impaired).
(c) One of the High-Risk Loans that KMPG found to be a Stage 3 loan was a loan owing from Borrower A (Loan A). BFI recorded the value of Loan A at approximately $137.8 million (net of an ECL provision of only approximately $2.6 million, or less than 2%) in the Loan Portfolio. BFI's own loan memo for Borrower A estimated Borrower A's enterprise value at $132.5 million, less than BFI's value of Loan A. KPMG Valuation concluded that Loan A was impaired in the range of approximately $29 million to $43 million.
48. KPMG's findings should have caused KPMG to identify that the ECL for the High-Risk Loans should be increased, and the value assigned to the impaired High-Risk Loans should be lowered. These findings ought to have put KPMG on notice that the ECL Model was not reliable in estimating the ECL for the Loan Portfolio. BFI had calculated an ECL provision for the entire Loan Portfolio of $17.5 million, and KPMG's own valuations team had concluded that one single loan in the Loan Portfolio (representing approximately 9.4% of the value of the Loan Portfolio) should be impaired by at least $29 million.
49. Nevertheless, KPMG Audit declined to engage KPMG Valuation for assessment of any further loans for the 2019 Audit and continued to rely uncritically on BFI's ECL Model.
50. BFI Management refused to change the staging of any of the four High-Risk Loans, and refused to record any impairment on any of the four High-Risk Loans. The NAV for the Four Funds was not reduced.
51. KPMG recorded the findings of KPMG Valuation as "uncorrected audit misstatements".
52. KPMG concluded that the tally of uncorrected audit misstatements arising from the High-Risk Loans, together with other uncorrected audit misstatements identified, were below the 3% Materiality Threshold KPMG had established for each of the Four Funds, and that they could represent to Unitholders that the financial statements for each fund as a whole were free from material misstatement. KPMG's conclusion was rooted in audit failures, where additional audit work should have been performed to comply with GAAS.
(a) For the two High-Risk Loans where KPMG disagreed with BFI's staging only (and did not assign a specific impairment range), KPMG failed to assess how a change in staging would impact the ECL for those loans. KPMG assumed, without evidence or documentation, that a change in staging would not increase the ECL. Had KPMG assessed a change in ECL associated with the change in staging, it would have increased the tally of uncorrected misstatements found by KPMG in the Four Funds' financial statements.
(b) KPMG failed to sufficiently investigate the discrepancy between the findings of KPMG Valuation and BFI's ECL calculations, which had implications for the reliability and accuracy of BFI's ECL Model as a whole.
(c) KPMG ignored evidence that BFI's loan valuation approach was simplistic, superficial, aggressive and internally inconsistent. For example, for Loan A, KPMG failed to investigate the discrepancy between BFI's determination of the value of Loan A using the ECL Model and BFI's own calculations of Borrower A's enterprise value, which was less than the value of Loan A.
(d) In all the circumstances, BFI Management's refusal to record any impairment on Loan A should have led KPMG to heighten its level of professional skepticism and question the potential bias of BFI Management, including the reliability of BFI's ECL determinations of value for the untested loans within the Loan Portfolio.
(e) KPMG assumed without additional testing that the errors in staging and/or the errors in valuation identified by KPMG Valuation were isolated to the four High-Risk Loans examined by KPMG Valuation.
(f) KPMG failed to document any consideration of whether the errors in staging and/or the errors in valuation were isolated occurrences, indicated a risk of errors in relation to the wider Loan Portfolio, or impacted the overall audit strategy and audit plan.
(g) KPMG did not lower or assess its Materiality Threshold, which could have led to further testing and additional procedures. There is no evidence that KPMG even considered lowering or otherwise assessing its Materiality Threshold.
(h) Had KPMG expanded its testing and/or lowered its Materiality Thresholds, it would likely have discovered additional misstatements in the financial statements of the Four Funds, particularly in relation to the valuation of loans due from financially distressed borrowers as described below. The accumulation of all misstatements would likely have exceeded the Materiality Thresholds or otherwise been material to Unitholders.
KPMG's Testing of Material Loans was Inadequate
53. KPMG selected a second set of loans to be audited by KPMG Audit (the Material Loans). The Material Loans were not assessed by KPMG to be complex, high-risk loans, and as a result, the testing performed on the Material Loans was less rigorous than the valuation work performed by KPMG Valuation on the High-Risk Loans.
54. The Material Loans represented up to approximately 42% of the collective NAV of the Four Funds for the 2019 Audits. Material Loans were defined by KPMG as loans greater than performance materiality that had been outstanding for longer than three months.{2}
55. For Material Loans, KPMG failed to conduct appropriate and adequate testing for audit purposes and failed to adequately respond to evidence that certain borrowers were financially distressed. KPMG Audit did not critically or adequately assess whether the ECL provision, including BFI's subjective data inputs, was appropriate for any of the Material Loans given the financial condition of the borrower.
56. KPMG Audit's work on Material Loans involved performing financial statement ratio analysis using, at times, unaudited and outdated financial statements of the borrowers. Even this limited testing conducted by KPMG should have caused KPMG to conduct further audit work because it revealed the existence of two additional financially distressed borrowers.
57. The first financially-distressed borrower was Borrower B.
(a) Borrower B is a First Nation or "Band" governed by the Indian Act, RSC 1985, c.I-5.
(b) At December 31, 2019, loans issued to Borrower B (Loan B) had a total balance in the Loan Portfolio of approximately $118.6 million.
(c) At December 31, 2019, Loan B was syndicated across the Four Funds, with a balance that was above the Materiality Threshold for three of the Four Funds.
(d) KPMG's working papers indicated that at March 31, 2019, Borrower B had current assets of approximately $23.6 million, including approximately $5.8 million in cash. Borrower B did not have sufficient current assets to cover its current liabilities, and KPMG noted that Borrower B "will not be able to pay back its current debts (current portion of the long term loan) under the normal course of business."
(e) Loan B was originated in 2017 as a PIK loan, with principal and accrued interest due at the maturity date of June 2018. No payments were made by June 2018 and Loan B was extended to June 2019. No payments were made by June 2019 and Loan B was extended to June 2020.
(f) At December 31, 2019, BFI categorized Loan B as Stage 1 (loan performing without indicators of a significant increase in credit risk). KPMG agreed with this assessment.
(g) The ECL Model calculated that the probability of default for Borrower B was 2.48%.
(h) BFI's ECL provision for Loan B was approximately $294,000, approximately 0.25% of the total balance of Loan B.
58. In accordance with International Financial Reporting Standards, a loan which is more than 90 days past due should be presumed to be in default unless BFI Management had a reasonable basis to rebut this presumption. A loan in default should be classified as Stage 3 and impairment should be assessed. Impairment of any loan in an amount greater than the ECL would reduce the value of the loan held in the Loan Portfolio and correspondingly reduce the NAV of the Four Funds.
59. KPMG did not identify any indicators of impairment on Loan B. This reflects audit deficiencies, including the following.
(a) KPMG failed to identify Loan B as a Stage 3 loan which BFI Management continued to renew and extend.
(b) KPMG did not critically or adequately assess whether BFI Management had reasonably rebutted the presumption that Loan B should be considered a Stage 3 loan and credit-impaired.
(c) KPMG relied upon the collateral for Loan B without conducting any tests to substantiate the existence or valuation of these assets. KPMG relied upon two trusts for which Borrower B was the beneficiary to substantiate the valuation of Loan B without conducting any procedures to independently validate the existence or valuation of these trusts or the legal rights of the Four Funds to these trusts in the event of default by Borrower B.
(d) KPMG did not evaluate, adequately or at all, whether the ECL provision of 0.25% was reasonable and supportable in light of Borrower B's circumstances.
60. The second financially distressed borrower was Borrower C (Loan C).
(a) Borrower C's unaudited interim financial statements for 2019, included in KPMG's working papers, included a going concern note disclosing that there is "substantial uncertainty on [Borrower C's] ability to continue as a going concern" and "there is significant uncertainty over [Borrower C's] ability to meet its funding requirements as they fall due".
(b) At December 31, 2019, Loan C had a total loan balance in the Loan Portfolio of approximately $129.3 million. It was syndicated across the Four Funds, with a balance that was above the Materiality Threshold for three of the Four Funds.
(c) Loan C was originated in 2017 with a loan balance of approximately $32.4 million. Borrower C had been in breach of its loan agreements almost from the start, repeatedly failing to make required principal and interest payments. BFI had responded by extending, renewing and increasing its loans to Borrower C.
(d) The terms of Loan C were amended in 2019 such that Loan C was converted to a PIK loan and periodic principal payments were not required for an agreed upon period of time. Payment of principal and accrued interest were due upon the extended maturity date.
(e) In 2019, BFI loaned additional funds to Borrower C for general corporate purposes and working capital needs, rather than for specific capital projects.
(f) Borrower C was a public company. Its shares lost approximately 95% of their value over a one-year period, declining from $3.90 per share in December 2018 to $0.1842 per share in December 2019.
(g) BFI had loaned money to Borrower B for the purpose of purchasing shares in Borrower C, perpetuating the perception that Borrower C was a viable entity.
(h) The ECL Model calculated Borrower C's probability of default to be 7.87%.
(i) BFI's ECL provision for Loan C was approximately $2.5 million, or approximately 1.97% of the total balance of Loan C.
61. KPMG agreed with BFI Management's assessment that there had been a year-over-year significant increase in credit risk for Loan C and it was appropriately reported as a Stage 2 loan (a loan performing with indicators of a significant increase in credit risk). However, KPMG did not critically assess whether the ECL provision for Loan C, including BFI's subjective data inputs, was reasonable and supportable given the current financial condition of Borrower C.
62. KPMG identified that Borrower C had breached its agreement with BFI by not making all required interest payments. However neither KPMG nor BFI identified Loan C as a Stage 3 loan. KPMG did not critically or adequately assess whether BFI Management had reasonably rebutted the presumption that Loan C should be considered a loan in default.
63. KPMG failed to perform further audit procedures when faced with evidence of a likely misstatement regarding Loan B and Loan C. KPMG did not request KPMG Valuation to assess Loan B or Loan C for impairment or propose any impairment in addition to BFI's ECL.
64. Had KPMG performed its audits in accordance with GAAS, it likely would have proposed impairments to Loan B and Loan C. When added to the other uncorrected misstatements found by KPMG, the total impairments would likely have exceeded the Materiality Threshold for the Four Funds or otherwise been material to Unitholders.
KPMG Ignored the Untested Balance
65. Despite the inherent risks of the Loan Portfolio, the problems identified by KPMG Valuation, and the inadequate testing and response by KPMG Audit, KPMG assessed all loans not selected for testing by either KPMG Valuation or KPMG Audit (the Untested Balance) as low risk with a low risk of material misstatement.
66. The Untested Balance of the Loan Portfolio was in excess of the Materiality Threshold for each of the Four Funds. For this material Untested Balance, KPMG relied on the essential soundness of BFI's ECL Model even though none of its inputs had been audited and evidence had already been collected that demonstrated the ECL Model was ineffective.
67. In light of the significant risk identified by KPMG, this was an insufficient level of testing. KPMG did not design or implement appropriate responses to the risk of material misstatement in the Untested Balance.
68. The loan valuation findings, the staging errors, the accumulated misstatements, and the other evidence collected by KPMG regarding financially distressed borrowers, ought to have prompted KPMG to question BFI's ability to appropriately value its most material assets.
69. KPMG failed to make ongoing adjustments to its audit procedures in 2019. KPMG did not:
(a) reconsider the appropriateness of relying on the ECL Model,
(b) reassess whether it should assign additional loans to KPMG Valuation for impairment assessment,
(c) select additional loans for KPMG Audit testing or even assess whether additional loans should be considered for KPMG Audit testing,
(d) lower or even reassess Materiality Thresholds, or
(e) document its apparent rationale of why the identified misstatements were isolated and not representative of a potentially pervasive and/or material understatement of ECL provisions and overstatement of the Four Funds' NAVs.
70. The audit deficiencies meant that valuations that were patently overstated at the relevant time were left uncorrected.
(a) For Loan A, BFI recorded an ECL of only approximately $2.6 million on a total loan balance of approximately $140.4 million when KPMG Valuation estimated impairment in the range of $29 million to $43 million and Borrower A had declared bankruptcy.
(b) For Loan B, BFI recorded an ECL of only approximately $294,000 on a total loan balance of approximately $118.6 million when Borrower B did not have sufficient current assets to cover its current liabilities, had only approximately $5.8 million in cash, had not made any payments since Loan B was first originated in 2017, and interest payments were being accrued and added to the principal loan amount (PIKed) by BFI Management.
(c) For Loan C, BFI recorded an ECL of approximately $2.5 million on a total loan balance of approximately $129.3 million when Loan C had been extended multiple times with amended terms such that periodic principal and interest payments were no longer required until the extended maturity date.
71. Had KPMG identified a reasonable impairment adjustment for each of Loan B and Loan C, these adjustments would likely have caused total identified misstatements to exceed the Materiality Thresholds for the Four Funds or been otherwise material to Unitholders.
KPMG Failed to Perform Required Retrospective Reviews of BFI's Loan Valuations
72. For the 2020 Audits, GAAS required KPMG to conduct a retrospective review of BFI's ECL calculations in the prior year to ensure that planning for the 2020 Audit was appropriate. This involves comparing prior period estimates with actual outcomes to evaluate the effectiveness of BFI Management's estimation process and identify any potential biases. KPMG concluded that prior period amounts involving BFI's judgments and assumptions were not misstated without sufficient analysis to support this conclusion.
73. Throughout the 2020 Audits, KPMG continued to rely on the ECL Model even though:
(a) KPMG had not evaluated the adequacy of KPMG FRM's work in relation to the ECL Model, including the relevance and reasonableness of KPMG FRM's findings and conclusions and their consistency with the outcome of the work performed by KPMG Valuation;
(b) KMPG did not test the inputs to the ECL Model for any loan within the Loan Portfolio;
(c) The ECL Model did not adequately account for the unique risk features of the Loan Portfolio;
(d) The ECL Model allowed for a significant degree of BFI Management subjectivity; and
(e) Data from KPMG Valuation and KPMG Audit called the reliability of the ECL Model into question.
Failure to Respond to Identified Fraud
74. Gary Ng was a 50% shareholder of BFI and the counterparty to several loans issued by BFI totalling approximately $113 million as at December 31, 2019 (the Ng Loans). The Ng Loans had been extended prior to 2019 on the basis they were collateralized by a $90 million security portfolio held by a financial institution. The collateral was a fiction (the Fraud).
75. KPMG was notified by BFI of the Fraud on or about September 1, 2020, during the planning of the 2020 Audits. KPMG failed to take adequate steps to understand the nature, scope or potential impact of the Fraud and its implications for the 2020 Audits, including its implications for KPMG's ability to rely on BFI Management's representations, the effectiveness of BFI's due diligence controls upon the issuance of new loans, and the risk that other loans may exist with non-existent, fictitious or insufficient collateral.
76. KPMG failed to appropriately test the existence, accuracy, valuation and rights over the collateral of the largest loans in the Loan Portfolio.
77. KPMG failed to document any consideration of whether it was appropriate to undertake additional procedures in relation to loan collateral in response to the Fraud.
Persistent Audit Failures
78. For the 2020 Audits, KPMG followed the same procedures it had used in 2019.
(a) Again, KPMG sent a population of loans (representing approximately 30% of the NAV of the Four Funds) to be tested by KPMG Valuation.
(b) Again, KPMG Audit selected only Material Loans for further testing. Again, the Material Loans represented, at most, approximately 44% of the NAV of the Four Funds for the 2020 Audits.
(c) Again, KPMG failed to design and implement appropriate audit procedures over the valuation of the Untested Balance of the Loan Portfolio syndicated to the Four Funds.
(d) Again, none of KPMG's testing involved testing the inputs to the ECL Model for any loan within the Loan Portfolio.
79. In conducting the 2020 Audits, KPMG ignored not only the red flags that arose during the 2019 Audits, but new red flags that arose in the course of the 2020 Audits: a write-off of Loan A, and evidence of the worsening credit risk of Loan B and Loan C.
80. As in 2019, if KPMG had identified impairments in relation to Loan B and Loan C by complying with GAAS, the total impairments would likely have exceeded the Materiality Thresholds for the Four Funds or otherwise been material to Unitholders.
Audit Failures Relating to Loan A Write-Off
81. Less than four months after the issuance of the 2019 audited financial statements for the Four Funds, BFI recorded a write-off of approximately $60 million on Loan A (the Loan A Write-Off). This write-off was almost four times greater than BFI's ECL provision for the entire amount of the Loan Portfolio allocated to the Four Funds at December 31, 2019, of approximately $17.5 million. It was more than twenty times greater than BFI's ECL for Loan A at December 31, 2019, of approximately $2.6 million.
82. Some write-off of Loan A had been foreseeable at the time of the 2019 Audits, as Borrower A had filed for bankruptcy in February 2020 because it had been unable to service their debt obligations to BFI. The ECL Model should have adequately incorporated forward-looking information. For the 2019 Audit, KPMG Valuation had proposed an impairment range for Loan A of approximately $29 million to $43 million. BFI Management had refused to recognize any impairment. When BFI Management changed their mind less than four months after the December 31, 2019 auditor's reports for the Four Funds' financial statements were issued, KPMG should have considered:
(a) whether the Loan A Write-Off called the reliability of the ECL Model into question, and
(b) whether, in combination with other factors, the Loan A Write-Off represented an indicator of BFI Management bias.
83. KPMG still continued to rely on the ECL Model in the 2020 Audits. KPMG apparently assumed that the discrepancy between the ECL calculation and the actual Loan A Write-Off was irrelevant to the valuation of the balance of the Loan Portfolio without performing any testing to support that assumption or documenting the reason for its assumption.
Worsening Credit Risk of Loan B to Borrower B
84. Loan B was one of the Material Loans for the 2020 Audits. Borrower B failed to make required principal and interest payments by the extended maturity date of June 2020 and Loan B was further extended to December 2020. Borrower B again failed to make required principal and interest payments by December 2020 and Loan B was once again extended to June 2021. BFI Management renewed Loan B each time to extend the maturity date while also continuing to provide additional advances.
85. At December 31, 2020, BFI categorized Loan B as Stage 2 (a loan performing with indicators of a significant increase in credit risk). KPMG agreed with this assessment.
86. BFI Management did not consider Loan B to be in default. BFI's ECL Model calculated Borrower B's probability of default to be 19.73%. BFI's ECL provision for Loan B continued to be approximately 1.97% of the total Loan B balance.
87. KPMG did not critically or adequately assess whether BFI Management had reasonably rebutted the presumption that Loan B should be considered a Stage 3 loan in default. KPMG did not document any consideration of whether Loan B should be considered a Stage 3 loan in default. KPMG did not recommend any impairment on Loan B or refer Loan B to KPMG Valuation.
Worsening Credit Risk of Loan C to Borrower C
88. Loan C was one of the Material Loans for the 2020 Audits. The data collected by or available to KPMG Audit showed a worsening of Borrower C's financial condition as compared to 2019 and further breaches of the repayments terms of Loan C.
(a) From December 31, 2019 to December 31, 2020 the total balance of Loan C had increased from $129.3 million to $153.6 million, due to PIKed interest and additional advances from BFI. BFI had allowed Borrower C to stop making monthly principal and interest payments. Unpaid interest continued to be accumulated and added to the balance of Loan C and Borrower C's monthly principal payments were uncollected past the loan repayment timeline agreed upon with BFI.
(b) In 2019, Borrower C reported a write-off of all of its goodwill balance (approximately $154.7 million) and approximately 80% of its intangible assets (approximately $46.4 million). Overall, Borrower C wrote down approximately half of its total assets.
(c) KPMG's working papers indicated that, as of September 30, 2020, Borrower C had only current assets of approximately $17.4 million, including approximately $4.2 million in cash.
(d) KPMG's financial statement ratio analysis indicated that Borrower C did "not have sufficient liquid assets available to cover its short-term liabilities" and was "not in a solvent position".
(e) The unaudited interim 2020 financial statements for Borrower C, included in KPMG's working papers, indicated that the balance of Loan C exceeded the total assets of Borrower C. These financial statements included the same "going concern" note as in 2019, indicating that the financial conditions "create a material uncertainty which may cast a significant doubt in [Borrower C's] ability to continue as a going concern." These financial statements also identified that Borrower C was in "breach of its financial covenants" in relation to Loan C.
(f) During 2020, the share price of Borrower C dropped approximately 79%, from $0.1842 per share in December 2019 to $0.038 in December 2020.
89. BFI Management did not consider Loan C to be in default. In fact, BFI concluded that Company C had increased in value from 2019 to 2020.
90. BFI's ECL Model calculated Borrower C's probability of default to be 7.84%, less than it was at December 31, 2019. BFI's ECL provision for Loan C continued to be approximately 1.96% of the total Loan C balance.
91. KPMG did not identify Loan C as in default. KPMG did not adequately assess whether BFI Management had a reasonable basis to rebut the presumption that Loan C should be considered a Stage 3 loan in default.
92. KPMG recommended that Loan C be considered a Stage 2 loan, with a significant increase in credit risk. BFI declined to accept KPMG's recommendation.
93. KPMG did not recommend any impairment or refer Loan C to KPMG Valuation.
94. KPMG did not document any consideration of whether the ECL provisions for Loan B or Loan C were appropriate given the financial circumstances of each borrower at the relevant time.
95. For each of the eight audits, KPMG issued an independent auditor's report directed to the Unitholders of each fund, stating KPMG's opinion that the financial statements presented fairly, in all material respects, the financial position of the respective fund. In each of the eight auditor's reports, KPMG represented to Unitholders that KPMG had conducted its audits in accordance with Canadian GAAS. These representations were false.
96. The conduct described above violated GAAS. For each of the 2019 and 2020 Audits, KPMG failed to comply with the following CAS:
(a) CAS 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Canadian Auditing Standards, by:
(i) failing to plan and perform each of the 2019 and 2020 Audits with professional skepticism;
(ii) failing to obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level;
(iii) failing to document their consideration of the nature and extent of adjusted and unadjusted misstatements identified through the Audits;
(iv) failing to comply with all CAS relevant to the Audits;
(b) CAS 320, Materiality in Planning and Performing an Audit, by failing to consider the misstatements identified in its assessment of materiality thresholds, which could have resulted in materiality thresholds being revised downwards and/or to additional procedures being performed;
(c) CAS 330, The Auditor's Responses to Assessed Risks, by failing to design and perform audit procedures to obtain sufficient appropriate audit evidence in response to the risk of material misstatement in relation to the valuation of loans;
(d) CAS 450, Evaluation of Misstatements Identified During the Audit, by failing in its evaluation of misstatements identified and indicators of BFI Management's bias;
(e) CAS 500, Audit Evidence, by failing to design and perform audit procedures that were appropriate in the circumstances for the purpose of obtaining sufficient appropriate audit evidence, and failing to document its consideration of various aspects of the Audits, including but not limited to its evaluation of the relevance and reliability of information to be used as audit evidence in assessing BFI's loan valuations;
(f) CAS 530, Audit Sampling, by failing to document its consideration of whether misstatements identified were isolated and evaluate their possible impact on the Audits;
(g) CAS 540, Auditing Accounting Estimates and Related Disclosures, by failing to conduct effective retrospective review procedures over BFI's calculation of ECLs; and
(h) CAS 620, Using the Work of an Auditor's Expert, by failing to identify the inadequacies in KPMG FRM's work over the ECL Model for auditing purposes.
97. For the 2020 Audits, KPMG also failed to comply with the following CAS:
(a) CAS 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, in failing to appropriately evaluate the implications of an identified fraud; and
(b) CAS 560, Subsequent Events, in failing to consider whether the 2019 financial statements of the Four Funds required restating following identification of the fraud after the 2019 Audit opinions were issued.
98. On April 30, 2021, one month after KPMG's auditor's reports for 2020 were issued, BFI and all its assets, including the Four Funds, were put into receivership by the Ontario Superior Court of Justice. This was initiated by an application of the Commission because of concerns that BFI management was in conflict with certain loan counterparties and had misappropriated investor funds. PricewaterhouseCoopers Inc. was appointed receiver and manager of BFI (the Receiver).
99. At the time of the receivership, the audited financial statements of all of BFI's funds (including the Four Funds) represented that its total assets under management was approximately $2.09 billion. The Receiver has claimed that unitholders will lose approximately $1.4 billion, in part because of significant deficiencies in the value of the Four Funds' loan portfolio, including insufficient and falsified collateral.
100. On or about October 29, 2021, KPMG notified the Receiver that it was withdrawing the auditor's reports on the financial statements of the Four Funds for the years ended December 31, 2019 and December 31, 2020.
101. As of March 2025, the Receiver had collected approximately $317 million from the liquidation of BFI's assets under management. This is approximately 15% of the total $2.09 billion in assets under management represented by BFI.
102. Specifically, as of March 2025, the Receiver had collected approximately $863,000 for Loan A (0.93% of BFI's December 31, 2020 book value for Loan A), approximately $953,000 for Loan B (0.71% of BFI's December 31, 2020 book value for Loan B) and approximately $11.3 million for Loan C (7.36% of BFI's December 31, 2020 book value for Loan C).
The Commission alleges the following breaches of Ontario securities law and/or conduct contrary to the public interest.
103. An auditor must not represent compliance with GAAS in an auditor's report unless the auditor has complied with the requirements of all individual Canadian auditing standards relevant to an audit. By falsely stating in each of the eight auditor's reports that it had conducted the audit in accordance with GAAS, KPMG breached subsection 126.2(1) of the Securities Act eight times.
104. These were statements that KPMG knew or reasonably ought to have known, in a material respect and at the time and in light of the circumstances under which they were made, were misleading or untrue or did not state a fact that was required to be stated or that was necessary to make the statements not misleading. The Audits did not comply with GAAS. KPMG's statements to the contrary would reasonably be expected to have a significant effect on the market price or value of units of the Four Funds.
105. Had Unitholders known that the NAV of the Four Funds was materially overvalued, the price or value of the Four Funds would reasonably be expected to have been significantly lower.
106. Had Unitholders known the Audits were not conducted in accordance with GAAS, the price or value of the Four Funds would reasonably be expected to have been significantly lower. The existence of audited financial statements that complied with GAAS would be considered important to a reasonable investor in determining whether to purchase or continue to hold units of the Four Funds. Because KPMG's Audits did not comply with GAAS, Unitholders were deprived of the benefits of audits that complied with GAAS, significantly affecting the value of their investment.
107. Further and in any event, the conduct described above is contrary to the public interest. Because the Four Funds were private investment vehicles, sold in the exempt market without a prospectus, there was less information available as compared to public markets. KPMG's audit opinions were one of the only sources of independent information concerning the financial health of the Four Funds. By representing it had complied with GAAS when it had not, KPMG's conduct offended the need for accurate disclosure of information, which is a fundamental animating principle of securities regulation.
The Commission requests that the Tribunal make the following orders against KPMG pursuant to subsection 127(1) and section 127.1 of the Securities Act:
(a) that KPMG be reprimanded, pursuant to paragraph 6 of subsection 127(1);
(b) that KPMG pay an administrative penalty of not more than $5 million for each failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1), totalling not more than $40 million for all eight false and misleading auditor's reports issued;
(c) that KPMG disgorge any amounts obtained as a result of non-compliance with Ontario securities laws pursuant to paragraph 10 of subsection 127(1); and
(d) that KPMG pay costs of the investigation and the hearing, pursuant to section 127.1.
DATED at Toronto, Ontario, this 31st day of March, 2026.
ONTARIO SECURITIES COMMISSION |
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20 Queen Street West, 22nd Floor |
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Toronto, ON M5H 3S8 |
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Johanna Braden |
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Senior Litigation Counsel |
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Enforcement Division |
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Tel: 416-263-7689 |
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jbraden@osc.ca |
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{1} The four Bridging Funds audited by KPMG were: the Bridging Income Fund LP, the Bridging Mid-Market Debt Fund LP, the Bridging Private Debt Institutional LP and the Bridging Indigenous Impact Fund.
{2} Performance materiality is a threshold below overall materiality used in the audit processes of assessing the risks of material misstatement and determining the nature, timing and extent of audit procedures to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall financial statement materiality.
Ontario Securities Commission and Andre Itwaru
FOR IMMEDIATE RELEASE
March 25, 2026
TORONTO -- The merits, sanctions and costs hearing in the above-named matter scheduled to be heard on March 26, 2026 at 10:00 a.m. will instead be heard on April 30, 2026 at 10:00 a.m. by videoconference.
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.
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Ontario Securities Commission and Christopher Candusso
FOR IMMEDIATE RELEASE
March 27, 2026
TORONTO -- The Tribunal issued a Notice of Hearing on March 27, 2026 setting the matter down to be heard on March 30, 2026 at 2:30 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 March 27, 2026 and Application for Enforcement Proceeding dated March 25, 2026 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.
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Ontario Securities Commission and Christopher Candusso
FOR IMMEDIATE RELEASE
March 30, 2026
TORONTO -- Following a hearing held today, the Tribunal issued an Order in the above-named matter approving the Settlement Agreement reached between the Commission and Christopher Candusso.
A copy of the Order dated March 30, 2026, Settlement Agreement dated March 24, 2026, and Oral Reasons for Approval of a Settlement dated March 30, 2026, are available at capitalmarketstribunal.ca.
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Ontario Securities Commission et al.
FOR IMMEDIATE RELEASE
March 30, 2026
TORONTO -- The Tribunal issued a Notice of Hearing on March 30, 2026 setting the matter down to be heard on May 7, 2026 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 March 30, 2026 and Application for Enforcement Proceeding dated March 27, 2026 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.
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Ontario Securities Commission and KPMG LLP
FOR IMMEDIATE RELEASE
March 31, 2026
TORONTO -- The Tribunal issued a Notice of Hearing on March 31, 2026 setting the matter down to be heard on May 5, 2026 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 March 31, 2026 and Application for Enforcement Proceeding dated March 31, 2026 are available at capitalmarketstribunal.ca.
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Ontario Securities Commission and Christopher Candusso -- s. 127(1)
BETWEEN:
File No. 2026-5
Adjudicators: |
M. Cecilia Williams (chair of the panel) |
Geoffrey D. Creighton |
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Dale R. Ponder |
March 30, 2026
(Subsection 127(1) of theSecurities Act, RSO 1990, c S.5)
WHEREAS on March 30, 2026, the Capital Markets Tribunal held a hearing by videoconference to consider the joint request for a settlement hearing filed by the Ontario Securities Commission and Christopher Candusso for approval of a settlement agreement dated March 24, 2026 (the Settlement Agreement), where Candusso admits to contravening Ontario securities law by failing to comply with the director and officer ban imposed in a Tribunal order dated January 20, 2023, in file number 2018-70;
ON READING the joint request for a settlement hearing, the Application for Enforcement Proceeding dated March 25, 2026, the Settlement Agreement and the written submissions of the Commission, on hearing the submissions of the representatives of the Commission and Candusso, and on being advised by the Commission that it has received payment from the respondent in the amount of $7,000;
IT IS ORDERED THAT:
1. the Settlement Agreement is approved;
2. Candusso 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 Securities Act (Act);
3. Candusso is prohibited from becoming or acting as a director or officer of any issuer from the date of this order until January 20, 2029, pursuant to paragraph 8 of subsection 127(1) of the Act; and
4. Candusso shall pay an administrative penalty of $7,000 for his failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act.
BETWEEN:
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. Christopher Candusso (Candusso or the Respondent) contravened Ontario securities law by failing to comply with a director and officer ban imposed in a Tribunal order dated January 20, 2023 (the January 2023 Order). The January 2023 Order required Candusso to immediately resign from any positions that he held as a director or officer of an issuer and prohibited him from becoming or acting as a director or officer of any issuer for a period of three years. Candusso remained a director and officer of one non-reporting issuer and became the director and officer of an additional non-reporting issuer 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. Compliance with Tribunal orders is essential to maintaining the integrity of Ontario's capital markets. 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.
4. The parties will jointly file a request that the Tribunal issue a Notice of Hearing (the Notice of Hearing) to announce that it will hold a hearing (the Settlement Hearing) to consider whether, pursuant to sections 127 and 127.1 of the Securities Act, RSO 1990, c S.5, as amended (the Act), it is in the public interest for the Tribunal to make certain orders against Candusso.
5. The Ontario Securities Commission (the Commission) and Candusso jointly recommend settlement of the proceeding (the Proceeding) against Candusso in accordance with the terms and conditions set out in this agreement (the Settlement Agreement). Candusso consents to the making of an order (the Order) substantially in the form attached as Schedule "A" to this Settlement Agreement based on the facts set out herein.
6. For the purposes of the Proceeding, and any other regulatory proceeding commenced by the Commission or another securities regulatory authority, Candusso agrees with the facts set out in Part III of this Settlement Agreement and the conclusions in Part IV and V of this Settlement Agreement.
7. Candusso is a resident of Etobicoke, Ontario.
8. Candusso was a respondent in Kitmitto (Re), file number 2018-70. On January 20, 2023, the Tribunal made the January 2023 Order. Among other things, the Order required Candusso to immediately resign from any positions that he held as a director or officer of an issuer and prohibited him from becoming or acting as a director or officer of any issuer for a period of three years (D&O Ban).
9. Candusso became a director and officer of Deuceville Inc. (Deuceville) on May 6, 2020, incorporated in Ontario on the same date. Candusso remained an officer and director of Deuceville after the January 2023 Order.
10. On January 11, 2023, Candusso initiated the process of incorporating a new corporation. On January 23, 2023, following the January 2023 Order, Candusso signed incorporation documents, including the consent to act as a director and officer of Caymus Mortgage Capital Inc. (Caymus). Caymus was incorporated in Ontario on January 24, 2023, and Candusso became a director of the corporation on the same date. In addition, on February 15, 2023, Candusso became an officer of Caymus.
11. The two corporations are issuers within the meaning of the Act.
12. Candusso failed to comply with the D&O Ban for approximately two years.
13. On December 20, 2024, the Commission requested Candusso to provide any evidence of his compliance with the D&O Ban.
14. Following the Commission's request, Candusso resigned as a director and officer of Deuceville effective January 16, 2025, and dissolved Caymus effective January 24, 2025.
15. Candusso has accepted full responsibility for his conduct.
16. Following the Commission's contact, Candusso resigned from being a director and officer of one issuer and dissolved the other, bringing him into compliance with the D&O Ban in the January 2023 Order.
17. By engaging in the conduct described above, the Respondent acknowledges and admits that he breached the D&O Ban in the January 2023 Order and, consequently, contravened 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 Respondent and the Commission agree to the terms of settlement set forth below.
19. The Respondent consents to the Order substantially in the form attached as Schedule "A", pursuant to which it is ordered that:
(a) this Settlement Agreement is approved;
(b) Candusso 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;
(c) Candusso is prohibited from becoming or acting as a director or officer of any issuer from the date of this order until January 20, 2029, pursuant to paragraph 8 of subsection 127(1) of the Act; and
(d) Candusso shall pay an administrative penalty of $7,000, for his failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act.
20. Candusso shall pay the amount set out in subparagraph 19(d) by wire transfer to the Commission prior to the issuance of the Order.
21. The Respondent acknowledges that this Settlement Agreement and the Order may form the basis for orders of parallel effect in other jurisdictions in Canada. The securities laws of some other Canadian jurisdictions allow orders made in this matter to take effect in those other jurisdictions automatically, without further notice to the Respondent. The Respondent should contact the securities regulator of any other jurisdiction in which the Respondent intends to engage in any securities or derivatives-related activities, prior to undertaking such activities.
22. If the Tribunal approves this Settlement Agreement, no enforcement proceedings will be continued against the Respondent under Ontario securities law based on the misconduct described in Part III of this Settlement Agreement, unless the Respondent fails to comply with any term in this Settlement Agreement, in which case enforcement proceedings may be brought or continued under Ontario securities law against the Respondent that may be based on, among other things, the facts set out in Part III of this Settlement Agreement as well as the breach of this Settlement Agreement.
23. The Respondent acknowledges that, if the Tribunal approves this Settlement Agreement and the Respondent fails to comply with any term in it, proceedings may be brought in order to ensure compliance with the terms of the Settlement Agreement.
24. The Respondent waives any defences to a proceeding referenced in paragraphs 22 or 23 that are based on the limitation period in the Act, provided that no such proceeding shall be commenced later than six years from the date of the occurrence of the last failure to comply with this Settlement Agreement.
25. The parties will seek approval of this Settlement Agreement at the Settlement Hearing before the Tribunal, which shall be held on a date determined by the Tribunal's Governance and Tribunal Secretariat in accordance with this Settlement Agreement and the Tribunal's Rules of Procedure.
26. The Respondent will attend the Settlement Hearing in person or by video conference.
27. The parties confirm that this Settlement Agreement sets forth all of the agreed facts that will be submitted at the Settlement Hearing, unless the parties agree that additional facts should be submitted at the Settlement Hearing.
28. If the Tribunal approves this Settlement Agreement:
(a) the Respondent irrevocably waives all rights to a full hearing, judicial review or appeal of this matter under the Act; and
(b) neither party will make any public statement that is inconsistent with this Settlement Agreement or with any additional agreed facts submitted at the Settlement Hearing.
29. Whether or not the Tribunal approves this Settlement Agreement, the Respondent will not use, in any proceeding, this Settlement Agreement or the negotiation or process of approval of this Settlement Agreement as the basis for any attack on the Commission or the Tribunal's jurisdiction, alleged bias, alleged unfairness or any other remedies or challenges that may be available.
30. If the Tribunal does not approve this Settlement Agreement or does not make an order substantially in the form of the Order attached as Schedule "A" to this Settlement Agreement:
(a) this Settlement Agreement and all discussions and negotiations between the parties before the Settlement Hearing will be without prejudice to the Commission and the Respondent; and
(b) the Commission and the Respondent will each be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing on the merits of the allegations contained in an Application for Enforcement Proceeding based on the conduct described herein. Any such proceedings, remedies and challenges will not be affected by this Settlement Agreement, or by any discussions or negotiations relating to this Settlement Agreement.
31. The parties will keep the terms of this Settlement Agreement confidential until the Settlement Hearing, except as is necessary to make submissions at the Settlement Hearing. If, for whatever reason, the Tribunal does not approve the Settlement Agreement, the terms of the Settlement Agreement shall remain confidential indefinitely, unless the parties otherwise agree in writing or if required by law.
32. This Settlement Agreement may be signed in one or more counterparts which together constitute a binding agreement.
33. A facsimile copy or other electronic copy of any signature will be as effective as an original signature.
DATED at Etobicoke, Ontario this "23rd" day of March, 2026.
"Eva Candusso" |
"Christopher Candusso" |
____________________________ |
____________________________ |
Witness (print name): |
CHRISTOPHER CANDUSSO |
DATED at Toronto, Ontario, this "24th" day of March, 2026.
ONTARIO SECURITIES COMMISSION
By: |
"Bonnie Lysyk" |
Name: Bonnie Lysyk |
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____________________________ |
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Title: Executive Vice President, Enforcement Division |
BETWEEN:
[Names of Adjudicators comprising the Panel]
File No. [#]
[Date order made]
(Subsection 127(1) of the Securities Act, RSO 1990, c S.5)
WHEREAS on [date], the Capital Markets Tribunal held a hearing [select option,] to consider the joint request for a settlement hearing filed by the Ontario Securities Commission and Christopher Candusso for approval of a settlement agreement dated [date] (the Settlement Agreement);
ON READING the joint request for a settlement hearing, the Application for Enforcement Proceeding dated [date], the Settlement Agreement and the written submissions of the Commission, on hearing the submissions of the representatives of the Commission and Candusso, and on being advised by the Commission that it has received payment from the respondent in the amount of $7,000;
IT IS ORDERED THAT:
1. the Settlement Agreement is approved;
2. Candusso 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 Securities Act (the Act);
3. Candusso is prohibited from becoming or acting as a director or officer of any issuer from the date of this order until January 20, 2029, pursuant to paragraph 8 of subsection 127(1) of the Act; and
4. Candusso shall pay an administrative penalty of $7,000, for his failure to comply with Ontario securities law, pursuant to paragraph 9 of subsection 127(1) of the Act.
___________________________ |
||
[Name of Panel Chair] |
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___________________________ |
___________________________ |
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[Name of Adjudicator] |
[Name of Adjudicator] |
Ontario Securities Commission and Christopher Candusso -- s. 127(1)
Citation: Ontario Securities Commission v Candusso, 2026 ONCMT 16
Date: 2026-03-30
File No. 2026-5
BETWEEN:
(Subsection 127(1) of the Securities Act, RSO 1990, c S.5)
Adjudicators: |
M. Cecilia Williams (chair of the panel) |
|
Geoffrey D. Creighton |
||
Dale R. Ponder |
||
Hearing: |
By videoconference, March 30, 2026 |
|
Appearances: |
Susan Kimani |
For the Ontario Securities Commission |
Matthew Scott |
For Christopher Candusso |
|
The following reasons have been prepared for publication, based on the reasons delivered orally at the hearing, as edited and approved by the panel, to provide a public record of the oral reasons.
[1] The Ontario Securities Commission and Christopher Candusso have agreed to a settlement in respect of the Commission's allegations that Mr. Candusso breached the director and officer ban imposed in an order of the Tribunal dated January 20, 2023, thereby contravening Ontario securities law.
[2] The Commission and Mr. Candusso are now asking for our approval of their settlement. We approve of the settlement and will order the sanctions that have been proposed by the parties. These are our oral reasons.
[3] The facts leading to this settlement are straightforward and are set out in the settlement agreement. In January 2023, the Capital Markets Tribunal ordered that Mr. Candusso resign from any positions he held as a director or officer of any issuer and banned him from acting as a director or officer of any issuer for a period of three years. Mr. Candusso remained a director and officer of one non-reporting issuer and became the director and officer of an additional non-reporting issuer 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.
[4] Mr. Candusso has resigned from his position with the first non-reporting issuer and has dissolved the second one.
[5] By violating the director and officer ban, Mr. Candusso breached Ontario securities law. He has agreed to the sanctions set out in the settlement agreement, which include that he resign from any positions he holds as a director and officer, a prohibition against acting as a director or officer of any issuer until January 20, 2029, and an administrative penalty of $7,000.
[6] There is one aggravating factor in Mr. Candusso's circumstances. He had initiated the process of incorporating a new company prior to the Tribunal's January 2023 order. Shortly after that order he took positive steps to complete the incorporation and to become a director and officer of that company, despite the order banning him from doing so.
[7] The mitigating factors relevant to Mr. Candusso's circumstances are that:
a. after being contacted by the Commission requesting evidence of his compliance with the director and officer ban against him, Mr. Candusso resigned from the one director position and dissolved the second entity, thereby bringing himself into compliance with the January 2023 order; and
b. by entering the settlement, he has taken accountability for his breach of the Tribunal's order.
[8] Our role at today's hearing is to decide whether the terms of the settlement fall within a reasonable range of outcomes. Before today's hearing, we held a confidential conference with the parties. We had the opportunity to hear from the parties and to ask them questions about the settlement. In deciding whether to approve the settlement, we respect the negotiation process and accord significant deference to the resolution reached by the parties.
[9] We find that the sanctions proposed by the parties are within the reasonable range and therefore in the public interest. While Mr. Candusso's misconduct is serious, his mitigating conduct is meaningful.
[10] We find that the sanctions against Mr. Candusso are proportionate to his misconduct and meet the objectives of specific and general deterrence. The sanctions serve to protect the capital markets of Ontario.
[11] We are also satisfied that the settlement agreement sends two clear messages:
a. that those subject to orders of the Tribunal must comply with those orders; and
b. that compliance with Tribunal orders is essential to maintaining the integrity of Ontario's capital markets.
[12] In conclusion, we find that the settlement is reasonable and in the public interest. We will issue an order substantially in the form of the draft attached to the settlement agreement.
Dated at Toronto this 30th day of March, 2026
CSA Staff Notice 11-349 Notice of Local Amendments in Certain Jurisdictions
April 2, 2026
From time to time, a local jurisdiction may amend a national or multilateral instrument or change a policy or companion policy that affects activity only in that jurisdiction. The CSA recognize that such a local amendment or change is of interest or importance beyond the local jurisdiction. CSA staff are issuing this Notice to identify amendments and changes implemented in British Columbia, Ontario, Saskatchewan and Yukon. For public convenience, CSA members in other jurisdictions will update the text of the applicable material on their websites to reflect these local amendments and changes.
The local amendments and changes referred to in this notice comprise those shown in Annexes A to D. These local amendments and changes are to the following instruments and policy:
• National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (British Columbia);
• National Instrument 45-106 Prospectus Exemptions (Ontario);
• National Instrument 45-110 Start-up Crowdfunding Registration and Prospectus Exemptions (Saskatchewan);
• National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (Yukon).
The text of rule and policy consolidations on the websites of CSA members will be updated, as necessary, to reflect these local amendments and changes.
Please refer your questions to any of the following:
Isabelle Pelletier |
Noreen Bent |
Autorité des marchés financiers |
British Columbia Securities Commission |
isabelle.pelletier@lautorite.qc.ca |
nbent@bcsc.bc.ca |
|
|
Jennifer Smith |
Leigh-Anne Mercier |
Alberta Securities Commission |
The Manitoba Securities Commission |
jennifer.smith@asc.ca |
leigh-anne.mercier@gov.mb.ca |
|
|
Liliana Ripandelli |
Doug Harris |
Ontario Securities Commission |
Nova Scotia Securities Commission |
lripandelli@osc.gov.on.ca |
doug.harris@novascotia.ca |
|
|
Sonne Udemgba |
Moira Goodfellow |
Financial and Consumer Affairs Authority of Saskatchewan |
Financial and Consumer Services Commission of New Brunswick |
sonne.udemgba@gov.sk.ca |
moira.goodfellow@fcnb.ca |
|
|
Steven Dowling |
Mohammad Bin Mannan Atik |
Government of Prince Edward Island, Superintendent of Securities |
Office of the Superintendent of Securities, Service NL |
sddowling@gov.pe.ca |
MohammadAtik@gov.nl.ca |
|
|
Rhonda Horte |
Matthew Yap |
Office of the Yukon Superintendent of Securities |
Office of the Superintendent of Securities, Northwest Territories |
rhonda.horte@yukon.ca |
Matthew_Yap@gov.nt.ca |
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Debora Bissou |
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Department of Justice, Government of Nunavut |
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dbissou@gov.nu.ca |
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Local Amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations in British Columbia
In B.C. Reg. 249/2025, the British Columbia Securities Commission ordered that, effective January 1, 2026, National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, B.C. Reg. 226A/2009, is amended as set out below.
1 National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, B.C. Reg. 226A/2009, is amended as set out in this Schedule.
(...)
4 The following sections are added to Division 1 after section 14.1.1:
(...)
14.1.3 Interpretation of "reasonable approximation" in British Columbia
(1) In British Columbia, the references to "reasonable" in paragraphs 14.1.2(2)(a) and (b) are to be interpreted as
(a) redundancies,
(b) included for clarity only, and
(c) not affecting the interpretation of other legislation that does not refer to "reasonable" in respect of the same or a similar requirement.
(2) For greater certainty, for the purposes of paragraph (1)(c), despite a provision in the following Instruments not including a reference to "reasonable" in respect of an approximation or a requirement to approximate, in British Columbia, a value or amount disclosed that is unreasonable does not satisfy the provision:
(a) National Instrument 21-101 Marketplace Operation;
(b) National Instrument 33-109 Registration Information;
(c) National Instrument 41-101 General Prospectus Requirements;
(d) National Instrument 44-101 Short Form Prospectus Distributions;
(e) National Instrument 45-106 Prospectus Exemptions;
(f) National Instrument 51-102 Continuous Disclosure Obligations;
(g) National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer;
(h) National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI);
(i) National Instrument 62-104 Take-Over Bids and Issuer Bids;
(j) National Instrument 81-102 Investment Funds;
(k) any other provision of securities legislation that refers to "approximate", "approximately" or "approximation".
(...).
1. National Instrument 45-106 Prospectus Exemptions is amended by this Instrument.
2. Subsection 2.4(2.1) is amended by adding the following paragraph:
(i.1) a person who purchases a security of the issuer in reliance on the prospectus exemptions in Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption or Ontario Instrument 45-510 Self-Certified Investor Prospectus Exemption,.
3. Section 2.4 is amended by adding the following subsection:
(3.1) In Ontario, subsection (3) does not apply to a distribution to a self-certified investor in reliance on the prospectus exemption in Ontario Instrument 45-510 Self-Certified Investor Prospectus Exemption..
4. This Instrument comes into force in Ontario on December 4, 2025.
1 These regulations may be cited as The Securities Commission (Adoption of National Instruments) (NI 45-110) Amendment Regulations, 2025.
RRS c S-42.2 Reg 3, Part LXVII amended
2(1) Part LXVII of the Appendix to The Securities Commission (Adoption of National Instruments) Regulations is amended in the manner set forth in this section.
(2) Appendix A to National Instrument 45-110 Start-up Crowdfunding Registration and Prospectus Exemptions is amended in the 12th bullet by striking out "a co-operative, as defined in clause (2)(1)(1) of The New Generation Co-Operatives Act (Saskatchewan)" and substituting "a co-operative, as defined in The New Generation Co-operatives Act (Saskatchewan) or in subsection 2(1) of The Co-operatives Act; 1996 (Saskatchewan)".
Coming into force
3 These regulations came into force on July 25, 2025.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions is changed by replacing "corporateaffairs@gov.yk.ca", in paragraph (3) of section 5.5, "Filing", by "securities@yukon.ca".
This change became effective in Yukon on April 1, 2025.
CSA Staff Notice 25-315 -- 2025 Annual Activities Report on the Oversight of the Canadian Investment Regulatory Organization and the Canadian Investor Protection Fund
CSA Staff Notice 25-315 2025 Annual Activities Report on the Oversight of the Canadian Investment Regulatory Organization and the Canadian Investor Protection Fund is reproduced on the following internally numbered pages. Bulletin formatting and pagination resumes at the end of the Staff Notice.
CSA STAFF NOTICE 25-315
2025 Annual Activities Report on the Oversight of the Canadian Investment Regulatory Organization and the Canadian Investor Protection Fund
April 2, 2026
1 |
2025 Highlights |
3 |
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2 |
Who We Are |
4 |
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3 |
Executive Summary |
5 |
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4 |
Post-Close Initiatives |
6 |
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5 |
Who We Regulate |
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(A) |
Canadian Investment Regulatory Organization |
9 |
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(B) |
Canadian Investor Protection Fund |
15 |
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6 |
Composition of Oversight Committees |
19 |
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7 |
Rule/By-law/Policy and Procedures Amendments |
21 |
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8 |
Appendix A -- What We Do |
23 |
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9 |
Appendix B -- Regulatory Program |
24 |
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10 |
Questions |
25 |
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The Canadian Securities Administrators (CSA) is the council of Canada's provincial and territorial securities regulators. Its objective is to improve, coordinate and harmonize regulation of the Canadian capital markets to ensure the smooth operation of Canada's securities industry and protect investors.
The securities regulatory authorities (CSA Members) in all thirteen provinces and territories have recognized the Canadian Investment Regulatory Organization (CIRO){1} and approved/accepted the Canadian Investor Protection Fund (CIPF){2}.
Acronym |
Name of CSA Members |
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AMF |
Autorité des marchés financiers |
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ASC |
Alberta Securities Commission |
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BCSC |
British Columbia Securities Commission |
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FCAA |
Financial and Consumer Affairs Authority of Saskatchewan |
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FCNB |
Financial and Consumer Services Commission of New Brunswick |
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MSC |
The Manitoba Securities Commission |
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NL |
Office of the Superintendent of Securities Service Newfoundland and Labrador |
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NSSC |
Nova Scotia Securities Commission |
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NT |
Office of the Superintendent of Securities, Northwest Territories |
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NU |
Office of the Superintendent of Securities, Nunavut Office |
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OSC |
Ontario Securities Commission |
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PEI |
Prince Edward Island, Financial and Consumer Services Division |
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YT |
Office of the Yukon Superintendent of Securities |
We are pleased to share CSA Staff Notice 25-315 2025 Annual Activities Report on the Oversight of Canadian Investment Regulatory Organization and Canadian Investor Protection Fund (Report) summarizing the key activities through which we conduct oversight of CIRO and CIPF.
This Report covers the period of January 1 -- December 31, 2025 (the Reporting Period).
During the Reporting Period we addressed a variety of matters, some relating to CIRO's amalgamation{3}. Key matters considered during the Reporting Period include the:
• consolidation of rules applicable to investment dealers and mutual fund dealers;
• delegation of the registration of investment dealers and mutual fund dealers and the individuals who act on their behalf by multiple jurisdictions, to CIRO and operationalization of the delegated registration functions and powers;
• review of amendments to the Approved Persons Fees Component within the Annual Fee of the Dealer Member Fee Model for investment dealers and mutual fund dealers;
• oversight of the CIRO cybersecurity breach; and
• approval and implementation of the CIRO proficiency model for investment dealers.
Key matters considered during the period specific to CIPF include the:
• review of CIPF's continuing efforts to integrate its two funds that provide coverage to eligible customers of CIRO investment dealers and mutual fund dealers;
• oversight of CIPF's alignment of the investment policies and strategies of the two funds; and
• consideration of whether it is appropriate for both funds to use the credit-risk based fund model which assists in setting fund size.
In addition to these key matters, CSA Members also conducted continuing regular oversight which includes our review of amendments to CIRO rules and CIPF policies, review of required filings from CIRO and CIPF, completion of the CSA's 2025 Oversight Review{4} of specific processes in three functional areas of CIRO and the substantial completion of the CSA's 2025 Oversight Review of specific processes in two functional areas of CIPF. Post-close initiatives will continue to be an area of focus in 2026.
This Report is an important tool for engaging with stakeholders. The objectives of this Report are to provide transparency, foster public confidence in the regulatory framework, and explain our role in overseeing CIRO's and CIPF's compliance with securities regulation. We welcome any questions or feedback that you may have.
Outlined in Appendix A is an overview of how we regulate CIRO and CIPF, while Appendix B describes the oversight functions and activities undertaken for the CIRO and CIPF oversight programs, including: the annual risk assessments, oversight reviews, reviews of proposed rules, reviews of materials filed, and meetings.
During the Reporting Period, work continued on various solutions outlined in CSA Position Paper 25-404 New Self-Regulatory Organization Framework (the Position Paper), as set out below.
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Post-close Initiative |
Priority / Status |
Scope |
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1. |
Incorporated Advisor (formerly Directed Commissions) |
High |
• |
CIRO published an Update on the Project to Develop Rule Amendments Relating of the Proposed Adoption of an Incorporated Advisor Compensation Option on October 29, 2025 providing information to the public on project work performed to date. |
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• |
CSA members are monitoring steps that CIRO is taking to harmonize compensation options between investment fund dealing representatives and mutual fund dealing- representatives, including CIRO's update to the market on October 29, 2025, and CIRO's communications with the Canada Revenue Agency. |
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• |
CIRO published a Position Paper on January 25, 2024 requesting public comments on its proposed approaches. |
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2. |
CIRO Rulebook Consolidation |
High |
• |
CSA Members are reviewing CIRO's proposed Dealer and Consolidated Rules (the DC Rules) to consolidate and harmonize the rulebooks for investment dealers and mutual fund dealers over five phases. The entirety of the five phases will be republished for comment in 2026. The DC Rules would replace the current Investment Dealer and Partially Consolidated (IDPC) Rules and Mutual Fund Dealer (MFD) Rules. |
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3. |
CIRO/CIPF New Cooperative Operating Agreement |
High |
• |
In 2022, the predecessor SROs and IPFs entered into a Transitional Agreement, that came into effect on January 1, 2023, designed to ensure that existing arrangements between the predecessor entities would continue to govern the relationship between CIRO and CIPF. |
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• |
CSA Members continue to oversee the development of the new Cooperative Operating Agreement which will replace the current Transitional Agreement. |
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4. |
Dual Registration Applications, Policy Matters and Exemptions |
Medium |
• |
CSA Members continue to consider dual registration matters and whether there are any potential challenges associated with these applications. CSA Members and CIRO staff are discussing novel issues related to the dual registration of investment dealers and mutual fund dealers. |
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5. |
CIRO Enforcement Practices |
Medium |
• |
Effective February 24, 2025, mutual fund dealers transitioned to the Complaints and Settlement Reporting System (ComSet) for reporting all events prescribed in MFD Rule 600. ComSet is already used by investment dealers. |
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• |
CIRO applied for use of the Restricted Fund for the purposes of the Disgorgement Distribution Program. The Disgorgement Distribution Program is expected to launch on April 1, 2026. |
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• |
MFD Rule amendments to align the disgorgement provision with the IDPC Rules are in progress. |
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• |
Ontario joined six other provinces{5} in granting CIRO full enforcement powers. Specifically, the ability to collect fines, collect and present evidence and statutory immunity for CIRO. |
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6. |
Strengthening Proficiency |
Medium |
• |
CIRO is midway through a multiphase consultation process to harmonize the investment dealer and mutual fund dealer Continuing Education (CE) programs. |
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• |
CIRO obtained approval from CSA Members for the new proficiency model for Approved Persons under the IDPC Rules. The new proficiency model took effect on January 1, 2026. |
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7. |
Integrated Fee Model |
Complete |
• |
CSA Members approved CIRO's new integrated fee model that applies to both investment dealer and mutual fund dealer members. The new integrated fee model took effect on April 1, 2025. |
{5} Alberta, Québec, Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick.
CSA Members have given CIRO, as an SRO, the responsibility to govern the operations and business conduct of investment dealers and mutual fund dealers and their representatives, and the trading activity on members of CIRO that are marketplaces. The authority of CIRO to carry out certain regulatory functions is set out in the Recognition Orders, along with the terms and conditions that CIRO is required to comply with in carrying out its regulatory functions.
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December 31, 2025 |
December 31, 2024 |
% Change |
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Assets Under Administration |
$6.1 Trillion |
$5.3 Trillion |
15.1% |
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Approved Persons |
111,566 |
107,772 |
3.5% |
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Firms |
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Investment Dealer |
147{7} |
161 |
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Mutual Fund Dealer |
77 |
80 |
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Dual Registered{6} |
12 |
8 |
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Total |
236{8} |
249 |
-5.2% |
{6} A dual registered firm is a firm that is registered as both an investment dealer and a mutual fund dealer.
{7} Within the 147 investment dealers are 5 crypto-asset trading platforms.
{8} The total does not include the 14 Québec "deemed members" that are not subject, during the transition phase, to CIRO's rules and continue to be subject to the regulatory framework applicable in Québec, including National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
The increase in CIRO's assets under administration was mainly attributable to an increase in equity markets during the Reporting Period.
The following diagram represents the distribution of 236 member firms by head office location.
Head Office Location |
Members |
Head Office Location |
Members |
Head Office Location |
Members |
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Alberta |
17 |
New Brunswick |
1 |
Saskatchewan |
3 |
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British Columbia |
16 |
Ontario |
158 |
United Kingdom |
1 |
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Manitoba |
3 |
Québec |
32 |
United States |
5 |
During the Reporting Period, eight CIRO rule amendments were approved or not objected to by CSA Members. Ten rule amendments continue to be under review as of December 31, 2025.
CIRO was responsible for filing certain information with CSA Members on a regular or ad hoc basis. During the Reporting Period, 43 filings were received from CIRO and reviewed by CSA Members.
During regular meetings held with CIRO, among other varied topics, the following key subjects were discussed and followed up by CSA Members.
Topic |
Activities During the Reporting Period |
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SRO Transition |
• |
Integration priorities, including: CIR•Rulebook Consolidation, CE harmonization and advancing incorporated advisor project. |
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Overseeing development of the new Cooperative Operating Agreement between CIRO and CIPF. |
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Registration Delegation |
• |
Effective April 1, 2025, the ASC, OSC, FCNB, NL, NSSC, NT, NU, PEI and YT issued delegation orders authorizing CIRO to undertake registration functions for investment dealers and mutual fund dealers. |
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• |
Effective July 1, 2025, the AMF issued similar registration delegation to CIRO. |
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• |
Effective October 1, 2025, the FCAA and the MSC authorized CIRO to carry out certain registration functions on its behalf. |
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• |
The BCSC published amendments to BC Instrument 22-502 Registration by IIROC on October 16, 2025, which proposes to delegate to CIRO registration of mutual fund dealers and their related individual registration categories. |
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• |
Streamlining the registration delegation process across all jurisdictions creates a harmonized approach to registration for CIRO members. |
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Annual Priorities |
• |
CSA Members provided input on CIRO's Annual Priorities for Fiscal 2026 which were published by CIRO on April 10, 2025. |
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Short Selling |
• |
CIRO, together with CSA Members, continues to review the regulatory framework regarding short selling to ensure it is current and appropriate.{9} |
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• |
On January 11, 2024, CIRO published amendments to the Universal Market Integrity Rules (UMIR) to support and clarify the short selling framework by adding a new positive requirement to have, prior to order entry, a reasonable expectation to settle a short sale. Proposed guidance was published for comment on the same date to clarify various current and proposed requirements related to short sales and failed trades. The approval and final amendments were published on December 5, 2024. |
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• |
On January 9, 2025, CIRO published the Proposed Amendments Respecting Mandatory Close-out Requirements for comment. The proposal intended to introduce mandatory close-out requirements to reduce fail-to-deliver positions. Work continues on this initiative. |
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Trading Increments |
• |
On December 18, 2025, CSA Members approved CIRO's Amendments Respecting Trading Increments to align Canadian trading increments with those in the United States for certain U.S. inter-listed securities. This follows the joint CSA / CIRO Staff Notice 23-331 Request for Feedback on December 2022 SEC Market Structure Proposals and Potential Impact on Canadian Capital Markets (12 comment letters were received) and the final rules adopted by the U.S. Securities and Exchange Commission in September 2024. |
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Crypto Assets |
• |
CIRO's Membership Intake Team continued to review applications for: (i) new membership from crypto-asset trading platforms; and (ii) business change from existing CIRO investment dealers planning on expanding into the distribution of crypto asset products. |
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• |
On June 11, 2025, CIRO convened a roundtable exercise with CIRO Members to discuss crypto-asset trading with the objective of exploring potential risks and challenges to operational resilience of crypto-trading platforms. |
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Disgorgement Distribution Program |
• |
On February 1, 2023, CIRO published a consultation paper Proposal on Distributing Funds Disgorged and Collected through New SRO Disciplinary Proceedings to Harmed Investors. The public comment period ended on May 1, 2023. |
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• |
On October 21, 2024, after carrying out additional research, CIRO published a consultation paper Distributing Funds Disgorged and Collected through CIRO Disciplinary Proceedings to Harmed Investors (Phase II). The public comment period ended on January 20, 2025. |
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• |
During the Reporting Period, CIRO applied for use of the Restricted Fund for the Disgorgement Distribution Program. |
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• |
Relatedly, on August 21, 2025, CIRO published a request for comment for its Proposed Amendments to Specifically Provide for Disgorgement in the Mutual Fund Dealer Rules. The public comment period ended on September 22, 2025 and eleven comment letters were received. |
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Arbitration Program Review |
• |
On December 6, 2022, IIROC published a consultation paper Review of the IIROC Arbitration Program. The public comment period ended on March 6, 2023. |
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• |
On October 31, 2024, after reaching out to stakeholders and conducting additional research, CIRO published a follow-up consultation paper Proposal to Modernize the CIRO Arbitration Program. The public comment period ended on January 31, 2025, and 17 comment letters were received. |
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Continuing Education |
• |
CSA Members approved CIRO's first phase of amendments to Harmonize CIRO's CE Programs between the IDPC Rules and the MFD Rules. |
||
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• |
A second phase of the CE Program will consider future amendments that have a more significant impact on member operations and/or information technology systems. |
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• |
Both phases of the CIRO CE Program are expected to become effective on January 1, 2028. |
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Proficiency Regime |
• |
CIRO completed their multi-year initiative to enhance proficiency standards for approved persons under the IDPC Rules. The resulting amendments to the IDPC Rules take effect on January 1, 2026. |
||
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• |
CIRO published syllabi, practice exams and study guides to support the requirements of their new investment dealer proficiency model. Fitch Learning is supporting CIRO with the design of the syllabus and the exams for investment dealer-approved persons. |
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• |
Consideration of any future changes to the proficiency regime relating to mutual fund dealers will be done in collaboration with CIRO. |
||
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Client Focused Reforms (CFRs) |
• |
CSA and CIRO staff conducted compliance reviews during 2024, which focused on evaluating registrants' compliance with the CFR's enhanced Know Your Client, Know Your Product and suitability determination requirements. |
||
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• |
Joint CSA/CIRO Staff Notice 31-368 on Client Focused Reforms: Review of Registrants' Know Your Client, Know Your Product and Suitability Determination Practices and Additional Guidance was published on December 10, 2025. |
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Cybersecurity Breach |
• |
On August 11, 2025, CIRO identified a cybersecurity breach and took measures to secure their systems and protect information in their custody. Relevant authorities were notified, including the CSA, law enforcement and applicable privacy commissioners. |
||
|
• |
In August, CIRO launched an investigation with the support of cybersecurity experts. |
||
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• |
Preliminary results identified that registration information for Member firms and registered individuals had been affected. CIRO shared these findings publicly and notified the impacted persons, offering credit monitoring and identity theft protection. CIRO also announced that the investigation and e-discovery process was still ongoing. |
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• |
To determine the full impact of the cyber incident it took CIRO over 9,000 hours and five months of investigation. These e-discovery processes are typically technical in nature and take time to complete. |
|
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|
• |
Following completion of the investigation, CIRO publicly disclosed in January 2026 that some clients or former clients of CIRO Member firms (approximately 750,000) had also been impacted by the cybersecurity breach. |
|
• |
CIRO is currently communicating with impacted individuals and offering credit monitoring and identity theft protection. |
||
|
• |
CIRO is actively evaluating all their systems, processes and data security measures and is committed to enhancements as necessary on an expedited timeline. |
||
|
• |
Cybersecurity and data management are critically important to the CSA. The CSA has been engaged since the August 2025 notification, requesting and assessing information provided and actions taken or contemplated in the near future by CIRO. This information will help the CSA determine if any further steps must be taken in its oversight function of CIRO. |
||
|
• |
Additionally, on an ongoing basis, the CSA reviews and is enhancing its own data management and cybersecurity practices. |
||
|
||||
Account Transfers |
• |
On July 10, 2025, CIRO published a request for comment on the Modernization of Requirements for Account Transfers and Bulk Account Movements (IDPC Rule 4800 and MFD Rule 2.12) to partially address delays clients experience in moving their accounts from one firm to another. The comment period closed on October 8, 2025. |
||
|
• |
At the same time, CIRO published a white paper on Enhancing Timely and Efficient Account Transfers in Canada: Phase 1 -- Defining the problem and laying the groundwork for change which is reviewing the technology solutions that can be introduced to improve the efficiency of account transfer-related processes. |
||
|
• |
23 comment letters were received; review and analysis are underway. |
||
|
||||
Order Execution Only (OEO) |
• |
On December 13, 2024, CIRO published a request for comment bulletin, Non- Tailored Advice in the Order Execution Only Channel. The bulletin included consultation questions seeking input from stakeholders on several issues related to do-it-yourself (DIY) investing and the ability for CIRO investment dealers to offer non-tailored advice on OEO services. The public comment period ended on February 26, 2025. |
||
|
• |
CIRO published Proposed New Guidance on Order Execution Only Account Services and Activities on August 12, 2025 with comments due by November 10, 2025. The proposed new guidance would replace the current Guidance Note 3400-21-003{10} as there has been significant growth in DIY investing resulting in a required update on clarifying the prohibition on recommendations in OEO accounts and decision-making support that OEO Dealers can provide to clients. |
||
|
||||
CIRO's Office of the Investor and CIRO Investor Advocacy Panel |
CIRO provided quarterly updates on Office of the Investor outreach activities including its Awareness Campaign on fraud and upcoming publications: |
|||
|
• |
On April 15, 2025, CIRO published its annual Office of the Investor -- Year in Review Report. |
||
|
• |
CIRO published its DIY Investing: New investors and the role of social media -- Qualitative Research Report on July 2, 2025 summarizing the latest research from CIRO's Office of the Investor on DIY investors. |
||
|
• |
On September 18, 2025, CIRO published its annual Investor Advisory Panel Annual Report. |
||
|
||||
Other Initiatives |
CSA Members engaged with CIRO staff on other regulatory matters, such as: |
|||
|
• |
completing the risk-based oversight review of CIRO that targeted specific processes within the areas of: (i) information technology; (ii) membership intake; and (iii) trading conduct and compliance. The results of this oversight review have been published in a separate report which was issued on July 23, 2025. |
||
|
• |
CIRO's ongoing role in the surveillance of equity markets in real time, along with its monitoring of debt trading, cross asset trading between derivatives listed on the Montréal Exchange and the underlying securities, and Canadian crypto asset trading platform activity. |
||
|
• |
CIRO engaged with the AMF and the new Chambre de l'assurance regarding Bill 92 -- An Act to amend various provision mainly with respect to the financial sector which was assented on June 4, 2025 and the transfer of functions and powers related to continuous education and discipline for mutual fund dealer representatives from the Chambre de l'assurance to CIRO by July 4, 2026. |
||
|
• |
CIRO published the joint CSA/CIRO Staff Notice 31-369 Guidance on theApplication of Securities Legislation to Finfluencer Activity to provide guidance on how securities laws apply to the activities of finfluencers and to registrants and issuers who work with them. |
||
{9} Joint CSA/IIROC Staff Notice 23-329 Short Selling in Canada was published on December 8, 2022. The consultation resulted from: (i) concerns raised by the Capital Markets Modernization Taskforce; and (ii) issues identified during the CSA's work on CSA Staff Notice 25-306 Activist Short Selling Update. The consultation provided an overview of the existing regulatory landscape surrounding short selling and requested public feedback on areas for regulatory consideration.
CSA/CIRO's responses to the public comment letters were published in Joint CSA/CIRO Staff Notice 23-332 Summary of Comments and Responses to CSA/IIROC Staff Notice 23-329 Short Selling in Canada on November 16, 2023. CSA and CIRO have formed a working group to more broadly examine short selling issues in the Canadian market context.
{10} GN 3400-21-003 was published on December 31, 2021. It provided guidance for OEO Dealers on expectations, regulatory requirements, tools, services, activities and information in line with OEO account regulatory framework.
CIPF is approved and accepted as an IPF{11} to provide protection within prescribed limits to eligible customers of CIRO dealer member firms suffering losses, if client property held by a member firm was unavailable as a result of the insolvency of a dealer member.
CIPF maintains two separate funds designed to provide coverage to eligible customers of CIRO members: an Investment Dealer Fund (IDF) and Mutual Fund Dealer Fund (MFDF).
The IDF liquidity resources are available to satisfy potential claims for coverage by customers of CIRO members registered as an "investment dealer" or in the categories of both "investment dealer" and "mutual fund dealer". The MFDF liquidity resources are available to customers of CIRO members registered as a "mutual fund dealer", except for customer accounts located in Québec for which mutual fund dealers are not required to contribute to the MFDF and, accordingly, those accounts are not afforded coverage by the MFDF.{12}
Both funds maintain their own insurance and lines of credit.
|
December 31, 2025 |
December 31, 2024 |
% Change |
|
|
||||
IDF{13} Liquidity Resources |
|
|
|
|
|
IDF |
$594M |
$572M |
3.8% |
|
Insurance |
$440M |
$440M |
- |
|
Lines of Credit |
$125M |
$125M |
- |
|
||||
MFDF Liquidity Resources |
|
|
|
|
|
MFDF |
$59M |
$57M |
3.5% |
|
Insurance |
$40M |
$40M |
- |
|
Lines of Credit |
$30M |
$30M |
- |
|
||||
TOTAL |
$1,288M |
$1,264M |
1.9% |
|
{13} Values relating to IDF's and MFDF's General Fund, insurance and lines of credit are from CIPF's 2025 unaudited annual financial statements.
During the Reporting Period, there were no changes to CIPF's policies and by-laws that required approval by CSA Members.
(iv) Materials Filed
CIPF was responsible for filing certain information with CSA Members on a regular or ad hoc basis. During the Reporting Period, 17 filings were received from CIPF and reviewed by CSA Members.
During regular meetings held with CIPF, among other varied topics, the following key subjects were discussed and followed up by CSA Members.
Topic |
Activities During the Reporting Period |
|
|
||
Cooperative Operating Agreement |
• |
CSA Members continue to oversee the development of the new Cooperative Operating Agreement which will replace the current Transitional Agreement. |
|
||
Strategic Plan |
• |
During the Reporting Period, CSA Members reviewed CIPF's new three-year strategic plan for 2025 -- 2027 and the goals and objectives supporting the strategic plan. |
|
• |
On June 30, 2025, CIPF published its three-year strategic plan. |
|
||
Investment Policies and Strategies |
• |
CIPF continues with its integration efforts and aligned the investment policies and strategies of the IDF and MFDF. |
|
• |
CSA Members reviewed CIPF's new investment policy (Investment Policy). In developing the Investment Policy, the legacy IDF investment policy was used as a baseline and its applicability was extended to the MFDF. |
|
• |
At the end of the Reporting Period, the portfolios of the IDF and MFDF were successfully transitioned to a third-party portfolio manager and the consolidated Investment Policy was implemented for both funds. |
|
||
Review of Adequacy of Assets in the Funds |
• |
Separate funds, insurance and lines of credit continue to be maintained for the coverage of investment dealers and mutual fund dealers. |
|
• |
For the IDF, CIPF continues to use a credit-risk based fund model (IDF Model) to project its liquidity resource requirement and assist in the setting of its fund size. During the Reporting Period, CIPF's Board reviewed the adequacy of the level of resources available in relation to the risk exposure of investment dealer member firms. No overall changes have been made to the methodology since October 2021, although the Probability of Default was recalibrated by third-party consultants during the Reporting Period. |
|
• |
In 2024, third-party actuaries performed a review of the fund size of MFDF and determined that its current size is adequate to cover multiple insolvencies. As well, MFDF continues to have a secondary layer of insurance in the amount of $20 million in respect of any losses to be paid out of the MFDF in excess of $50 million. This is in addition to the original layer of insurance of $20 million in respect of any losses to be paid out of the MFDF in excess of $30 million. |
|
• |
CIPF continues to analyze the movement of mutual fund dealers to dual registration and the impact on liquidity resources. |
|
• |
The fit-for-purpose review continues, to assess if it is appropriate to extend the IDF Model to the mutual fund dealer universe. CIPF staff are in the process of developing a credit-risk model for the MFDF. |
|
||
Crypto Assets |
• |
The Coverage Policy continues to state explicitly that crypto assets are excluded from CIPF's coverage. |
|
• |
CIPF undertakes regular reviews of the scope and terms of its Coverage Policy; however, the primary areas of interest for CIPF continue to be the custody, control and pricing of crypto assets, specifically their recoverability, tradability and traceability. |
|
||
Meeting of International IPFs |
• |
As a member of the steering committee of organizing the 2025 International Investor Compensation Schemes (ICS) Conference, in Madrid, CIPF participated in discussions focused on crisis preparedness and streamlining insolvency proceedings. |
|
• |
In addition, CIPF attended the 2025 International Deposit Guarantee Schemes Conference, which was held in conjunction with the ICS Conference as part of the European Forum of Deposit Insurers International Conferences. |
|
• |
The opportunity to exchange information with international compensation funds has been valuable. |
|
• |
CIPF also held meetings with domestic compensation funds. |
|
||
Insolvencies |
• |
During the Reporting Period, there were no CIRO member insolvencies whereby CIPF was actively involved. |
|
||
Other initiatives |
• |
In late 2025, AMF and CIPF conducted a scenario walkthrough to assess potential coverage overlap between the AMF fund (Fonds d'indemnisation des services financiers (FISF) and CIPF, with discussions scheduled to resume at the beginning of 2026. |
|
• |
During the Reporting Period, CSA Members jointly conducted a risk-based oversight review to determine whether CIPF complied with the terms and conditions of its Approval Orders. The review focused on changes to CIPF's Assessment Policies and assessment methodologies, and whether approval by CIPF's Board was obtained for those changes. The results of the oversight review will be published in a separate report in 2026. |
AMF |
Dominique Martin |
|
|
ASC |
Lynn Tsutsumi |
|
|
BCSC |
Mark Wang |
|
|
FCAA |
Curtis Brezinski |
|
|
FCNB |
Clayton Mitchell |
|
|
MSC |
Angela Duong |
|
|
NSSC |
Doug Harris, Cynthia Tambago-Alday |
|
|
OSC |
Michelle Alexander |
AMF |
Jean-Simon Lemieux |
Pascal Bancheri |
Serge Boisvert |
|
Roland Geiling |
Catherine Lefebvre |
Lucie Prince |
|
Herman Tan |
Cheick Kaba Diakité |
Victorien Kabiwa |
|
Marie-Andrée Beaulieu |
Kim Legendre |
|
|
|||
ASC |
Sasha Cekerevac |
Rose Rotondo |
Gerald Romanzin |
|
Amy Tollefson |
Shafyn Manji |
Jessica Kester |
|
Harvey Steblyk |
|
|
|
|||
BCSC |
Michael Brady |
Joseph Lo |
Eric Lan |
|
Navdeep Gill |
Zach Masum |
Anne Hamilton |
|
Liz Coape-Arnold |
Georgina Steffens |
|
|
Catherine Tearoe |
Anton Lunyov |
|
|
|||
FCAA |
Curtis Brezinski |
|
|
|
|||
FCNB |
Nick Doyle |
Jake Calder |
|
|
|||
MSC |
Kim Asano |
Angela Duong |
Aishah Abdullahi |
|
|||
NL |
Loyola Power |
|
|
|
|||
NSSC |
Doug Harris |
Brian Murphy |
Angela Scott |
|
Cynthia Tambago-Alday |
|
|
|
|||
NT |
Matthew Yap |
|
|
|
|||
NU |
Debora Bissou |
|
|
|
|||
OSC |
Joseph Della Manna |
Karin Hui |
Scott Laskey |
|
Stacey Barker |
Christopher Byers |
Chris Jepson |
|
Dimitri Bollegala |
Kosta Nikolopoulos |
|
|
Shivkanwal Padam |
Dena Staikos |
|
|
|||
PEI |
Curtis Toombs |
|
|
|
|||
YT |
Rhonda Horte |
|
|
AMF |
Jean-Simon Lemieux |
Lucie Prince |
Herman Tan |
|
Cheick Kaba Diakité |
Kim Legendre |
|
|
|||
ASC |
Sasha Cekerevac |
Rose Rotondo |
Gerald Romanzin |
|
Amy Tollefson |
Shafyn Manji |
Jessica Kester |
|
Harvey Steblyk |
|
|
|
|||
BCSC |
Michael Brady |
Joseph Lo |
Georgina Steffens |
|
Eric Lan |
Zach Masum |
Anne Hamilton |
|
Liz Coape-Arnold |
Navdeep Gill |
Catherine Tearoe |
|
Anton Lunyov |
|
|
|
|||
FCAA |
Curtis Brezinski |
|
|
|
|||
FCNB |
Nick Doyle |
Jake Calder |
|
|
|||
MSC |
Kim Asano |
Angela Duong |
Aishah Abdullahi |
|
|||
NL |
Loyola Power |
|
|
|
|||
NSSC |
Doug Harris |
Brian Murphy |
Angela Scott |
|
Cynthia Tambago-Alday |
|
|
|
|||
NT |
Matthew Yap |
|
|
|
|||
NU |
Debora Bissou |
|
|
|
|||
OSC |
Joseph Della Manna |
Stacey Barker |
Karin Hui |
|
Scott Laskey |
Christopher Byers |
Chris Jepson |
|
Kosta Nikolopoulos |
Shivkanwal Padam |
|
|
|||
PEI |
Curtis Toombs |
|
|
|
|||
YT |
Rhonda Horte |
|
|
As of December 31, 2025
Completed |
CIRO Rule/By-Law Amendments |
Publication Date |
|
||
|
Integrated Fee Model |
January 30, 2025 |
|
||
|
Amendments Respecting Proficiency Model for Approved Persons under the IDPC Rules |
April 17, 2025 |
|
||
|
Enhanced Cost Reporting Amendments |
July 3, 2025 |
|
||
|
Housekeeping Amendments to UMIR |
July 10, 2025 |
|
||
|
Amendments to UMIR Respecting Net Asset Value Orders and Intentional Crosses |
July 17, 2025 |
|
||
|
Amendments Respecting Contingent Derivative Orders |
November 20, 2025 |
|
||
|
Amendments Respecting Trading Increments |
December 18, 2025 |
|
||
|
Harmonization of the CIRO Continuing Education Programs -- Phase 1 |
January 8, 2026{15} |
{15} CSA Members approved the Harmonization of the CIRO Continuing Education Programs -- Phase 1 proposed rule amendments in December 2025. The Notice of Approval / Implementation was published on January 8, 2026.
As of December 31, 2025
In Progress |
CIRO Rule/By-Law Amendments |
Publication Date |
|
||
|
Rule Consolidation Project -- Phase 1 |
October 20, 2023 |
|
||
|
Rule Consolidation Project -- Phase 2 |
January 11, 2024 |
|
||
|
Rule Consolidation Project -- Phase 3 |
April 18, 2024 |
|
||
|
Rule Consolidation Project -- Phase 4 |
October 17, 2024 |
|
||
|
Proposed Amendments Respecting Mandatory Close-Out Requirements |
January 9, 2025 |
|
||
|
Rule Consolidation Project -- Phase 5 |
March 27, 2025 |
|
||
|
Modernization of Requirements for Account Transfers and Bulk Account Movements |
July 10, 2025 |
|
||
|
Proposed Amendments to the Mutual Fund Dealer Rules Respecting Disgorgement |
August 21, 2025 |
|
||
|
Approved Person Fees Component Within the Annual Fee of Dealer Member Fee Model |
October 8, 2025 |
|
||
|
Proposed Amendments Respecting Fully Paid Securities Lending and Financing Arrangements (Republication) |
October 16, 2025 |
The oversight of CIRO is coordinated through a Memorandum of Understanding (MOU) among CSA Members. The MOU describes the oversight program used by CSA Members to:
• oversee CIRO's performance of its self-regulatory activities and services;
• ensure that CIRO is acting in the public interest and complying with the terms and conditions of its Recognition Orders.
A similar MOU exists for the oversight of CIPF.
Each MOU sets out that two CSA Members are designated as coordinators, tasked with the role of coordinating, communicating and scheduling activities of the oversight program between CSA Members, and between CSA Members and CIRO or CIPF (Coordinators).
The Coordinators serve for four years on a staggered rotation basis among the two designated CSA Members. In 2023, BCSC and OSC were designated as the inaugural Coordinators by consensus of all CSA Members. Effective January 1, 2026, the ASC replaced BCSC as Coordinator.
Each MOU requires the establishment of the CSA Market Regulation Steering Committee (MRSC){16} and the Oversight Committees for CIRO and CIPF (Oversight Committees){17}. Each Oversight Committee acts as a forum to discuss issues, concerns and proposals related to the oversight of their respective entities. The committees include representatives from CSA Members, with the Coordinators serving as the leads.
Oversight Function |
Activities During the Reporting Period |
|
|
||
Annual Risk Assessment |
• |
CSA Members evaluate each entity's potential inherent risks and mitigating controls in each functional area of the entity. |
|
• |
This evaluation may become the basis for future oversight activities. |
|
||
Review of Proposed Rules |
• |
CIRO is required to seek approval from CSA Members for proposed new rules, policies, and constating documents (collectively, the rules) and by-laws, and any changes to existing rules and by-laws. |
|
• |
CIPF is required to seek approval or non-objection of any changes to certain policies (e.g., coverage policy) and its by-laws. |
|
• |
A "housekeeping" rule change is one that has no material impact on investors, issuers, registrants, CIRO, CIPF, or the Canadian capital markets generally (e.g., changes of an editorial nature; changes necessary to conform to applicable securities legislation, statutory or legal requirements, accounting or auditing standards). |
|
• |
If a rule change is not classified as housekeeping, it is published for public comment. |
|
||
Review of Materials Filed |
• |
CIRO and CIPF are responsible for filing certain information (other than proposed rules or by-laws) with each CSA Member. |
|
• |
This information includes, but is not limited to, reports on financial condition, regulatory self-assessment, risk management, systems integrity, market surveillance, internal audit, progress on compliance examination results, and enforcement matters. |
|
• |
CSA Members review issues and the materials filed, which help inform the annual risk assessment. |
|
||
Meetings |
• |
Quarterly meetings are scheduled with CIRO and semi-annual meetings with CIPF, to discuss the oversight process and to share information about emerging and/or ongoing regulatory issues and trends. |
|
• |
Ad hoc meetings are held to address the oversight of specific issues. |
|
||
Oversight Reviews |
• |
Oversight reviews are a more in-depth process for CSA Members to make an independent assessment of whether the entities have met their regulatory obligations. |
|
• |
The scope of an oversight review is determined by the results of the annual risk assessment and/or specific issues that arise on a periodic basis. |
|
• |
As part of an oversight review, CSA Members may interview CIRO or CIPF staff, review written policies and procedures to understand the systems and processes in place, and examine files on a sample basis. |
|
• |
CSA Members jointly conduct risk-based oversight reviews that target specific processes within the functional areas under review. |
If you have any questions or comments about this CSA Staff Notice, please contact any of the following:
Sasha Cekerevac |
Joseph Della Manna |
Coordinator |
Coordinator |
Manager, Market Oversight |
Assistant Vice-President, Trading & Markets |
Alberta Securities Commission |
Ontario Securities Commission |
403 297-7764 |
416 204-8984 |
sasha.cekerevac@asc.ca |
jdellamanna@osc.ca |
|
|
Michael Brady |
Angela Duong |
Deputy Director, |
Deputy Director, |
Capital Markets Regulation |
Compliance and Oversight |
British Columbia Securities Commission |
The Manitoba Securities Commission |
604 899-6561 |
204 945-5195 |
mbrady@bcsc.bc.ca |
angela.duong@gov.mb.ca |
|
|
Doug Harris |
Nick Doyle |
General Counsel, Director of Market Regulation and Policy and Secretary |
Legal Counsel |
Nova Scotia Securities Commission |
Financial and Consumer Services Commission of New Brunswick |
902 424-4106 |
506-635-2450 |
doug.harris@novascotia.ca |
nick.doyle@fcnb.ca |
|
|
Jean-Simon Lemieux |
Curtis Brezinski |
Director, |
Acting Director, |
Oversight of Trading Activities |
Capital Markets, Securities Division |
Autorité des marchés financiers |
Financial and Consumer Affairs Authority of Saskatchewan |
514 395-0337 ext. 4366 or 1-877-395-0337 ext. 4366 |
306 787-5876 |
jean-simon.lemieux@lautorite.qc.ca |
curtis.brezinski@gov.sk.ca |
{1} Each province and territory issues a recognition order (Recognition Order) pursuant to applicable legislation providing a securities regulator with the power to recognize a self-regulatory organization or entity responsible for regulating the operations and the standards of practice and business conduct of investment dealers and mutual fund dealers (SRO). CIRO is the SRO, which operates as a successor to the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). IIROC and the MFDA amalgamated to continue as the New Self-Regulatory Organization of Canada (New SRO), on January 1, 2023, which subsequently changed its name to CIRO on June 1, 2023.
{2} An investor protection fund (IPF) may compensate investors for financial losses in respect of property held in their account caused solely by the insolvency of an investment dealer or mutual fund dealer. There is currently one approved/accepted IPF, CIPF formed through the amalgamation of two protection funds, the former Canadian Investor Protection Fund and the MFDA Investor Protection Corporation, on January 1, 2023. Analogous to the recognition of CIRO, CIPF has been approved/accepted through approval orders (Approval Orders).
{3} A number of these matters relates to the amalgamation of IIROC and MFDA as described in the CSA Position Paper 25-404 New Self-Regulatory Organization Framework published on August 3, 2021.
{4} The CSA's 2025 Oversight Review of CIRO was issued on July 23, 2025.
{11} In Québec, CIPF is an accepted contingency fund. Please refer to Footnote #2 on page 4.
{12} Coverage may be applicable to an account located in Québec, if the account is carried by a mutual fund dealer operating outside of Québec and only in the event of the carrier's insolvency.
{14} On March 27, 2025, CIRO published bulletin 25-0091 Withdrawal of Proposed Amendments Respecting Reporting, Internal Investigation and Client Complaint Requirements for the withdrawal of the IIROC Notice 22-0009 Proposed Reporting, Internal Investigation and Client Complaint Requirements originally published on January 13, 2022.
{16} The MRSC is the forum for coordination and providing updates where issues relate to both CIRO and CIPF.
{17} The Oversight Committees are operational committees under the oversight of MRSC.
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
March 25, 2026
The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (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 passport application):
a) the Ontario Securities Commission is the principal regulator for this application, and
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 British Columbia, Alberta, Nova Scotia, and Newfoundland and Labrador.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.
This order is based on the following facts represented by the Filer:
1. the Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;
2. the outstanding securities of the Filer, including debt securities, are 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;
3. 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;
4. the Filer is applying for an order that the Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and
5. the Filer is not in default of securities legislation in any jurisdiction.
The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.
The decision of the principal regulator under the Legislation is that the Order Sought is granted.
OSC File #: 2026-107
Guardian Capital Group Limited and Desjardins Global Asset Management Inc.
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceases to be a reporting issuer under securities legislation.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
March 31, 2026
The principal regulator in the Jurisdiction has received an application from the Filers for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that each of the Filers 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 passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filers have 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, British Columbia, Québec and Manitoba.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.
This order is based on the following facts represented by each Filer:
1. such Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;
2. the outstanding securities of the Filer, including debt securities, are 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;
3. 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;
4. each such Filer is applying for an order that the Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and
5. each such Filer is not in default of securities legislation in any jurisdiction.
The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.
The decision of the principal regulator under the Legislation is that the Order Sought is granted.
OSC File #: 2026-131
Application for time-limited relief from prospectus requirement and trade reporting requirements to allow the Filer to distribute Crypto Contracts and operate a platform that facilitates the buying, holding, selling, depositing, withdrawing and staking of crypto assets -- relief granted subject to certain conditions set out in the decision, including investment limits, account appropriateness, disclosure and reporting requirements -- relief is time-limited and will expire four years from the date of the decision -- relief granted based on the particular facts and circumstances of the application with the objective of fostering capital raising by innovative businesses in Canada -- decision should not be viewed as precedent for other filers in the jurisdictions of Canada.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(1), 53, 74 & 144.
Multilateral Instrument 11-102 Passport System, s. 4.7.
OSC Rule 91-506 Derivatives: Product Determination, ss. 2 & 4.
OSC Rule 91-507 Derivatives: Trade Reporting, Part 3.
March 25, 2026
As set out in Staff Notice 21-327 and Staff Notice 21-329, securities legislation applies to CTPs that facilitate or propose to facilitate the trading of instruments or contracts involving Crypto Assets because the user's contractual right to the Crypto Asset may itself constitute a security and/or a derivative.
To foster innovation and respond to novel circumstances, the CSA has implemented an interim, time-limited regulatory framework that would allow CTPs to operate within a regulated environment, with regulatory requirements tailored to the CTPs' operations. The overall goal of the regulatory framework is to ensure there is a balance between the need to be flexible and to facilitate innovation in the Canadian capital markets, while upholding the regulatory mandate of promoting investor protection and fair and efficient capital markets.
The Filer is registered in the category of investment dealer in all Jurisdictions and has been admitted as a dealer member with CIRO. In connection with its previous registration as a restricted dealer in all Jurisdictions, the Filer applied for and received exemptive relief in the decisions dated August 15, 2022, March 8, 2024, March 12, 2025 and more recently, in the Existing Decision on terms substantially similar to this decision.
Under the terms and conditions of the Existing Decision and the terms and conditions imposed on its previous registration as a restricted dealer, the Filer has operated, and continues to operate, the Newton Platform that permits clients resident in Canada to enter into Crypto Contracts to purchase, sell, hold, deposit, stake, and withdraw Crypto Assets. The Filer has submitted an application for a decision similar to the Existing Decision but reflects the Filer's status as an investment dealer and CIRO member in order to continue to operate the Newton Platform upon acceptance into CIRO membership.
This decision has been tailored for the specific facts and circumstances of the Filer, and the securities regulatory authority or regulator in the Jurisdictions will not consider this decision as constituting a precedent for other filers.
The securities regulatory authority or regulator in the Principal Jurisdiction has received an application from the Filer (the Passport Application) for a decision under the securities legislation of the Principal Jurisdiction (the Legislation) exempting the Filer from the prospectus requirement under the Legislation in respect of the Filer entering into Crypto Contracts (the Prospectus Relief).
The securities regulatory authority or regulator in the Principal Jurisdiction and each of the Jurisdictions where required (the Coordinated Review Decision Makers) have received an application from the Filer (collectively with the Passport Application, the Application) for a decision under the securities legislation of those jurisdictions exempting the Filer from the applicable local trade reporting requirements:
(a) Part 3 of Ontario Securities Commission Rule 91-507 Derivatives: Trade Reporting;
(b) Part 3 of Manitoba Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting; and
(c) Part 3 of Multilateral Instrument 96-101 Derivatives: Trade Reporting in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan, and Yukon
(the Trade Reporting Relief, and together with the Prospectus Relief, the Requested Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a hybrid application):
(a) the Ontario Securities Commission is the principal regulator for this Application (the Principal Regulator),
(b) in respect of the Prospectus Relief, the Filer has provided notice that, in the jurisdictions where required, subsection 4.7(1) of MI 11-102 is intended to be relied upon in each of the other provinces and territories of Canada,
(c) the decision is the decision of the Principal Regulator, and
(d) the decision in respect of the Trade Reporting Relief evidences the decision of each Coordinated Review Decision Maker.
Terms used in this decision have the meaning set out herein or in Appendix A.
Terms defined in NI 14-101 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein or in Appendix A.
In this decision, a person or company is an affiliate (Affiliate) of another person or company if
(a) one of them is, directly or indirectly, a subsidiary of the other, or
(b) each of them is controlled, directly or indirectly, by the same person.
This decision is based on the following facts represented by the Filer:
The Filer
1. The Filer is a corporation incorporated under the federal laws of Canada with its principal and head office in Toronto, Ontario.
2. The Filer operates under the business name of "Newton".
3. The Filer is registered as a dealer in the category of investment dealer with the Jurisdictions and is a member of CIRO.
4. The Filer is registered as a money services business under regulations made under Canadian AML and ATF Law.
5. The Filer does not have any securities listed or quoted on an exchange or marketplace in any jurisdiction of Canada or internationally.
6. The Filer's books and records, financial controls and compliance systems (including its policies and procedures) are in compliance with CIRO requirements.
7. The Filer's personnel consists, and will consist, of permitted individuals, investment representatives and supervisors, compliance professionals and finance professionals who have experience operating in a regulated financial services environment and expertise in blockchain technology. All of the Filer's key personnel have passed, and new personnel will have passed, background checks, including criminal record checks.
8. The Filer is not in default of securities legislation of any jurisdictions of Canada.
The Newton Platform
9. The Filer operates the Newton Platform.
10. The Filer's role under the Crypto Contracts is to fulfill its obligations to Clients relating to Crypto Assets and fiat, and to provide custody services for all Crypto Assets and fiat held in Client Accounts on the Newton Platform.
11. The Filer's trading of Crypto Contracts is consistent with activities described in Staff Notice 21-327 and constitutes the trading of securities and/or derivatives.
12. The Filer may buy, sell, borrow, stake or hold Crypto Assets in its inventory for operational purposes, such as payment of network/transaction fees required to transfer Crypto Assets and testing, or to provide staking liquidity for the Staking Services. Otherwise, the Filer does not and will not hold any proprietary positions in Crypto Assets for itself and it does not take a long or short position in a Crypto Asset with any party, including Clients. The Filer does not allow Clients to enter into a short position with respect to any Crypto Asset.
13. To use the Newton Platform, each Client must open a Client Account using the Filer's Website or App. Client Accounts are governed by the Newton TOS that are accepted by Clients at the time of account opening. The Newton TOS govern all activities in Client Accounts, including with respect to all Crypto Assets purchased, sold, staked and held on the Newton Platform. Clients are entitled to hold their Crypto Assets in their Client Accounts.
14. Under the Newton TOS, the Filer maintains certain controls over Client Accounts to ensure compliance with applicable law and CIRO Rules, and to provide secure custody of the Client Accounts.
15. The Filer will provide order execution only account services as a CIRO dealer in accordance with CIRO Rules.
16. The Filer's books and records, financial controls and compliance systems (including its policies and procedures) are in compliance with CIRO Rules.
17. The Filer does not have any authority to act on a discretionary basis on behalf of Clients and does not offer or provide discretionary investment management services relating to Crypto Assets or Client Accounts.
18. The Filer is a member firm of CIPF but the Crypto Assets held in custody by the Filer do not qualify for CIPF coverage.
19. The Risk Statement provided to each prospective client includes disclosure that there is no CIPF coverage for the Crypto Assets or Crypto Contracts in respect of the Crypto Assets, and each prospective client must acknowledge that they have received, read and understood the Risk Statement before opening an account with the Filer.
OTC Trading
20. Newton OTC Inc., an Affiliate of the Filer, operates an over-the-counter crypto asset desk for orders of a minimum size of C$30,000. Crypto Assets purchased from Newton OTC Inc. are "immediately delivered", as described in Staff Notice 21-327, to the blockchain wallet address specified by the purchaser which is not under the ownership, possession or control of Newton OTC Inc. or the Filer.
21. Newton OTC Inc. will only sell Crypto Assets that the Filer has reasonably determined are not securities and/or derivatives following the procedures set out in representations 22 to 29 of this decision. The Filer and Newton OTC Inc. acknowledge that any determination made by the Filer as set out in representations 22 to 29 of this decision does not prejudice the ability of any of the regulators or securities regulatory authorities of any province or territory of Canada to determine that a Crypto Asset that Newton OTC Inc. may sell is a security and/or derivative.
Crypto Assets Made Available Through the Newton Platform
22. The Filer has established and applies the KYP Policy in accordance with NI 31-103 and CIRO Rules. The Filer's review of Crypto Assets in accordance the KYP Policy includes, but is not limited to, publicly-available information concerning:
a) the creation, governance, usage, and design of the Crypto Asset, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created the Crypto Asset;
b) the supply, demand, maturity, utility, and liquidity of the Crypto Asset;
c) material technical risks associated with the Crypto Asset, including any code defects, security breaches, and other threats concerning the Crypto Asset and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
d) legal and regulatory risks associated with the Crypto Asset, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of the Crypto Asset.
23. The Filer does not allow Clients to buy or deposit, or to enter into Crypto Contracts to buy or deposit, Value-Referenced Crypto Assets that are not Specified Value-Referenced Crypto Assets.
24. Except for the trading of Value-Referenced Crypto Assets, the Filer only offers and only allows Clients to enter into Crypto Contracts to buy, sell, stake and hold Crypto Assets that are not a security and/or derivative.
25. The Filer is not engaged, and will not engage without the prior written consent of the Principal Regulator, in trades that are part of, or designed to facilitate the design, creation, issuance, or distribution of Crypto Assets by the developer(s) of the Crypto Asset, its issuers, or Affiliates or associates of such persons.
26. As set out in the KYP Policy, the Filer determines whether a Crypto Asset available to be bought and sold through a Crypto Contract is a security and/or a derivative and is being offered in compliance with securities and derivatives laws, which include but are not limited to:
a) consideration of statements made by any regulators or securities regulatory authorities of the Applicable Jurisdictions, other regulators of the IOSCO member jurisdictions, or the regulator with the most significant connection to a Crypto Asset about whether the Crypto Asset, or generally about whether the type of Crypto Asset, is a security and/or a derivative; and
b) if the Filer determines it to be necessary, obtaining legal advice as to whether the Crypto Asset is a security and/or derivative under securities legislation of the Jurisdictions.
27. The Filer monitors ongoing developments related to Crypto Assets available on the Newton Platform that may cause a Crypto Asset's legal status as a security and/or a derivative or the assessment conducted by the Filer pursuant to its KYP Policy and as described in representations 22 to 26 of this decision to change.
28. The Filer acknowledges that any determination made by the Filer as set out in representations 22 to 27 of this decision does not prejudice the ability of the Principal Regulator or of any of the securities regulatory authorities of any of the Jurisdictions to determine that a Crypto Asset available on the Newton Platform is a security and/or a derivative.
29. The Filer has established and applies policies and procedures to promptly stop the trading of any Crypto Asset available on the Newton Platform and to allow Clients to liquidate, in an orderly manner, their positions in Crypto Contracts with underlying Crypto Assets that the Filer ceases to make available on the Newton Platform.
Account Opening
30. Each Client must open a Client Account using the Filer's Website or App to access the Newton Platform.
31. The Filer has adopted eligibility criteria for the onboarding of all Clients. All Clients on the Newton Platform must successfully complete the Filer's KYC process which satisfies the identity verification requirements applicable to reporting entities under Canadian AML and ATF Law and CIRO Rules. Each Client who is an individual, and each individual who is authorized to give instructions for a Canadian Client that is a legal entity, must be: a Canadian citizen or permanent resident; and 18 years or older.
32. The Filer does not provide recommendations or advice to Clients or conduct a trade-by-trade suitability determination for Clients, but rather performs product assessments pursuant to the KYP Policy and account assessments taking into account the Account Appropriateness Factors and setting Client Limits.
33. As part of the account opening process:
a) The Filer collects KYC information to verify the identity of the Client in accordance with the Canadian AML and ATF Law and CIRO Rules;
b) The Filer applies its KYC process and satisfies the identity verification requirements applicable to reporting entities under the Canadian AML and ATF Law and CIRO Rules;
c) In addition to the account opening assessment required under CIRO guidance for dealer members offering order execution only account services, the Filer assesses "account appropriateness". Specifically, prior to opening a Client Account, the Filer collects KYC information and uses electronic questionnaires to collect information that the Filer will use to determine whether and to what extent it is appropriate for a prospective client to enter into Crypto Contracts with the Filer to buy, sell, or stake Crypto Assets. The account appropriateness assessment conducted by the Filer considers the Account Appropriateness Factors. The Account Appropriateness Factors are used by the Filer to evaluate whether and to what extent entering into Crypto Contracts with the Filer is appropriate for a prospective client before the opening of a Client Account.
d) After completion of the account appropriateness assessment, a prospective client receives appropriate messaging about using the Newton Platform to enter into Crypto Contracts, which, in circumstances where the Filer has evaluated that entering into Crypto Contracts with the Filer is not appropriate for the prospective client, will include prominent messaging to the prospective client that this is the case and that the prospective client will not be permitted to open a Client Account.
e) The Filer has adopted and applies policies and procedures to conduct an assessment to establish Client Limits for each Client that is not a Permitted Client or a Registered CTP and what steps the Filer will take when such Client approaches or exceeds their Client Limit. After completion of the assessment, the Filer monitors and will apply the Client Limits.
f) The Filer provides a prospective client with a Risk Statement that clearly explains the following in plain language:
i) the Crypto Contracts;
ii) the risks associated with the Crypto Contracts;
iii) a prominent statement that no securities regulatory authority or regulator in Canada has assessed or endorsed the Crypto Contracts or the Crypto Assets made available through the Newton Platform;
iv) the due diligence performed by the Filer before making a Crypto Asset available through the Newton Platform, including the due diligence performed by the Filer to assess whether the Crypto Asset is a security and/or a derivative under the securities and derivatives legislation of each of the jurisdictions of Canada and the securities and derivatives laws of the foreign jurisdiction with which the Crypto Asset has the most significant connection, and the risks if the Filer has incorrectly determined that the Crypto Asset is not a security and/or a derivative;
v) that the Filer has prepared and made available through the Newton Platform a Crypto Asset Statement for each Crypto Asset, with instructions as to where on the Newton Platform the Client may obtain each Crypto Asset Statement;
vi) the Filer's policies for halting, suspending and withdrawing a Crypto Asset from trading on the Newton Platform, including criteria that would be considered by the Filer, options available to Clients holding such a Crypto Asset, any notification periods and any risks to Clients;
vii) the location and the manner in which Crypto Assets are held for the Client, and the risks and benefits to the Client of the Crypto Assets being held in that location and in that manner, including the impact of insolvency of the Filer or the Acceptable Third-Party Custodian;
viii) the manner in which the Crypto Assets are accessible by the Filer, and the risks and benefits to the Client arising from the Filer having access to the Crypto Assets in that manner;
ix) that the Filer is a member of CIPF but the Crypto Contracts in respect of the Crypto Assets issued or entered into by the Filer and the Crypto Assets held by the Filer (directly or indirectly through third parties) do not qualify for CIPF protection;
x) that the statutory rights in section 130.1 of the Act, and, if applicable, similar statutory rights under securities legislation of other Jurisdictions, do not apply in respect of the Risk Statement or a Crypto Asset Statement to the extent that a Crypto Contract is distributed under the Prospectus Relief in this decision; and
xi) the date on which the information in the Risk Statement was last updated.
g) In order for a prospective client to open and operate a Client Account with the Filer, the Filer will obtain an electronic acknowledgement from the prospective client confirming that the prospective client has received, read and understood the Risk Statement. Such acknowledgement will be prominent and separate from other acknowledgements provided by the prospective client as part of the account opening process.
h) A copy of the Risk Statement acknowledged by a Client will be made available by the Filer to the Client in the same place as the Client's other statements on the Newton Platform.
34. Before a Client enters into a Crypto Contract to buy a Crypto Asset, the Filer will provide instructions for the Client to read the Crypto Asset Statement for the Crypto Asset, which will include a link to the Crypto Asset Statement on the Website or App.
35. Each Crypto Asset Statement includes the following in plain language:
a) a prominent statement that no securities regulatory authority or regulator in Canada has assessed or endorsed the Crypto Contracts or any Crypto Assets made available through the Newton Platform,
b) a description of the Crypto Asset, including the background of the creation of the Crypto Asset and the background of the developer(s) that created the Crypto Asset, if applicable,
c) a description of the due diligence performed by the Filer with respect to the Crypto Asset,
d) a description of any risks specific to the Crypto Asset,
e) a direction to the Client to review the Risk Statement for additional discussion of general risks associated with the Crypto Contracts and the Crypto Assets made available through the Newton Platform,
f) a statement that the statutory rights in section 130.1 of the Act, and, if applicable, similar statutory rights under securities legislation of the Jurisdictions, do not apply in respect of the Crypto Asset Statement to the extent that a Crypto Contract is distributed under the Prospectus Relief in this decision, and
g) the date on which the Crypto Asset Statement was last updated.
36. The Filer applies policies and procedures for updating the Risk Statement and each Crypto Asset Statement to reflect any material changes to the disclosure or include any material risks that may develop with respect to the Crypto Contracts, crypto assets generally, or a specific Crypto Asset, as the case may be. In the event the Risk Statement is updated, existing Clients of the Filer will be promptly notified of the update and provided with a copy of the updated Risk Statement. In the event a Crypto Asset Statement is updated, existing Clients of the Filer will be promptly notified, with links to the updated Crypto Asset Statement.
37. In addition to any monitoring required by CIRO, the Filer monitors Client Accounts after opening to identify activity inconsistent with the Client Accounts, the account appropriateness assessment and Crypto Asset assessment. If warranted, the Client may receive further messaging about the Newton Platform, the Crypto Assets, specific risk warnings, or receive direct outreach from the Filer about their activity.
38. The Filer monitors compliance with the Client Limits. If warranted, the Client will receive warnings when their Client Account is approaching its Client Limit, which will include information on steps the Client may take to prevent the Client from incurring further losses.
39. The Filer also prepares and makes available to Clients on an ongoing basis and in response to emerging issues in Crypto Assets, educational materials and other informational updates about trading on the Newton Platform and the ongoing development of Crypto Assets and Crypto Asset trading markets.
Operation of the Newton Platform
40. All Crypto Contracts entered into by Clients to buy and sell Crypto Assets are placed with the Filer through the Website or App.
41. Clients are able to submit orders, either in units of the applicable Crypto Asset or in fiat currency, 24 hours a day, 7 days a week. Clients are able to deposit and withdraw certain Crypto Assets and Canadian dollars, 24 hours a day, 7 days a week (or where applicable, for fiat currency, during banking hours).
42. The Filer has established and maintains and ensures compliance with policies and procedures that identify and address conflicts of interest arising from the operation of the Newton Platform and its related services in the best interest of Clients, including conflicts between the interests of its owners, its commercial interests and the responsibilities and sound functioning of the Newton Platform and related services.
43. The Filer relies upon Liquidity Providers to act as sellers of Crypto Assets that may be purchased by the Filer for the Clients. Liquidity Providers also buy any Crypto Assets from the Filer that Clients wish to sell.
44. One of the Filer's significant Liquidity Providers is DV Chain (Canada) Inc., a subsidiary of Newton Trading Systems Ltd., which is a significant shareholder of the Filer.
a) DV Chain (Canada) Inc. is a corporation incorporated in Canada under the laws of the province of Ontario with its principal and head office in Toronto, Ontario.
b) DV Chain (Canada) Inc. is an over-the-counter liquidity provider that trades Crypto Assets on a proprietary basis, as principal, with institutional counterparties in Canada.
c) The Filer has verified that DV Chain (Canada) Inc. is not in default under securities laws in the Jurisdictions.
45. The Filer evaluates the prices obtained from its Liquidity Providers on an ongoing basis against global benchmarks to provide fair and reasonable pricing to its Clients. If the Filer concludes from its review that it is not providing fair and reasonable pricing to its Clients, it will take steps to address this.
46. A Crypto Contract is a bilateral contract between a Client and the Filer. Accordingly, the Filer is a counterparty to all trades entered by Clients on the Newton Platform. For each Client transaction, the Filer is also a counterparty to one or more corresponding Crypto Asset buy or sell transaction with a Liquidity Provider. For each buy or sell transaction initiated by a Client, the Filer buys or sells Crypto Assets with Liquidity Providers.
47. After an order has been placed by a Client, the Filer obtains a price for the Crypto Asset from a Liquidity Provider, after which the Filer incorporates a fee to compensate the Filer and presents this total cost to the Client. If the Client is agreeable, the Client confirms that it wishes to proceed and the Client's market order at the quoted price will be filled on the Newton Platform. The Filer confirms the transaction with the Liquidity Providers and records in its books and records the particulars of the trade.
48. Clients can enter orders to the Newton Platform in two ways: (i) a market order which specifies the desired trading pair and quantity; (ii) a limit order, which specifies the desired trading pair, quantity and price at which the Client wishes to transact. Clients can also enter a recurring buy, which allows a Client to specify the desired trading pair, quantity, and frequency, and automatically enters a market order at the set frequency.
49. When a Client enters a limit order, the Newton Platform will not process the trade until such future time as when the price from the Liquidity Provider plus the 'spread' meets the price entered by the Client, then the Client's order will automatically be executed.
50. For each limit order, the limit order may be partially or completely filled if the Client's specified limit price is met. If the market price plus the 'spread' does not meet the price specified in the limit order, the limit order remains open in the Client Account until it is cancelled by the Client or filled. If the order remains open for 90 days, the order is automatically canceled by the system. Clients are given notification of the cancellation and may re-create the order if they wish. If a limit order is partially filled, the rest of the order remains open in the Client Account. Open limit orders entered by Clients are displayed on the Newton Platform; however, they are not available to trade against other Client orders.
Pre-trade Controls and Settlement
51. The Filer does not allow Clients to enter into a Crypto Contract to buy, sell or stake Crypto Assets unless the Filer has taken steps to:
a) assess the relevant aspects of the Crypto Asset pursuant to the KYP Policy and, as described in representation 33, to determine whether it is appropriate for its Clients,
b) approve the Crypto Asset, and Crypto Contracts to buy and sell such Crypto Asset, to be made available to Clients, and
c) monitor the Crypto Asset for significant changes and review its approval under (b) where a significant change occurs.
52. The Filer's books and records will record all of the trades executed on the Newton Platform. No order will be accepted by the Filer unless there is sufficient cash or Crypto Assets available in the relevant Client Account to complete the trade.
53. The Filer will not (except in accordance with CIRO Rules and with prior written consent of CIRO) extend margin, credit or other forms of leverage to Clients in connection with trading Crypto Contracts or Crypto Assets on the Newton Platform and will not offer derivatives based on Crypto Assets other than Crypto Contracts.
54. The Filer promptly, and no later than two business days after the trade, settles transactions with the Liquidity Providers on a net basis. Where there are net purchases of Crypto Assets with a Liquidity Provider, the Filer arranges for cash to be transferred to the Liquidity Provider and Crypto Assets to be sent by the Liquidity Provider to the Filer. Where there are net sales of Crypto Assets, the Filer arranges for Crypto Assets to be sent from the Filer to the Liquidity Provider in exchange for cash received by the Filer from the Liquidity Provider.
55. All fees earned by the Filer are clearly disclosed on the Newton Platform, and the Clients can check the quoted prices for Crypto Assets on the Newton Platform and use this information to compare against the prices available on other Registered CTPs in Canada.
56. Clients receive electronic trade confirmations and monthly statements setting out the details of the transaction history in their Client Account. Clients are able to view their transaction history and account balances in real time by accessing their Client Account using the Website or App.
57. In addition to the Risk Statement, Crypto Asset Statement, account appropriateness assessment, and ongoing education initiatives described in representations 33 to 39, the KYP assessments described in representations 22 to 29, and the Client Limits described in representations 33(e) and 38, the Filer will also monitor Client activity, and contact Clients to discuss their trading behaviour if it indicates a lack of knowledge or understanding of Crypto Asset trading, in an effort to identify and deter behaviours that may indicate that trading a Crypto Contract is not appropriate for the Client, or that additional education is required. The outcome of this engagement with a Client may result, in some cases, in a decision by the Filer to close a Client Account.
58. The Filer has taken or will take reasonable steps to verify that each Liquidity Provider is appropriately registered or licensed to trade in the Crypto Assets in their home jurisdiction, or that their activities do not require registration in their home jurisdiction, and that they are not in default of securities legislation in the Jurisdictions. The Filer will cease using a Liquidity Provider upon the direction of the Principal Regulator when the Principal Regulator has concerns relating to the Liquidity Provider.
59. The Filer has verified that each Liquidity Provider has effective policies and procedures to address concerns relating to fair price, fraud and market manipulation.
Custody of Crypto Assets
60. The Filer will hold Clients' Crypto Assets (i) in blockchain wallets or accounts clearly designated for the benefit of Clients or in trust for Clients, and (ii) separate and apart from the assets of any custodial service provider and the proprietary Crypto Assets held in inventory by the Filer. The Filer is not permitted to pledge, re-hypothecate or otherwise use any Crypto Assets owned by its Clients.
61. The Filer is proficient and experienced in holding Crypto Assets and has established and applies policies and procedures that manage and mitigate custodial risks, including an effective system of controls and supervision to safeguard Crypto Assets. The Filer also maintains appropriate policies and procedures related to information technology security, cyber-resilience, disaster recovery capabilities, and business continuity plans.
62. The Filer has expertise in and has developed anti-fraud and anti-money-laundering monitoring systems, for both fiat and Crypto Assets, to reduce the likelihood of fraud, money laundering, or Client error in sending or receiving Crypto Assets to incorrect wallet addresses.
63. The Filer has and will retain the services of the third-party custodians that are Acceptable Third-Party Custodians to hold not less than 80% of the total value of Crypto Assets held on behalf of Clients. The Filer primarily uses the services of the Custodians and use other custodians as necessary, after reasonable due diligence. As necessary for operational purposes, up to 20% of the total value of Crypto Assets held on behalf of Clients may be held in "hot wallets" secured by Fireblocks.
64. The Filer maintains its own hot wallets to hold limited amounts of Crypto Assets that will be used to facilitate Client deposit and withdrawal requests and to facilitate trade settlement with Liquidity Providers. However, the majority of Crypto Assets are held with the Custodians.
65. The Custodians are prudentially regulated and licensed as either an uninsured national trust bank or trust company in their home jurisdictions.
66. The Custodians have each obtained a SOC report from a leading global audit firm. The Filer has conducted due diligence on the Custodians, including, among other things, a review of the Custodians' policies and procedures for holding Crypto Assets and their SOC 2 Type 2 examination reports. The Filer has not identified any material concerns respecting the Custodians. The Filer has also assessed whether the Custodians meet the definition of an Acceptable Third-Party Custodian.
67. The Custodians operate a custody account for the Filer to use for the purpose of holding the Clients' Crypto Assets in trust for the benefit of Clients of the Filer.
68. Those Crypto Assets that the Custodians hold in trust for the benefit of Clients of the Filer are held in segregated omnibus accounts, in the name of the Filer in trust for the benefit of Clients of the Filer, and are held separate and distinct from the assets of the Filer, the Filer's Affiliates, the Custodians and the Custodians' other clients.
69. The Custodians maintain insurance which covers losses of assets held by the Custodians, on behalf of their clients due to third-party hacks, copying or theft of private keys and master seed phrases or passcodes, and insider theft or acts of dishonesty by the Custodians' employees or executives. The Filer has assessed the Custodians' insurance policies and has determined, based on information that is publicly available, information provided by the Custodians, and considering the scope of the Custodians' business, that the amount of insurance is appropriate.
70. Each Custodian has established and applies policies and procedures that manage and mitigate the custodial risks, including, but not limited to, an effective system of controls and supervision to safeguard the Crypto Assets for which it acts as custodian and to mitigate security breaches and cyber incidents. Each Custodian has established and applies written disaster recovery and business continuity plans.
71. The Filer confirms on a daily basis that Clients' Crypto Assets held with the Custodians and held by the Filer reconcile with the Filer's books and records to ensure that all Clients' Crypto Assets are accounted for. Clients' Crypto Assets held in trust for their benefit with Custodians are deemed to be the Clients' Crypto Assets in case of the insolvency or bankruptcy of the Filer or of its Custodians.
72. Clients are permitted to transfer into their Client Account with the Filer, Crypto Assets they obtained outside the Newton Platform or withdraw from their Client Account with the Filer, Crypto Assets they have purchased pursuant to their Crypto Contracts with the Filer or previously deposited with the Filer. The Filer may not support transfers for all Crypto Assets. Upon request by a Client, the Filer will promptly deliver possession or control of the Crypto Assets purchased under a Crypto Contract to a blockchain address specified by the Client, subject to first satisfying all applicable legal and regulatory requirements, including anti-money laundering requirements and anti-fraud controls.
73. The Filer licenses software from Fireblocks which includes a crypto asset wallet that stores private and public keys and interacts with various blockchains to send and receive Crypto Assets and monitor balances. Fireblocks uses secure multiparty computation to share signing responsibility for a particular blockchain address among multiple independent persons.
74. Fireblocks has obtained a SOC report under the SOC 2 Type 2 standards from a leading global audit firm. The Filer has reviewed a copy of the SOC 2 Type 2 audit report prepared by the auditors of Fireblocks and has not identified any material concerns.
75. Fireblocks has insurance coverage in the amount of US$30 million in aggregate which, in the event of theft of Crypto Assets from hot wallets secured by Fireblocks due to an external cyber breach of Fireblocks' software or any malicious or intentional misbehaviour or fraud committed by employees, will be distributed among applicable Fireblocks customers, which could include the Filer, pursuant to an insurance settlement agreement.
76. The Filer has licensed software from Coincover to provide additional security for keys to Crypto Assets held by the Filer using Fireblocks, including key pair creation, key pair storage, device access recovery and account access recovery. Coincover is based in the United Kingdom and is regulated by the Financial Conduct Authority. Unless otherwise approved by the Principal Regulator, the Filer will maintain Coincover security coverage.
77. The insurance obtained by the Filer includes coverage for loss or theft of the Crypto Assets, in accordance with the terms of the Filer's insurance policy, and the Filer has assessed the insurance coverage to be sufficient to cover the loss of Crypto Assets, whether held directly by the Filer or indirectly through the Custodian.
Custody of Client Fiat
78. All Client cash that is being held by the Filer is and will be held by a Canadian financial institution in a designated trust account, in the name of the Filer in trust for the benefit of Clients of the Filer and separate and apart from the Filer's fiat currency balances. All cash in Client Accounts will be held in accordance with CIRO Rules.
Staking Services
79. The Filer offers Staking Services to its Clients.
80. The Filer will offer Clients Staking Services only for Stakeable Crypto Assets.
81. The Filer is proficient and knowledgeable about staking Stakeable Crypto Assets.
82. The Filer itself does not, and will not, without the prior written consent of CIRO, act as a Validator or contract with a staking services provider under terms requiring the Filer to authorize the delegation of validator keys. The Filer has written agreements with certain of its custodians (including the Custodians) and/or with third party Validators to provide services in respect of staking Stakeable Crypto Assets. The Custodians and Validators are proficient and experienced in staking Stakeable Crypto Assets.
83. Before engaging a Validator, the Filer will conduct due diligence on the Validator, with consideration for the Validator's management, infrastructure and internal control documentation, security measures and procedures, reputation of operating nodes, use by others, measures to operate nodes securely and reliably, amount of Crypto Assets staked by the Validator on its own nodes, quality of work, including any slashing incidents or penalties, financial status and insurance, and registration, licensing or other compliance under applicable laws, particularly securities laws. Where the Filer engages a Custodian to provide Staking Services, the Filer conducts due diligence on how the Custodian provides the Staking Services and selects the Validators.
84. The Filer offers the Staking Services in respect of the Ethereum, Solana and Cardano blockchains. The Filer may offer the Staking Services in respect of other Stakeable Crypto Assets in the future.
85. The Filer, as part of its KYP Policy, reviews the Stakeable Crypto Assets made available to Clients for staking and staking protocols related to those Stakeable Crypto Assets prior to offering those Stakeable Crypto Assets as part of the Staking Services. The Filer's review includes the following:
a) the Stakeable Crypto Assets that the Filer proposes to offer for staking;
b) the operation of the proof-of-stake blockchain for the Stakeable Crypto Assets that the Filer proposes to offer for staking;
c) the staking protocols for the Stakeable Crypto Assets that the Filer proposes to offer for staking;
d) the risks of loss of the staked Stakeable Crypto Assets, including from software bugs and hacks of the protocol;
e) the Validators engaged by the Filer or the Filer's Custodians, including, but not limited to, information about:
i) the persons or entities that manage and direct the operations of the Validator,
ii) the Validator's reputation and use by others,
iii) the amount of Crypto Assets the Validator has staked on its own nodes,
iv) the measures in place by the Validator to operate the nodes securely and reliably,
v) the financial status of the Validator,
vi) the performance history of the Validator, including but not limited to the amount of downtime of the Validator, past history of "double signing" and "double attestation/voting",
vii) any losses of Stakeable Crypto Assets related to the Validator's actions or inactions, including losses resulting from slashing, jailing or other penalties incurred by the Validator, and
viii) any guarantees offered by the Validator against losses including losses resulting from slashing or other penalties and any insurance obtained by the Validator that may cover this risk.
86. The Filer, as part of its account appropriateness assessment, evaluates whether offering the Staking Services is appropriate for a Client before providing access to an account that makes available the Staking Services and, on an ongoing basis, at least once in each 12-month period.
87. If, after completion of an account appropriateness assessment, the Filer determines that providing the Staking Services is not appropriate for the Client, the Filer will notify the Client that this is the case and the Filer will not make available the Staking Services to the Client.
88. The Filer will only stake the Stakeable Crypto Assets of those Clients who have agreed to the Staking Services and have allocated Stakeable Crypto Assets to be staked. Where a Client no longer wishes to stake all or a portion of the allocated Stakeable Crypto Assets, subject to any Lock-Up Periods or any terms of the Staking Services that permit the Client to remove Stakeable Crypto Assets from the Staking Services prior to the expiry of any Lock-Up Periods, the Filer will cease to stake those Stakeable Crypto Assets.
89. Before the first time a Client allocates any Stakeable Crypto Assets to be staked, the Filer will deliver to the Client the Risk Statement that includes the risks with respect to staking and the Staking Services described in representation 90 below and requires the Client to provide electronic acknowledgement of having received, read and understood the Risk Statement.
90. The Filer will clearly explain in the Risk Statement the risks with respect to staking and the Staking Services in plain language, which includes:
a) the details of the Staking Services and the role of all third parties involved;
b) the due diligence performed by the Filer with respect to the proof-of-stake consensus protocol for each Stakeable Crypto Asset for which the Filer provides the Staking Services;
c) the details of the Validators that will be used for the Staking Services and the due diligence performed by the Filer with respect to the Validators;
d) the details of whether and how the custody of staked Stakeable Crypto Assets differs from Stakeable Crypto Assets held on behalf of the Clients that are not engaged in staking;
e) the general risks related to staking and any risks arising from the arrangements used by the Filer to offer the Staking Services (e.g., reliance on third parties; risk of loss due to technical errors or bugs in the protocol; hacks or theft from the Crypto Assets being held in hot wallets, etc.) and how any losses will be allocated to Clients;
f) whether any of the staked Stakeable Crypto Assets are subject to Lock-up Periods; and
g) how rewards are calculated on the staked Stakeable Crypto Assets, including any fees charged by the Filer or any third party, how rewards are paid out to Clients, and any associated risks.
91. Immediately before each time that a Client allocates Stakeable Crypto Assets to be staked under the Staking Services, the Filer will require the Client to acknowledge the risks of staking Stakeable Crypto Assets as may be applicable to the particular Staking Services or each particular Stakeable Crypto Asset, including, but not limited to:
a) that the staked Stakeable Crypto Asset may be subject to a Lock-up Period and, consequently, the Client may not be able to sell or withdraw their Stakeable Crypto Asset for a predetermined or unknown period of time, with details of any known period, if applicable;
b) that given the volatility of Crypto Assets, the value of a Client's staked Stakeable Crypto Asset when they are able to sell or withdraw, combined with the value of any Stakeable Crypto Asset earned through staking, may be significantly less than the current value;
c) how rewards will be calculated and paid out to Clients and any risks inherent in the calculation and payout of any rewards;
d) unless the Filer has clearly indicated the reward yield is fixed and unconditional, that there is no guarantee that the Client will receive any rewards on the staked Stakeable Crypto Asset, and that past rewards are not indicative of expected future rewards;
e) whether rewards may be changed at the discretion of the Filer;
f) that the Client may lose all or a portion of the Client's staked Stakeable Crypto Assets if the Validator does not perform as required by the network; and
g) that additional risks can be found in the Risk Statement and Crypto Asset Statement, including the names and other information regarding the Validators and information regarding Lock-up Periods and rewards, with a link to the Risk Statement and Crypto Asset Statement.
92. The Staking Services will be available by using the App or through the Website.
93. To stake Stakeable Crypto Assets, a Client may use the App to instruct the Filer to stake a specified amount of Stakeable Crypto Assets held by the Client on the Newton Platform.
94. For certain Stakeable Crypto Assets, the Filer will also allow Clients to automatically stake those Stakeable Crypto Assets when purchasing more of the asset. If a Client turns on this "auto-stake" feature, Stakeable Crypto Assets are automatically staked upon being purchased by the Client. The Client can disable this feature at any time.
95. Immediately before each time a Client buys Stakeable Crypto Assets that are automatically staked, the Filer will provide prominent disclosure to the Client that the Stakeable Crypto Asset the Client is about to buy will be automatically staked.
96. Subject to any Lock-up Periods that may apply, the Client may at any time use the App to instruct the Filer to unstake a specified amount of Stakeable Crypto Assets that the Client had previously staked.
97. The Filer will stake and unstake Crypto Assets on an omnibus basis by calculating the total amount of a Stakeable Crypto Asset that Clients wish to stake or unstake and adjusting the amount actually staked to reconcile with the net amount that Clients have, in total, instructed the Filer to stake or unstake.
98. The Filer will hold the staked Stakeable Crypto Assets in trust for the benefit of its Clients in one or more omnibus Locations in the name of the Filer in trust for the benefit of the Clients with the Custodians separate and distinct from (i) the assets of the Filer, the Custodians and the Custodian's other clients; and (ii) the Crypto Assets held for its Clients that have not agreed to staking those specific Crypto Assets. For greater certainty, the Filer (or the Custodians) will not stake Clients' Crypto Assets from the same Location in which it holds unstaked Clients' Crypto Assets.
99. Notwithstanding representation 98, the Filer may maintain a residual proprietary interest in the Locations holding Clients' staked Stakeable Crypto Assets:
a) to meet minimum quantity requirements established by a proof-of-stake network;
b) to maintain preferential Validator selection criteria while managing turnover in Clients' staked positions, where this portion of the residual proprietary interest corresponds with historical turnover;
c) to the extent that such Locations temporarily hold fees payable to the Filer from staking rewards received for Clients.
100. To stake Clients' Stakeable Crypto Assets, the Filer will instruct the Custodian to transfer Stakeable Crypto Assets to an omnibus Location and to sign a blockchain transaction confirming that assets in that Location are to be staked with a Validator.
101. Similarly, when unstaking Stakeable Crypto Assets, the Filer will instruct the Custodian to sign a blockchain transaction confirming that assets in a Location are no longer staked. After expiry of any Lock-up Periods that may prevent the assets from being transferred, the Filer will instruct the Custodian to transfer the unstaked assets from the Location to cold storage wallets holding unstaked Stakeable Crypto Assets.
102. The Filer and the Custodian remain in possession, custody and control of the staked Stakeable Crypto Assets at all times. At all times, the Custodian continues to hold the private keys or other cryptographic key material required to stake or unstake Clients' Stakeable Crypto Assets or to access staking rewards. Custody, possession and control of staked Stakeable Crypto Assets are not transferred to Validators or any other third parties in connection with the Staking Services.
103. The Filer has established and will apply policies and procedures to address how staking rewards, fees and losses will be calculated and allocated to Clients that have staked Stakeable Crypto Assets under the Staking Services.
104. Staking rewards are issued periodically and automatically by the blockchain protocol of the Stakeable Crypto Asset and received directly into the Locations with the Custodian. Other than any "validator commission" that may be received by a Validator under the rules of the blockchain protocol, Validators will not receive or otherwise have control over staking rewards earned by Clients.
105. Staking rewards are typically issued for a specific time period, often referred to as an "epoch". For each "epoch", the Filer will promptly determine the amount of staking rewards earned by each Client that had staked Stakeable Crypto Assets under the Staking Services.
106. When staking rewards for a Stakeable Crypto Asset are received at Locations, the Filer will promptly calculate the amount of the staking reward earned by each Client using the Staking Services in respect of that asset and credits each Client Account accordingly. Staking reward distributions will be shown in the App and on Client Account statements.
107. For certain Stakeable Crypto Assets, staking rewards are automatically staked by the blockchain protocol to compound rewards. Clients must unstake some or all of these rewards if they wish to sell or transfer them.
108. Where staking rewards are not compounded by the blockchain protocol, the Filer instructs the Custodian to transfer staking rewards from the Locations to other omnibus wallets holding Clients' Crypto Assets.
109. Certain Stakeable Crypto Assets are subject to a so-called "warm-up" or "bonding" period after being staked, during which time the Stakeable Crypto Assets do not earn any staking rewards. A Client will not receive staking rewards in respect of any of their staked Stakeable Crypto Assets that are still subject to "warm-up" periods.
110. Similarly, a Client will not receive staking rewards in respect of Stakeable Crypto Assets that have been unstaked by the Client but are still subject to Lock-up Periods.
111. The Filer may show in the App or Website the current estimated reward rate for Stakeable Crypto Assets. This estimated reward rate is based on data derived from the blockchain for the Stakeable Crypto Asset and adjusted for any applicable validator commission or fees payable to the Filer.
112. The Filer does not offer a fixed and unconditional reward to Clients. If the Filer does so in the future, its policies and procedures must include those to accrue for reward obligations and maintain sufficient inventory to offset reward obligations at the time of accrual.
113. The Filer estimates the rewards it has earned on behalf of its Clients and proprietary positions in Crypto Assets, compare the estimate to rewards received, investigate significant discrepancies, and take appropriate corresponding actions.
114. The Filer charges a fee to Clients using Staking Services based on a percentage of the Client's staking rewards. The Filer clearly discloses the fees charged by the Filer for the Staking Services and provide a clear calculation of the rewards earned by each Client that agrees to the Staking Services.
115. When staking rewards are received into staking wallets each epoch, the Filer promptly calculates the total amount of the fee payable by Clients using the Staking Services for that epoch and transfers an amount of Stakeable Crypto Assets equal to the fee to a separate wallet exclusively holding Crypto Assets belonging to the Filer.
116. For certain Stakeable Crypto Assets, a Validator can, as part of the blockchain consensus protocol, set a percentage of the staking rewards earned by Stakeable Crypto Assets staked with the Validator to be received by the Validator. This is typically referred to as the "validator commission". The validator commission is deducted automatically by the underlying blockchain protocol from staking rewards and transferred by the protocol directly to the Validator. Where a "validator commission" applies, the Filer will clearly disclose the existence and amount of the validator commission to Clients using the Staking Services.
117. Under the commercial agreements between the Filer and Validators, Validators may pay some of the validator commission to the Filer for arranging the staking of Clients' Stakeable Crypto Assets with the Validators. The Filer will disclose to Clients that it receives a share of validator commissions. Further, the Filer has adopted policies and procedures for the selection of Validators and staking of Clients' Stakeable Crypto Assets to Validators to ensure that these decisions are based on factors other than the Filer's financial considerations under these commercial agreements.
118. For Stakeable Crypto Assets that do not have "validator commissions", the Filer will pay a fee to the Validator and/or a Custodian for activating and operating nodes for the Clients using the Staking Services. This fee is included in the fee paid by Clients to the Filer in connection with the Staking Services.
119. The Filer will engage its auditor to perform procedures, satisfactory to CIRO, designed to verify that the Filer maintains books and records reflecting:
(a) Rewards earned from all proof-of-stake networks on which it participates in the Staking Services; and
(b) The allocation of rewards to Clients and the Filer in a manner that is consistent with the Filer's policies and procedures.
120. Certain proof-of-stake blockchain protocols impose penalties where a validator fails to comply with protocol rules. This penalty is often referred to as "slashing" or "jailing". If a Validator is "slashed" or "jailed", a percentage of the tokens staked with that Validator and/or a percentage of staking rewards earned by Clients staking to that Validator is permanently lost and/or the Validator will not be selected to participate in transaction validation, and any Stakeable Crypto Assets staked with that Validator will not be eligible to earn staking rewards. Accordingly, if a Validator fails to comply with protocol rules, a percentage of Crypto Assets staked or earned by the Filer's Clients may be lost (i.e., the balance of the staking wallet will be reduced automatically by the blockchain protocol) and/or the Filer's Clients will not earn staking rewards for a period of time.
121. The Filer does not provide any guarantee against slashing or other penalties imposed due to Validator error, action or inactivity. However, to the extent the Filer receives any compensation from a Validator or Custodian for a slashing or other penalty, the Filer will distribute that compensation to those Clients affected by the slashing penalty. The Newton TOS clearly discloses that the Filer will not provide any reimbursement in respect of a Stakeable Crypto Asset, except in this circumstance. The unavailability of any reimbursement is also described in the Risk Statement and the relevant Crypto Asset Statements.
122. To mitigate the risk of penalties imposed due to Validator error, action or inactivity, the Filer may, where feasible, arrange to stake Stakeable Crypto Assets across multiple Validators, so that any penalty resulting from the actions or inaction of a specific Validator does not affect all staked Crypto Assets and the Filer can, if appropriate, re-stake with alternative Validators.
123. In addition, the Filer monitors its Validators for, among other things, downtime, jailing and slashing events and will take any appropriate action to protect Stakeable Crypto Assets staked by Clients.
124. For certain Stakeable Crypto Assets that are subject to Lock-up Periods, the Filer may permit Clients using the Staking Services to remove assets from the Staking Services prior to the expiry of the Lock-up Period. However, the Filer will extend this permission only on a best-efforts basis, and this condition must be expressly disclosed to and acknowledged by the Client.
125. Where the Filer provides this service in connection with a Stakeable Crypto Asset, the Filer will provide the liquidity necessary for Clients to sell or withdraw Crypto Assets prior to the expiry of Lock-up Periods from the Filer's own inventory of Stakeable Crypto Assets in accordance with its liquidity management policies and procedures. When the Lock-up Period applicable to a Client's unstaked Crypto Assets expires, the Filer will return the now freely transferable assets to its inventory. The Filer has established and will maintain internal controls to:
a) Promptly segregate positions from its inventory equal to the amount the Filer has permitted to be unstaked; and
b) Prevent the Filer from using Client Assets to settle delivery obligations related to positions it has permitted to be unstaked.
126. Where the Filer does not provide this liquidity for a Stakeable Crypto Asset, a Client that unstakes Stakeable Crypto Assets must wait until the applicable Lock-up Period expires before the Client can sell or transfer those assets.
Marketplace and Clearing Agency
127. The Filer does not operate a "marketplace" as that term is defined in NI 21-101 and, in Ontario, subsection 1(1) of the Act.
128. The Filer does not operate a "clearing agency" or a "clearing house" as those terms are defined or referred to in securities or commodities futures legislation.
The Principal Regulator is satisfied that the decision satisfies the test set out in the Legislation for the Principal Regulator to make the decision and each Coordinated Review Decision Maker is satisfied that the decision in respect of the Trade Reporting Relief satisfies the tests set out in the securities legislation of its Jurisdiction for the Coordinated Review Decision Maker to make the decision in respect of the Trade Reporting Relief.
The decision of the Principal Regulator under the Legislation is that the decision of each Coordinated Review Decision Maker under the securities legislation in its Jurisdiction is that the Trade Reporting Relief is granted, provided that and for so long as the Filer complies with the following terms and conditions:
A. Unless otherwise exempted by a further decision of the Principal Regulator and, if required under securities legislation, the regulator or securities regulatory authority of any other Jurisdiction, the Filer complies with all of the terms, conditions, restrictions and requirements applicable to a registered dealer under securities legislation, including the Legislation, and any other terms, conditions, restrictions or requirements imposed by a securities regulatory authority or regulator on the Filer.
B. The Filer is a dealer member of CIRO and is registered as an investment dealer in the Principal Jurisdiction and the Jurisdictions in which the Clients are resident.
C. The Filer will comply with terms and conditions or other requirements imposed by CIRO, and for any change in business that requires the Filer to provide written notification to CIRO under the CIRO Rules, the Filer will submit an application to CIRO and comply with any and all terms and conditions imposed by CIRO as a result of the change in business.
D. The Filer, and any employee, agent, or other representatives of the Filer, will not provide recommendations or advice to any Client or prospective client on the Newton Platform.
E. Except for Value-Referenced Crypto Assets and Crypto Contracts based on Value-Referenced Crypto Assets, the Filer will only offer Clients and will only allow Clients the ability to enter into Crypto Contracts based on or to trade, Crypto Assets that are not themselves securities and/or derivatives.
F. The Filer does not allow Clients to buy or deposit, or to enter into Crypto Contracts to buy or deposit, Value-Referenced Crypto Assets other than Specified Value-Referenced Crypto Assets.
G. The Filer will not operate a "marketplace" as the term is defined in NI 21-101 and, in Ontario, in subsection 1(1) of the Act, or a "clearing agency" or "clearing house" as those terms are defined or referred to in securities or commodities futures legislation.
H. The Filer has confirmed, and will continue to confirm, that it is not liable for the debt of an Affiliate or Affiliates that could have a material negative effect on the Filer, except as required under CIRO Rules.
I. At all times, the Filer will hold not less than 80% of the total value of all Crypto Assets held on behalf of Clients with one or more Acceptable Third-Party Custodians, unless the Filer has obtained the prior written approval of the Principal Regulator to hold a different percentage with an Acceptable Third-Party Custodian or has obtained the prior written approval of the Principal Regulator and the regulator or securities regulatory authority of the other Jurisdictions to hold at least 80% of the total value of the Crypto Assets with an entity that does not meet certain criteria of an Acceptable Third-Party Custodian.
J. Before the Filer holds Crypto Assets with a custodian, the Filer will ensure that the custodian:
a) meets each of the requirements to be an Acceptable Third-Party Custodian, except for those criteria in respect of which the custodian does not meet and the Principal Regulator and the regulator or securities regulatory authority of the other Jurisdictions have provided prior written approval for use of the custodian;
b) will hold the Crypto Assets for the benefit of the Filer's Clients (i) in an account clearly designated for the benefit of the Filer's Clients or in trust for the Filer's Clients, (ii) separate and apart from the assets of the Filer, the Filer's Affiliates and the custodian's other clients, and (iii) separate and apart from the custodian's own assets and from the assets of any custodial service provider;
c) has appropriate insurance to cover the loss of Crypto Assets held at the custodian; and
d) has established and applies written policies and procedures that manage and mitigate the custodial risks, including, but not limited to, an effective system of controls and supervision to safeguard the Crypto Assets for which it acts as custodian.
K. For the Crypto Assets held by the Filer, the Filer will:
a) hold the Crypto Assets for the benefit of, and in trust for, its Clients separate and distinct from the assets of the Filer;
b) ensure there is appropriate insurance to cover the loss of Crypto Assets held by the Filer for the benefit of its Clients; and
c) have established, and will maintain and apply written policies and procedures that manage and mitigate the custodial risks, including, but not limited to, an effective system of controls and supervision to safeguard the Crypto Assets for which it acts as custodian.
L. The Filer uses or will only use a Liquidity Provider that it has verified is registered or licensed, to the extent required in its home jurisdiction, to execute trades in Crypto Assets and that is not in default of securities legislation in any of the Jurisdictions.
M. The Filer will promptly stop using a Liquidity Provider if the Filer is made aware, or a court, regulator, or securities regulatory authority in any of the Jurisdictions has determined, that the Liquidity Provider is not in compliance with securities legislation.
N. When the Filer trades with its Clients on a principal basis in its capacity as a dealer, the Filer will abide by policies it has adopted with a view to providing fair and reasonable price to its Clients.
O. The Filer will evaluate the price obtained from its Liquidity Provider on an ongoing basis against global benchmarks and will provide fair and reasonable prices to its Clients.
P. The Filer will assess liquidity risk and concentration risk posed by its Liquidity Provider and, in so doing, will consider trading volume data (as provided in paragraph 1(e) of Appendix E), complete a historical analysis of its Liquidity Provider, and complete a relative analysis between Liquidity Providers when the Filer adds Liquidity Providers as service providers. The Filer will also consider whether a Liquidity Provider has issued its own Proprietary Tokens and whether to limit reliance on any Liquidity Provider.
Q. Before each prospective client opens a Client Account, the Filer will deliver to the prospective client a Risk Statement and will require the prospective client to provide electronic acknowledgement of having received, read and understood the Risk Statement.
R. The Filer will ensure that the Risk Statement delivered to each prospective client and each Client with a pre-existing Client Account is prominent and separate from other disclosures given to the Client at that time and that the acknowledgement is separate from other acknowledgements made by the Client at that time.
S. The Filer will make available to the Client, in the same place as the Client's other statements on the Newton Platform, a copy of the Risk Statement acknowledged by the Client.
T. Before a Client enters into a Crypto Contract to buy a Crypto Asset, the Filer will provide instructions for the Client to read the Crypto Asset Statement for the Crypto Asset, which will include a link to the Crypto Asset Statement on the Website and on the App.
U. The Filer will promptly update the Risk Statement and each Crypto Asset Statement to reflect any material changes to the disclosure or include any material risks that may develop with respect to the Crypto Contracts or Crypto Assets and,
a) in the event of any update to the Risk Statement, will promptly notify each existing Client of the update and deliver to them a copy of the updated Risk Statement, and
b) in the event of any update to a Crypto Asset Statement, will promptly notify Clients through electronic disclosures on the Newton Platform with links to the updated Crypto Asset Statement.
V. Prior to the Filer delivering a Risk Statement to a Client or prospective client, the Filer will deliver, or will have previously delivered, a copy of the Risk Statement to the Principal Regulator.
W. For each Client that is not a Permitted Client or a Registered CTP, the Filer will conduct an account appropriateness assessment as described in representation 33(c) prior to opening a Client Account, on an ongoing basis, and at least every twelve months.
X. The Filer will apply and monitor the Client Limits as described in representation 33(e).
Y. The Filer will monitor Client activity and contact Clients to discuss their trading behaviour if it indicates a lack of knowledge or understanding of Crypto Asset trading, in an effort to identify and deter behaviours that may indicate that trading a Crypto Contract is not appropriate for the Client, or that additional education is required.
Z. Except as set out in conditions AA and BB, the Filer will ensure that the maximum amount of Crypto Assets, other than Specified Crypto Assets, that a Client may purchase and sell on the Newton Platform under Crypto Contracts does not, on a net basis, exceed the Investment Limit.
AA. The Investment Limit does not apply in Alberta, British Columbia, Manitoba, Québec, and Saskatchewan.
BB. The Investment Limit does not apply to Permitted Clients or Registered CTPs.
CC. In the Jurisdictions where the Prospectus Relief is required, the first trade of a Crypto Contract is deemed to be a distribution under securities legislation of that Jurisdiction.
DD. The Filer will provide the Principal Regulator with at least 10 days' prior written notice of any:
a) change of or use of a new custodian; and
b) material changes to the Filer's ownership, its business operations, including its systems, or its business model.
EE. The Filer will notify CIRO and the Principal Regulator, promptly, of the loss of any amount of Crypto Assets or any material breach or failure of its, its Affiliate's, or a Custodian's system of controls or supervision, and the steps taken by the Filer, its Affiliate, or the Custodian, as the case may be, to address each such breach or failure.
FF. The Filer will evaluate Crypto Assets as set out in representations 22 to 29.
GG. The Filer will not trade Crypto Assets or Crypto Contracts based on Crypto Assets with a Client in any Jurisdiction, without the prior written consent of the Principal Regulator and the regulator or securities regulatory authority of the Jurisdictions, where the Crypto Assets were issued by or on behalf of a person or company that is, or has in the last five years been the subject of an order, judgment, decree, sanction, fine, or administrative penalty imposed by, or has entered into a settlement agreement with, a government or government agency, administrative agency, self-regulatory organization, administrative tribunal, or court in Canada or in a Specified Foreign Jurisdiction in relation to a claim based in whole or in part on fraud, theft, deceit, aiding and abetting, or otherwise facilitating criminal activity, misrepresentation, violation of Canadian AML and ATF Law, conspiracy, breach of trust, breach of fiduciary duty, insider trading, market manipulation, unregistered trading, illegal distributions, failure to disclose material facts or changes, or allegations of similar conduct.
HH. Except to allow Clients to liquidate their positions in those Crypto Contracts in an orderly manner or transfer such Crypto Assets to a blockchain address specified by the Client, the Filer will promptly stop trading Crypto Contracts if: (a) the underlying Crypto Asset is determined by the Filer to be; (b) the underlying Crypto Asset is determined by a court, regulator or securities regulatory authority in any jurisdiction of Canada or a foreign jurisdiction with which the Crypto Asset has the most significant connection to be; or (c) the Filer is made aware or is informed that the Crypto Asset is viewed by a regulator or securities regulatory authority to be, (i) a security and/or derivative, or (ii) a Value-Referenced Crypto Asset that is not a Specified Value-Referenced Crypto Asset.
II. The Filer will not engage in trades that are part of, or designed to facilitate, the creation, issuance or distribution of Crypto Assets by the developer(s) of the Crypto Asset, its issuers or Affiliates or associates of such persons.
JJ. Before the Filer acts as a carrying broker to a dealer in respect of Crypto Contracts, the Filer will take reasonable steps to verify that the dealer has received the prior written approval of CIRO to offer Crypto Contracts to its Clients.
KK. The Filer will comply with the terms and conditions in Appendix D in respect of the Staking Services.
LL. The Filer will promptly notify the Principal Regulator if the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, the New York Department of Financial Services, the Financial Industry Regulatory Authority, the National Futures Association, the New Hampshire Banking Department, the South Dakota Division of Banking, or any other regulatory authority applicable to a custodian of the Filer makes a determination that (i) the custodian is not permitted by that regulatory authority to hold Client Crypto Assets, or (ii) if there is a change in the status of the custodian as a regulated financial institution. In such a case, the Filer will identify a suitable alternative custody provider that meets the definition of an Acceptable Third-Party Custodian to hold the Crypto Assets.
MM. The Filer will deliver the reporting as set out in Appendix E.
NN. Within 7 calendar days from the end of each month, the Filer will deliver to the regulator or securities regulatory authority in each of the Jurisdictions, a report of all Client Accounts for which the Client Limits were exceeded during that month.
OO. The Filer will provide certain reporting in respect of the preceding calendar quarter to the Principal Regulator and CIRO within 30 days of the end of March, June, September, and December in connection with the Staking Services, including, but not limited to:
a) the total number of Clients to which the Filer provides the Staking Services;
b) the Crypto Assets for which the Staking Services are offered;
c) for each Crypto Asset that may be staked:
i) the amount of Crypto Assets staked,
ii) the amount of each such Crypto Assets staked that is subject to a Lock-up Period and the length of the Lock-up Period;
iii) the amount of Crypto Assets that Clients have requested to unstake; and
iv) the amount of rewards earned by the Filer and the Clients for the Crypto Assets staked under the Staking Services;
d) the names of any third parties used to conduct the Staking Services;
e) any instance of slashing, jailing or other penalties being imposed for validator error;
f) the details of why these penalties were imposed;
g) any reporting regarding the Filer's liquidity management as requested by the Principal Regulator; and
h) the value, at the end of each period, of the Filer's residual proprietary interest in segregate staked Locations for each Crypto Asset staked.
PP. The Filer will deliver to the Principal Regulator, within 30 days of the end of March, June, September, and December, either:
a) blackline copies of changes made to the policies and procedures on the operations of its wallets (including, but not limited to: establishment of wallets; transfer of Crypto Assets into and out of the wallets; and authorizations to access the wallets) previously delivered to the Principal Regulator; or
b) a nil report stating that no changes have been made to its policies and procedures on the operations of its wallets in the quarter.
QQ. In addition to any other reporting required by the Legislation, the Filer will provide, on a timely basis, any report, data, document or information to the Principal Regulator, including any information about the Filer's custodian(s) and the Crypto Assets held by the Filer's custodian(s), that may be requested by the Principal Regulator from time to time as reasonably necessary for the purpose of monitoring compliance with the Legislation and the terms and conditions in this decision, in a format acceptable to the Principal Regulator.
RR. Upon request, the Filer will provide the Principal Regulator and the regulators or securities regulatory authorities of each of the Jurisdictions with aggregated or anonymized data concerning Client demographics and activity on the Newton Platform that may be useful to advance the development of the Canadian regulatory framework for trading Crypto Assets.
SS. The Filer will promptly make any changes to its business practices or policies and procedures that may be identified by the Filer, the Principal Regulator or CIRO to address investor protection concerns arising from the operation of the Newton Platform.
TT. This decision expires on the date that is four years from the date of this decision.
UU. This decision may be amended by the Principal Regulator upon prior written notice to the Filer in accordance with applicable securities legislation.
In respect of the Prospectus Relief
Dated: March 18, 2026
In respect of the Trade Reporting Relief
Dated: March 25, 2026
OSC File #: 2026-42
"Acceptable Third-Party Custodian" means an entity that
(i) is one of the following:
A. a Canadian custodian (as defined in NI 31-103) or Canadian financial institution (as defined in NI 14-101);
B. a custodian qualified to act as a custodian or sub-custodian for assets held in Canada pursuant to section 6.2 [Entities Qualified to Act as Custodian or Sub- Custodian for Assets Held in Canada] of NI 81-102;
C. a custodian that meets the definition of an "acceptable securities location" in accordance with CIRO Rules and Form 1 of CIRO;
D. a foreign custodian (as defined in NI 31-103) for which the Filer has obtained the prior written consent from the Principal Regulator and the regulator or securities regulatory authority of the Jurisdiction(s); or
E. an entity that does not meet the criteria for a qualified custodian (as defined in NI 31-103) and for which the Filer has obtained the prior written consent from the Principal Regulator and the regulator or securities regulatory authority of the Jurisdiction(s);
(ii) is functionally independent of the Filer within the meaning of NI 31-103;
(iii) has obtained audited financial statements within the last twelve months, which
A. are audited by a person or company that is authorized to sign an auditor's report under the laws of a jurisdiction of Canada or a foreign jurisdiction and that meets the professional standards of that jurisdiction;
B. are accompanied by an auditor's report that expresses an unqualified opinion; and
C. unless otherwise agreed to by the Principal Regulator, discloses on their statement of financial position or in the notes of the audited financial statements the amount of liabilities that it owes to its Clients for holding their assets, and the amount of assets held by the custodian to meet its obligations to those custody clients, broken down by asset; and
(iv) has obtained a SOC report within the last twelve months or has obtained a comparable report recognized by a similar accreditation board satisfactory to the Principal Regulator and the regulator or securities regulatory authority of the Jurisdictions.
"Account Appropriateness Factors" include:
(i) the prospective client's or Client's experience and knowledge in investing in Crypto Assets;
(ii) the prospective client's or Client's financial assets and income;
(iii) the prospective client's or Client's risk tolerance; and
(iv) the Crypto Assets approved to be made available to a Client by entering into Crypto Contracts on the Newton Platform.
"Accredited Crypto Investor" means:
(i) an individual
1. who, alone or with a spouse, beneficially owns financial assets (as defined in section 1.1 of NI 45-106) and Crypto Assets, if not included in financial assets, having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1,000,000,
2. whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that net income level in the current calendar year,
3. whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that net income level in the current calendar year, or
4. who, alone or with a spouse, beneficially owns net assets of at least $5,000,000,
(ii) a person or company described in paragraphs (a) to (i) of the definition of "accredited investor" as defined in subsection 73.3(1) of the Act or section 1.1 of NI 45-106, or
(iii) a person or company described in paragraphs (m) to (w) of the definition of "accredited investor" as defined in section 1.1 of NI 45-106.
"Act" means the Securities Act (Ontario).
"Aggregate Nominal Value" means the price of the outstanding units of the Value-Referenced Crypto Asset where each unit of the Value-Referenced Crypto Asset has a price equal to one dollar, or one of the similar monetary units, of the Reference Fiat Currency.
"App" means iOS and Android applications that provide access to the Newton Platform.
"Canadian AML and ATF Law" means the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and related regulations.
"CIPF" means the Canadian Investor Protection Fund.
"CIRO" means the Canadian Investment Regulatory Organization.
"CIRO Rules" means the by-laws, rules, regulations and policies of CIRO.
"Client" means a client of the Filer that has successfully opened a Client Account using the Filer's Website or App to conduct trades on the Newton Platform.
"Client Account" means an account opened by the Client through the Website or App to use the Newton Platform.
"Client Assets" includes all fiat and Crypto Assets that a Client purchases on, or transfers onto, the Newton Platform.
"Client Limit" means appropriate limits on the losses that a Client can incur on the Newton Platform based on the Filer's application of the Account Appropriateness Factors to the Client.
"Coincover" means Digital Assets Services Limited (trading as Coincover).
"Crypto Asset" means anything commonly considered to be a crypto asset, digital or virtual currency, or digital or virtual token.
"Crypto Asset Statement" means a plain language description prepared by the Filer of each Crypto Asset and of the risks of the Crypto Asset made available through the Newton Platform that includes the information set out in representation 35 of this decision.
"Crypto Contract" means an instrument or contract between the Filer and a Client to purchase, sell, hold, deposit, stake, or withdraw Crypto Assets.
"CSA" means the Canadian Securities Administrators.
"CTP" means crypto asset trading platform.
"Custodian" means, as of the date of this decision, Coinbase Custody Trust Company, LLC and BitGo Bank & Trust, National Association (N.A.).
"Eligible Crypto Investor" means
(i) a person whose
1. net assets, alone or with a spouse, in the case of an individual, exceed $400,000,
2. net income before taxes exceeded $75,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year, or
3. net income before taxes, alone or with a spouse, in the case of an individual, exceeded $125,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year, or
(ii) an Accredited Crypto Investor.
"Existing Decision" means the decision, In the Matter of Newton Crypto Ltd. dated March 11, 2026.
"Fireblocks" means Fireblocks Ltd.
"International Standards on Assurance Engagements" means the International Standards on Assurance Engagements set by the International Auditing and Assurance Standards Board, as amended from time to time.
"Investment Limit" means an amount that is calculated on a net basis, is not less than $0 CAD in the preceding twelve months, and in the case of a client that is:
(i) not an Eligible Crypto Investor, does not exceed a net acquisition cost of $30,000;
(ii) an Eligible Crypto Investor, but is not an Accredited Crypto Investor, does not exceed a net acquisition cost of $100,000; and
(iii) in the case of an Accredited Crypto Investor, is not limited.
"IOSCO" means the International Organization of Securities Commissions.
"KYC" means know-your-client.
"KYP Policy" means the policies and procedures to review Crypto Assets and to determine whether to allow Clients on the Newton Platform to enter into Crypto Contracts.
"Liquidity Provider" means multiple crypto asset trading firms and includes DV Chain (Canada) Inc.
"Location" means an address or wallet (or group of addresses or wallets) that is (are) subject to a distinct pre-set governance policy within the private key management solution employed by the Filer or the Custodians.
"Lock-up Period" means any lock-up, unbonding, unstaking, or similar periods imposed by the Crypto Asset protocol, Custodian or Validator, where such Crypto Assets will not be accessible to the Client or will be accessible only after payment of additional fees or penalties or forfeiture of any rewards.
"MI 11-102" means Multilateral Instrument 11-102 Passport System.
"Money Market Fund" has the meaning ascribed to that term in NI 81-102 or in Rule 12d1-1 of the United States Investment Company Act of 1940, as the case may be.
"Newton Platform" means a proprietary and automated internet-based platform, operated by the Filer, for the trading of Crypto Assets in Canada that enables Clients of the Filer to buy, sell, hold, deposit, stake, and withdraw Crypto Assets by entering into Crypto Contracts with the Filer.
"Newton TOS" means the agreement that a Client accepts prior to opening a Client Account that governs the rights and responsibilities of the Newton Platform and the Client during the term of their relationship.
"NI 14-101" means National Instrument 14-101 Definitions.
"NI 21-101" means National Instrument 21-101 Marketplace Operation.
"NI 31-103" means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
"NI 45-106" means National Instrument 45-106 Prospectus Exemptions.
"NI 81-102" means National Instrument 81-102 Investment Funds.
"Outstanding Units of the Value-Referenced Crypto Asset" means units of the Value-Referenced Crypto-Asset that have been minted and issued in exchange for funds less any units for which a request for redemption has been fulfilled.
"Permitted Client" has the meaning ascribed to that term in NI 31-103.
"Promoter" has the meaning ascribed to that term in Canadian securities legislation.
"Proprietary Token" means, with respect to a person or company, a Crypto Asset that is not a Value-Referenced Crypto Asset, and for which the person or company or an affiliate of the person or company, acted as the issuer (and mints or burns the Crypto Asset) or a Promoter.
"Publicly Accountable Enterprise" a publicly accountable enterprise as defined in the Handbook.
"Reference Fiat Currency" means the Canadian dollar or the United States dollar.
"Registered CTP" means a CTP that is registered as a restricted dealer or an investment dealer under securities legislation in one or more jurisdictions of Canada.
"Risk Statement" means the statement of risks described in representation 33(f) of this decision.
"SOC report" means a System and Organization Controls report completed under the SOC 2 Type 1 or SOC 2 Type 2.
"Specified Crypto Asset" means the Crypto Assets listed in Appendix B to this decision.
"Specified Foreign Jurisdiction" means any of the following: Australia, Brazil, any member country of the European Union, Hong Kong, Japan, the Republic of Korea, New Zealand, Singapore, Switzerland, the United Kingdom of Great Britain and Northern Ireland, the United States of America, and any other jurisdiction that the Principal Regulator may advise.
"Specified Value-Referenced Crypto Asset" means a Value-Referenced Crypto Asset that meets the terms and conditions in Appendix C to this decision.
"Staff Notice 21-327" means CSA Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets.
"Staff Notice 21-329" means Joint Canadian Securities Administrators/Investment Industry Regulatory Organization of Canada Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements.
"Staff Notice 21-333" means CSA Staff Notice 21-333 Crypto Asset Trading Platforms: Terms and Conditions for Trading Value-Referenced Crypto Assets with Clients.
"Stakeable Crypto Assets" means (i) Crypto Assets of blockchains that use a proof-of-stake consensus mechanism and (ii) the staked Crypto Assets that are used to guarantee the legitimacy of new transactions the Validator adds to the blockchain.
"Staking Services" means services where the Filer arranges to stake Crypto Assets and earn staking rewards for participating Clients.
"U.S. GAAP" has the meaning ascribed to that term in National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.
"U.S. PCAOB GAAS" has the meaning ascribed to that term in National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.
"Validator" means, in connection with a particular proof-of-stake consensus algorithm blockchain, an entity that operates one or more nodes that meet protocol requirements for a Crypto Asset and participates in consensus by broadcasting votes and committing new blocks to the blockchain.
"Value-Referenced Crypto Asset" means a Crypto Asset that is designed to maintain a stable value over time by referencing the value of a fiat currency or other value or right, or combination thereof.
"Value-Referenced Crypto Asset Holder" means a person or company with ownership or control or possession of a unit of a Value Referenced Crypto-Asset, including a CTP holding a unit of a Value-Referenced Crypto Asset pursuant to a Crypto Contract with a client.
"Website" means the https://www.newton.co website, or such other website as may be used to host the Newton Platform from time to time.
• Bitcoin
• Ether
• Litecoin
• Bitcoin Cash
• Solana
• A Specified Value-Referenced Crypto Asset
1. The Filer established that all of the following conditions are met:
(a) the Value-Referenced Crypto Asset references, on a one-to-one basis, the value of a Reference Fiat Currency;
(b) the Value-Referenced Crypto Asset entitles a Value-Referenced Crypto Asset Holder who maintains an account with the issuer of the Value-Referenced Crypto Asset to a right of redemption, subject only to reasonable publicly disclosed conditions, on demand directly against the issuer of the Value-Referenced Crypto Asset or against the reserve of assets, for the Reference Fiat Currency on a one-to-one basis, less only any fee that is publicly disclosed by the issuer of the Value-Referenced Crypto Asset, and payment of the redemption proceeds within a reasonable period as disclosed by the issuer of the Value-Referenced Crypto Asset;
(c) the issuer of the Value-Referenced Crypto Asset maintains a reserve of assets that is:
(i) in the Reference Fiat Currency and is comprised of any of the following:
(1) cash;
(2) investments that are evidence of indebtedness with a remaining term to maturity of 90 days or less and that are issued, or fully and unconditionally guaranteed as to principal and interest, by the government of Canada or the government of the United States;
(3) securities issued by one or more Money Market Funds licensed, regulated, or authorized by a regulatory authority in Canada or the United States of America; or
(4) such other assets that the Principal Regulator and the regulator or securities regulatory authority in each Canadian jurisdiction where Clients of the Filer reside has consented to in writing;
(d) all of the assets that comprise the reserve of assets are:
(i) measured at fair value in accordance with Canadian GAAP for Publicly Accountable Enterprises or U.S. GAAP at the end of each day;
(ii) held with a Qualified Custodian;
(iii) held in an account clearly designated for the benefit of the Value-Referenced Crypto Asset Holders or in trust for the Value-Referenced Crypto Asset Holders;
(iv) held separate and apart from the assets of the issuer of the Value-Referenced Crypto Asset and its Affiliates and from the reserve of assets of any other Crypto Asset, so that, to the best of the knowledge and belief of the Filer after taking steps that a reasonable person would consider appropriate, including consultation with experts such as legal counsel, no creditors of the issuer other than the Value-Referenced Crypto Asset Holders in their capacity as Value-Referenced Crypto Asset Holders, will have recourse to the reserve of assets, in particular in the event of insolvency; and
(v) not encumbered or pledged as collateral at any time; and
(e) the fair value of the reserve of assets is at least equal to the Aggregate Nominal Value of all outstanding units of the Value-Referenced Crypto Asset at least once each day.
2. The issuer of the Value-Referenced Crypto Asset makes all of the following publicly available:
(a) details of each type, class, or series of the Value-Referenced Crypto Asset, including the date the Value-Referenced Crypto Asset was launched and key features and risks of the Value-Referenced Crypto Asset;
(b) the quantity of all outstanding units of the Value-Referenced Crypto Asset and their Aggregate Nominal Value at least once each business day;
(c) the names and experience of the persons or companies involved in the issuance and management of the Value-Referenced Crypto Asset, including the issuer of the Value-Referenced Crypto Asset, any manager of the reserve of assets, including any individuals that make investment decisions in respect of the reserve of assets, and any custodian of the reserve of assets;
(d) the quantity of units of the Value-Referenced Crypto Asset held by the issuer of the Value-Referenced Crypto Asset or any of the persons or companies referred to in paragraph (c) and their nominal value at least once each business day;
(e) details of how a Value-Referenced Crypto Asset Holder can redeem the Value-Referenced Crypto Asset, including any possible restrictions on redemptions such as the requirement for a Value-Referenced Crypto Asset Holder to have an account with the issuer of the Value-Referenced Crypto Asset and any criteria to qualify to have an account;
(f) details of the rights of a Value-Referenced Crypto Asset Holder against the issuer of the Value-Referenced Crypto Asset and the reserve of assets, including in the event of insolvency or winding up;
(g) all fees charged by the issuer of the Value-Referenced Crypto Asset for distributing, trading, or redeeming the Value-Referenced Crypto Asset;
(h) whether Value-Referenced Crypto Asset Holders are entitled to any revenues generated by the reserve of assets;
(i) details of any instances of any of the following:
(i) the issuer of the Value-Referenced Crypto Asset has suspended or halted redemptions for all Value-Referenced Crypto Asset Holders; and
(ii) the issuer of the Value-Referenced Crypto Asset has not been able to satisfy redemption rights at the price or in the time specified in its public policies;
(j) within 45 days of the end of each month, an assurance report from a public accountant that is authorized to sign such a report under the laws of a jurisdiction of Canada or the United States of America, and that meets the professional standards of that jurisdiction, that complies with all of the following:
(i) provides reasonable assurance in respect of the assertion by management of the issuer of the Value-Referenced Crypto Asset that the issuer of the Value-Referenced Crypto Asset has met the requirements in paragraphs 1(c)-(e) as at the last business day of the preceding month and at least one randomly selected day during the preceding month;
(ii) the randomly selected day referred to in subparagraph (i) is selected by the public accountant and disclosed in the assurance report;
(iii) for each day referred to in subparagraph (i), management's assertion includes all of the following:
(1) details of the composition of the reserve of assets;
(2) the fair value of the reserve of assets in paragraph 1(d)(i); and
(3) the quantity of all outstanding units of the Value-Referenced Crypto Asset in paragraph (b); and
(iv) the assurance report is prepared in accordance with the Handbook, International Standards on Assurance Engagements or attestation standards established by the American Institute of Certified Public Accountants;
(k) starting with the first financial year ending after December 1, 2023, within 120 days of the financial year end of the issuer of the Value-Referenced Crypto Asset, annual financial statements of the issuer of the Value-Referenced Crypto Asset that meet the following requirements:
(i) the annual financial statements include all of the following:
(1) a statement of comprehensive income, a statement of changes in equity and a statement of cash flows, each prepared for the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any;
(2) a statement of financial position, signed by at least one director of the issuer of the Value-Referenced Crypto Asset, as at the end of the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any; and
(3) notes to the financial statements;
(ii) the annual financial statements are prepared in accordance with one of the following accounting principles:
(1) Canadian GAAP applicable to Publicly Accountable Enterprises; or
(2) U.S. GAAP;
(iii) the statements are audited in accordance with one of the following auditing standards:
(1) Canadian GAAS;
(2) International Standards on Auditing; or
(3) U.S. PCAOB GAAS; and
(iv) the statements are accompanied by an auditor's report that:
(1) identifies the auditing standards used to conduct the audit;
(2) is prepared and signed by a public accountant that is authorized to sign such a report under the laws of a jurisdiction of Canada or the United States of America;
(3) if the statements are audited in accordance with Canadian GAAS or International Standards on Auditing, expresses and unmodified opinion; and
(4) if the statements are audited in accordance with U.S. PCAOB GAAS, expresses an unqualified opinion.
3. The Filer includes in the Crypto Asset Statement for the Value-Referenced Crypto Asset, all of the following:
(a) a prominent statement that no securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the Crypto Assets made available through the Newton Platform;
(b) a prominent statement that the Value-Referenced Crypto Asset is not the same as, and is riskier than, a deposit in a bank or holding cash with the Filer;
(c) a prominent statement that although Value-Referenced Crypto Assets may be commonly referred to as "stablecoins," there is no guarantee that the Value-Referenced Crypto Asset will maintain a stable value when traded on secondary markets or that the reserve of assets will be adequate to satisfy all redemptions;
(d) a prominent statement that, due to uncertainties in the application of bankruptcy and insolvency law, in the event of the insolvency of [Value-Referenced Crypto Asset issuer], there is a possibility that creditors of [Value-Referenced Crypto Asset issuer] would have rights to the reserve assets that could outrank a Value-Referenced Crypto Asset Holder's rights, or otherwise interfere with a Value-Referenced Crypto Asset Holder's ability to access the reserve of assets in the event of insolvency;
(e) a description of the Value-Referenced Crypto Asset and its issuer;
(f) a description of the due diligence performed by the Filer with respect to the Value-Referenced Crypto Asset;
(g) a brief description of the information in section 2 of this Appendix and links to where the information in that section is publicly available;
(h) a link to where on its Website the issuer of the Value-Referenced Crypto Asset will disclose any event that has or is likely to have a significant effect on the value of the Value-Referenced Crypto Asset or on the reserve of assets;
(i) a description of the circumstances where the secondary market trading value of the Value-Referenced Crypto Asset may deviate from par with the Reference Fiat Currency and details of any instances where the secondary market trading value of the Value-Referenced Crypto Asset has materially deviated from par with the Reference Fiat Currency during the last 12 months on the Newton Platform;
(j) a brief description of any risks to the Client resulting from the trading of a Value-Referenced Crypto Asset or a Crypto Contract in respect of a Value-Referenced Crypto Asset that may not have been distributed in compliance with securities laws;
(k) any other risks specific to the Value-Referenced Crypto Asset, including the risks arising from the fact that the Filer may not, and a Client does not, have a direct redemption right with the issuer of the Value-Referenced Crypto Asset;
(l) a direction to the Client to review the Risk Statement for additional discussion of general risks associated with the Crypto Contracts and Crypto Assets made available through the Newton Platform;
(m) a statement that the statutory rights in section 130.1 of the Act and, if applicable, similar statutory rights under securities legislation of other Jurisdictions, do not apply in respect of the Crypto Asset Statement to the extent a Crypto Contract is distributed under the Prospectus Relief in this decision; and
(n) the date on which the information in the Crypto Asset Statement was last updated.
4. If the Filer uses the terms "stablecoin" or "stablecoins" in any information, communication, advertising or social media related to the Newton Platform and targeted at or accessible by Canadian investors, the Filer will also include the following statement (or a link to the following statement when impractical to include):
"Although the term "stablecoin" is commonly used, there is no guarantee that the asset will maintain a stable value in relation to the value of the reference asset when traded on secondary markets or that the reserve of assets, if there is one, will be adequate to satisfy all redemptions."
5. The issuer of the Value-Referenced Crypto Asset has filed an undertaking in substantially the same form as set out in Appendix B of Staff Notice 21-333 and the undertaking is posted on the CSA website.
6. To the extent the undertaking referred to in section 5 of this Appendix includes language that differs from sections 1 or 2 of this Appendix, the Filer complies with sections 1 and 2 of this Appendix as if they included the modified language from the undertaking.
7. The Filer's KYP Policy requires the Filer to assess whether the Value-Referenced Crypto Asset or the issuer of the Value-Referenced Crypto Asset satisfies the criteria in sections 1, 2, 5 and 6 of this Appendix on an ongoing basis.
8. The Filer continues to have, and follows, policies and procedures to facilitate halting or suspending deposits or purchases of the Value-Referenced Crypto Asset, or Crypto Contracts in respect of the Value-Referenced Crypto Asset, as quickly as is commercially reasonable, if the Value-Referenced Crypto Asset no longer satisfies the criteria in sections 1, 2, 5, and 6 of this Appendix.
9. In this Appendix, terms have the same meanings set out in Appendix D of CSA SN 21-333.
1. The Staking Services are offered in relation to the Stakeable Crypto Assets that are subject to a Crypto Contract between the Filer and a Client.
2. Unless the Principal Regulator has provided its prior written consent, the Filer only offers Clients the Staking Services only for (i) Crypto Assets of blockchains that use a proof-of-stake consensus mechanism and (ii) the staked Crypto Assets that are used to guarantee the legitimacy of new transactions the Validator adds to the blockchain (i.e., Stakeable Crypto Assets).
3. The Filer is proficient and knowledgeable about staking Stakeable Crypto Assets.
4. The Filer itself does not act as a Validator. The Filer has entered into written agreements with third parties to stake Stakeable Crypto Assets and each such third party is proficient and experienced in staking Stakeable Crypto Assets.
5. The Filer's KYP Policy includes a review of the Stakeable Crypto Assets made available to Clients for staking and staking protocols related to those Stakeable Crypto Assets prior to offering those Stakeable Crypto Assets as part of the Staking Services. The Filer's review includes the following:
(a) the Stakeable Crypto Assets that the Filer proposes to offer for staking;
(b) the operation of the proof-of-stake blockchain for the Stakeable Crypto Assets that the Filer proposes to offer for staking;
(c) the staking protocols for the Stakeable Crypto Assets that the Filer proposes to offer for staking;
(d) the risks of loss of the staked Stakeable Crypto Assets, including from software bugs and hacks of the protocol;
(e) the Validators engaged by the Filer or the Filer's Custodian, including, but not limited to, information about:
(i) the persons or entities that manage and direct the operations of the Validator,
(ii) the Validator's reputation and use by others,
(iii) the amount of Stakeable Crypto Assets the Validator has staked on its own nodes,
(iv) the measures in place by the Validator to operate the nodes securely and reliably,
(v) the financial status of the Validator,
(vi) the performance history of the Validator, including but not limited to the amount of downtime of the Validator, past history of "double signing" and "double attestation/voting",
(vii) any losses of Stakeable Crypto Assets related to the Validator's actions or inactions, including losses resulting from slashing, jailing or other penalties incurred by the Validator, and
(viii) any guarantees offered by the Validator against losses including losses resulting from slashing or other penalties and any insurance obtained by the Validator that may cover this risk.
6. For each Client that is not a Permitted Client or a Registered CTP, the Filer has policies and procedures to assess account appropriateness for a Client includes consideration of the Staking Services to be made available to that Client.
7. For each Client that is not a Permitted Client or a Registered CTP, the Filer applies the account appropriateness policies and procedures to evaluate whether offering the Staking Services is appropriate for a Client before providing access to an account that makes available the Staking Services and, on an ongoing basis, at least once in each 12-month period.
8. If, after completion of an account-level appropriateness assessment, the Filer determines that providing the Staking Services is not appropriate for the Client, the Filer will include prominent messaging to the Client that this is the case and the Filer will not make available the Staking Services to the Client.
9. The Filer only stakes the Stakeable Crypto Assets of those Clients who have agreed to the Staking Services and have allocated Stakeable Crypto Assets to be staked. Where a Client no longer wishes to stake all or a portion of the allocated Stakeable Crypto Assets, subject to any Lock-Up Periods or any terms of the Staking Services that permit the Client to remove Stakeable Crypto Assets from the Staking Services prior to the expiry of any Lock-Up Periods, the Filer ceases to stake those Stakeable Crypto Assets.
10. Before the first time a Client allocates any Stakeable Crypto Assets to be staked, the Filer delivers to the Client the Risk Statement that includes the risks with respect to staking and the Staking Services described in paragraph 11 below, and requires the Client to provide electronic acknowledgement of having received, read and understood the Risk Statement.
11. The Filer clearly explains in the Risk Statement the risks with respect to staking and the Staking Services in plain language, which include, at a minimum:
(a) the details of the Staking Services and the role of all third parties involved;
(b) the due diligence performed by the Filer with respect to the proof-of-stake consensus protocol for each Crypto Asset for which the Filer provides the Staking Services;
(c) the details of the Validators that will be used for the Staking Services and the due diligence performed by the Filer with respect to the Validators;
(d) the details of whether and how the custody of staked Stakeable Crypto Assets differs from Crypto Assets held on behalf of the Filer's Clients that are not engaged in staking;
(e) the general risks related to staking and any risks arising from the arrangements used by the Filer to offer the Staking Services (e.g., reliance on third parties; risk of loss due to technical errors or bugs in the protocol; hacks or theft from the Crypto Assets being held in hot wallets, etc.) and how any losses will be allocated to Clients;
(f) whether the Filer will reimburse Clients for any Stakeable Crypto Assets lost due to slashing or other penalties imposed due to Validator error, action or inactivity or how any losses will be allocated to Clients;
(g) whether any of the staked Stakeable Crypto Assets are subject to any Lock-up Periods; and
(h) how rewards are calculated on the staked Stakeable Crypto Assets, including any fees charged by the Filer or any third party, how rewards are paid out to Clients, and any associated risks.
12. Immediately before each time that a Client allocates Stakeable Crypto Assets to be staked under the Staking Services, the Filer requires the Client to acknowledge the risks of staking Stakeable Crypto Assets as may be applicable to the particular Staking Services or each particular Stakeable Crypto Asset, including, but not limited to:
(a) that the staked Stakeable Crypto Asset may be subject to a Lock-up Period and, consequently, the Client may not be able to sell or withdraw their Stakeable Crypto Asset for a predetermined or unknown period of time, with details of any known period, if applicable;
(b) that given the volatility of Crypto Assets, the value of a Client's staked Stakeable Crypto Asset when they are able to sell or withdraw, and the value of any Stakeable Crypto Asset earned through staking, may be significantly less than the current value;
(c) how rewards will be calculated and paid out to Clients and any risks inherent in the calculation and payout of any rewards;
(d) that there is no guarantee that the Client will receive any rewards on the staked Stakeable Crypto Asset, and that past rewards are not indicative of expected future rewards;
(e) whether rewards may be changed at the discretion of the Filer;
(f) unless the Filer guarantees any Stakeable Crypto Assets lost to slashing, that the Client may lose all or a portion of the Client's staked Stakeable Crypto Assets if the Validator does not perform as required by the network;
(g) if the Filer offers a guarantee to prevent loss of any Stakeable Crypto Assets arising from the Staking Services, including due to slashing, any limits on that guarantee and requirements for a Client to claim under the guarantee; and
(h) that additional risks can be found in the Risk Statement and Crypto Asset Statement, including the names and other information regarding the Validators and information regarding Lock-up Periods and rewards, with a link to the Risk Statement and Crypto Asset Statement.
13. Immediately before each time a Client buys or deposits Stakeable Crypto Assets that are automatically staked pursuant to an existing agreement by the Client to the Staking Services, the Filer provides prominent disclosure to the Client that the Stakeable Crypto Asset it is about to buy or deposit will be automatically staked.
14. The Filer will promptly update the Risk Statement and each Crypto Asset Statement to reflect any material changes to the disclosure or include any material risks that may develop with respect to the Staking Services and/or Stakeable Crypto Assets.
15. In the event of any update to the Risk Statement, for each existing Client that has agreed to the Staking Services, the Filer will promptly notify the Client of the update and deliver to them a copy of the updated Risk Statement.
16. In the event of any update to a Crypto Asset Statement, for each existing Client that has agreed to the Staking Services in respect of the Stakeable Crypto Asset for which the Crypto Asset Statement was updated, the Filer will promptly notify the Client of the update and deliver to the Client a copy of the updated Crypto Asset Statement.
17. The Filer and the Custodian remain in possession, custody and control of the staked Stakeable Crypto Assets at all times.
18. The Filer holds the staked Stakeable Crypto Assets for its Clients in one or more omnibus staking wallets in the name of the Filer for the benefit of the Filer's Clients with the Custodians and the staked Stakeable Crypto Assets are held separate and distinct from (i) the assets of the Filer, the Custodians and the Custodians' other Clients; and (ii) the Crypto Assets held for its Clients that have not agreed to staking those specific Crypto Assets.
19. The Filer has established policies and procedures that manage and mitigate custodial risks for staked Stakeable Crypto Assets, including but not limited to, an effective system of controls and supervision to safeguard the staked Stakeable Crypto Assets.
20. If the Filer permits Clients to remove Stakeable Crypto Assets from the Staking Services prior to the expiry of any Lock-up Period, the Filer establishes and applies appropriate liquidity management policies and procedures to fulfill withdrawal requests made, which may include using the Stakeable Crypto Assets it holds in inventory, setting aside cash for the purpose of purchasing such inventory, or entering into agreements with its Liquidity Providers that permit the Filer to purchase any required Crypto Assets. The Filer holds Stakeable Crypto Assets in trust for its Clients and will not use Stakeable Crypto Assets of those Clients who have not agreed to the Staking Services for fulfilling such withdrawal requests.
21. If the Filer provides a guarantee to Clients from some or all of the risks related to the Staking Services, the Filer has established, and will maintain and apply, policies and procedures to address any risks arising from such guarantee.
22. In the event of bankruptcy or insolvency of the Filer, the Filer will assume and will not pass to Clients any losses arising from slashing or other penalties arising from the performance or non-performance of the Validator.
23. The Filer monitors its Validators for downtime, jailing and slashing events and takes any appropriate action to protect Stakeable Crypto Assets staked by Clients.
24. The Filer has established and applies policies and procedures to address how staking rewards, fees and losses will be calculated and allocated to Clients that have staked Stakeable Crypto Assets under the Staking Services.
25. The Filer regularly and promptly determines the amount of staking rewards earned by each Client that has staked Stakeable Crypto Assets under the Staking Services and distributes each Client's staking rewards to the Client promptly after they are made available to the Filer.
26. The Filer clearly discloses the fees charged by the Filer for the Staking Services and provides a clear calculation of the rewards earned by each Client that agrees to the Staking Services.
1. The Filer will continue to deliver the following information to the Principal Regulator and each of the Coordinated Review Decision Makers in an agreed form and manner specified by the Principal Regulator and each of the Coordinated Review Decision Makers with respect to Clients residing in the Jurisdiction of such Coordinated Review Decision Maker, within 30 days of the end of each March, June, September and December:
a) Aggregate reporting of activity conducted pursuant to the Newton Platform's operations that will include the following:
i. Number of Client Accounts opened each month in the quarter;
ii. Number of Client Accounts frozen or closed each month in the quarter;
iii. Number of Client Accounts applications rejected by the Newton Platform each month in the quarter based on the Account Appropriateness Factors as described in representation 33(c);
iv. Number of trades each month in the quarter;
v. Average value of the trades in each month in the quarter;
vi. number of Client Accounts with a net acquisition cost greater than $30,000 of Crypto Assets at the end of each month in the quarter;
vii. number of Client Accounts that in the preceding 12 months, excluding Specified Crypto Assets, that: (a) in the case of a Client that is not an Eligible Crypto Investor, exceeded a net acquisition cost of $30,000 at the end of each month in the quarter, and (b) in the case of a Client that is an Eligible Crypto Investor, but not an Accredited Crypto Investor, exceeded a net acquisition cost of $100,000 at the end of each month in the quarter;
viii. Number of Client Accounts at the end of each month in the quarter;
ix. Number of Client Accounts with no trades during the quarter;
x. Number of Client Accounts that have not been funded at the end of each month in the quarter;
xi. Number of Client Accounts that hold a positive amount of Crypto Assets at end of each month in the quarter;
xii. Number of Client Accounts that exceeded their Client Limit at the end of each month in the quarter;
b) The details of any Client complaints received by the Filer during the calendar quarter and how such complaints were addressed;
c) A listing of all blockchain addresses, except for deposit addresses, that hold Crypto Assets on behalf of Clients, including all hot and cold wallets;
d) The details of any fraudulent activity or cybersecurity incidents on the Newton Platform during the calendar quarter, any resulting harms and effects on Clients, and the corrective measures taken by the Filer to remediate such activity or incident and prevent similar activity or incidents from occurring in the future;
e) The details of the transaction volume per Liquidity Provider, per Crypto Asset during the quarter;
2. The Filer will deliver to the Principal Regulator and each of the Coordinated Review Decision Makers, in an agreed form and manner specified by the Principal Regulator and each of the Coordinated Review Decision Makers, a report that includes the anonymized account-level data for the Newton Platform's operations for each Client residing in the Jurisdiction of such Coordinated Review Decision Maker, within 30 days of the end of each March, June, September and December for data elements outlined in Appendix F.
Number |
Data Element |
Definition for Data Element{1} |
Format |
Values |
Example |
|
|||||
Data Elements Related to each Unique Client |
|||||
|
|||||
1 |
Unique Client Identifier |
Alphanumeric code that uniquely identifies a customer. |
Varchar(72) |
An internal Client identifier code assigned by the CTP to the Client. The identifier must be unique to the Client. |
ABC1234 |
|
|||||
2 |
Unique Account Identifier |
Alphanumeric code that uniquely identifies an account. |
Varchar(72) |
A unique internal identifier code which pertains to the customer's account. There may be more than one Unique Account Identifier linked to a Unique Client Identifier. |
ABC1234 |
|
|||||
3 |
Jurisdiction |
The Province or Territory where the Client, head office or principal place of business is, or under which laws the Client is organized, or if an individual, their principal place of residence. |
Varchar(5) |
Jurisdiction where the Client is located using ISO 3166-2 -- See the following link for more details on the ISO standard for Canadian jurisdictions codes. https://www.iso.org/obp/ui/#iso:code:3166:CA |
CA-ON |
|
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Data Elements Related to each Unique Account |
|||||
|
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4 |
Account Open Date |
Date the account was opened and approved to trade. |
YYYY-MM-DD, based on UTC. |
Any valid date based on ISO 8601 date format. |
2022-10-27 |
|
|||||
5 |
Cumulative Realized Gains/Losses |
Cumulative Realized Gains/Losses from purchases, sales, deposits, withdrawals and transfers in and out, since the account was opened as of the end of the reporting period. |
Num(25,0) |
Any value rounded to the nearest dollar in CAD. Use the market value at the time of transfers in, transfers out, deposits and withdrawals of the Digital Token to determine the cost basis or the realized gain or loss. |
205333 |
|
|||||
6 |
Unrealized Gains / Losses |
Unrealized Gains/Losses from purchases, deposits and transfers in as of the end of the reporting period. |
Num(25,0) |
Any value rounded to the nearest dollar in CAD. Use the market value at the time of transfers in or deposits of the Digital Token to determine the cost basis. |
-30944 |
|
|||||
7 |
Digital Token Identifier |
Alphanumeric code that uniquely identifies the Digital Token held in the account. |
Char(9) |
Digital Token Identifier as defined by ISO 24165. See the following link for more details on the ISO standard for Digital Token Identifiers. https://dtif.org/ |
4H95J0R2X |
|
|||||
Data Elements Related to each Digital Token Identifier Held in each Account |
|||||
|
|||||
8 |
Quantity Bought |
Number of units of the Digital Token bought in the account during the reporting period. |
Num(31,18) |
Any value greater than or equal to zero up to a maximum number of 18 decimal places. |
4358.326 |
|
|||||
9 |
Number of Buy Transactions |
Number of transactions associated with the Quantity Bought during the reporting period. |
Num(25,0) |
Any value greater than or equal to zero. |
400 |
|
|||||
10 |
Quantity Sold |
Number of units of the Digital Token sold in the account during the reporting period. |
Num(31,18) |
Any value greater than or equal to zero up to a maximum number of 18 decimal places. |
125 |
|
|||||
11 |
Number of Sell Transactions |
Number of transactions associated with the Quantity Sold during the reporting period. |
Num(25,0) |
Any value greater than or equal to zero. |
3325 |
|
|||||
12 |
Quantity Transferred In |
Number of units of the Digital Token transferred into the account during the reporting period. |
Num(31,18) |
Any value greater than or equal to zero up to a maximum number of 18 decimal places. |
10.928606 |
|
|||||
13 |
Number of Transactions from Transfers In |
Number of transactions associated with the quantity transferred into the account during the reporting period. |
Num(25,0) |
Any value greater than or equal to zero. |
3 |
|
|||||
14 |
Quantity Transferred Out |
Number of units of the Digital Token transferred out of the account during the reporting period. |
Num(31,18) |
Any value greater than or equal to zero up to a maximum number of 18 decimal places. |
603 |
|
|||||
15 |
Number of Transactions from Transfers Out |
Number of transactions associated with the quantity transferred out of the account during the reporting period. |
Num(25,0) |
Any value greater than or equal to zero. |
45 |
|
|||||
16 |
Quantity Held |
Number of units of the Digital Token held in the account as of the end of the reporting period. |
Num(31,18) |
Any value greater than or equal to zero up to a maximum number of 18 decimal places. |
3641.25461 |
|
|||||
17 |
Value of Digital Token Held |
Value of the Digital Token held as of the end of the reporting period. |
Num(25,0) |
Any value greater than or equal to zero rounded to the nearest dollar in CAD. Use the unit price of the Digital Token as of the last business day of the reporting period multiplied by the quantity held as reported in (16). |
45177788 |
|
|||||
18 |
Client Limit |
The Client Limit established on each account. |
Num(25,2) |
Any value greater than or equal to zero rounded to the nearest dollar in CAD, or if a percentage, in decimal format. |
0.50 |
|
|||||
19 |
Client Limit Type |
The type of limit as reported in (18). |
Char(3) |
AMT (amount) or PER (percent). |
PER |
{1} Note: Digital Token refers to either data associated with a Digital Token, or a Digital Token referenced in an investment contract.
Application for time-limited relief from certain registrant obligations, prospectus requirement and trade reporting requirements -- suitability relief to allow the Filer to distribute Crypto Contracts and operate a platform that facilitates the buying, selling, depositing, withdrawing and staking of crypto assets -- relief granted subject to certain conditions set out in the decision, including investment limits, account appropriateness, disclosure and reporting requirements -- relief is time-limited and will expire 6 months from the date of the decision -- relief granted based on the particular facts and circumstances of the application with the objective of fostering capital raising by innovative businesses in Canada -- decision should not be viewed as precedent for other filers in the jurisdictions of Canada.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(1), 53, 74 & 144.
Multilateral Instrument 11-102 Passport System, s. 4.7.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 13.3.
OSC Rule 91-506 Derivatives: Product Determination, ss. 2 & 4.
OSC Rule 91-507 Derivatives: Trade Reporting, Part 3.
March 11, 2026
As set out in CSA Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets and Joint CSA/Investment Industry Regulatory Organization of Canada (IIROC) Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements, securities legislation applies to crypto asset trading platforms (CTPs) that facilitate or propose to facilitate the trading of instruments or contracts involving anything commonly considered a crypto asset, digital or virtual currency, or digital or virtual token (a Crypto Asset) because the user's contractual right to the Crypto Asset may itself constitute a security and/or a derivative (a Crypto Contract).
To foster innovation and respond to novel circumstances, the Canadian Securities Administrators (CSA) have considered an interim, time-limited registration that would allow CTPs to operate within a regulated environment, with regulatory requirements tailored to the CTP's operations. The overall goal of the regulatory environment is to ensure there is a balance between the need to be flexible and to facilitate innovation in the Canadian capital markets, while upholding the regulatory mandate of promoting investor protection and fair and efficient capital markets.
The Filer is currently registered in the category of restricted dealer in all provinces and territories of Canada. In connection with its registration as a restricted dealer, the Filer previously applied for and received exemptive relief in a decision dated August 15, 2022 (the 2022 Decision), which was varied and extended in a decision dated March 8, 2024 (the 2024 Decision), and further varied and extended in a decision dated March 12, 2025 (the 2025 Decision).
Under the terms and conditions of the 2022 Decision, the 2024 Decision and the 2025 Decision, the Filer has operated, and continues to operate, on an interim basis, a platform (the Platform) that permits clients resident in Canada to enter into Crypto Contracts to purchase, hold, sell, deposit, withdraw and, since the 2024 Decision, stake Crypto Assets.
The exemptive relief granted under the 2025 Decision expires on March 12, 2026 and required the Filer to continue to work actively and diligently with its Principal Regulator (as defined below), the Autorité des marchés financiers (AMF) and the Canadian Investment Regulatory Organization (CIRO), formerly IIROC, to transition the Filer's registration to that of an investment dealer and obtain CIRO membership.
The Filer has submitted an application to revoke and replace the 2025 Decision with this decision (the Decision) in order to allow the Filer to complete the CIRO membership process while continuing to operate the Platform past March 12, 2026 on an interim basis as a restricted dealer.
This Decision has been tailored for the specific facts and circumstances of the Filer, and the securities regulatory authority or regulator in the Applicable Jurisdictions (as defined below) will not consider this Decision as constituting a precedent for other filers.
The securities regulatory authority or regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) extending the time-limited exemption of the Filer from:
(a) the prospectus requirements under the Legislation in respect of the Filer entering into Crypto Contracts with clients to purchase, hold, sell, deposit, withdraw and stake Crypto Assets (the Prospectus Relief); and
(b) the requirement in section 13.3 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, before it opens an account, takes investment action for a client, or makes a recommendation or exercises discretion to take investment action, to determine on a reasonable basis that the action is suitable for the client (the Suitability Relief).
The securities regulatory authority or regulator in the Jurisdiction and each of the other jurisdictions referred to in Appendix A (collectively, the Coordinated Review Decision Makers) have received an application from the Filer for a decision under the securities legislation of those jurisdictions exempting the Filer from certain reporting requirements under the Local Trade Reporting Rules (as defined in Appendix A) (the Trade Reporting Relief, and together with the Prospectus Relief and the Suitability Relief, the Requested Relief).
The Filer has also applied to revoke the 2025 Decision effective as of the date of this Decision.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a hybrid application):
(a) the Ontario Securities Commission is the principal regulator for this application (the Principal Regulator);
(b) in respect of the Prospectus Relief and the Suitability Relief, the Filer has provided notice that, in the jurisdictions where required, 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 (the Non-Principal Jurisdictions, and, together with the Jurisdiction, the Applicable Jurisdictions); and
(c) the decision in respect of the Trade Reporting Relief is the decision of the Principal Regulator and evidences the decision of each Coordinated Review Decision Maker.
Terms defined in National Instrument 14-101 Definitions, MI 11-102, Canadian securities legislation or the 2025 Decision have the same meaning if used in this Decision, unless otherwise defined.
This Decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the federal laws of Canada with its principal and head office in Toronto, Ontario.
2. The Filer operates under the business name of "Newton".
3. The Filer does not have any securities listed or quoted on an exchange or marketplace in any jurisdiction inside or outside of Canada.
4. The Filer is registered as a dealer in the category of restricted dealer with the Applicable Jurisdictions.
5. The Filer is registered as a money services business (MSB) under regulations made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).
6. The Filer's personnel consist of software engineers, compliance professionals and client support representatives who each have experience operating in a regulated financial services environment as an MSB and expertise in blockchain technology. All of the Filer's personnel have passed criminal records checks and new personnel joining the Filer after August 15, 2022 will have passed criminal records and credit checks. The Filer does not have any dealing representatives.
7. On August 15, 2022, the Filer was granted relief from certain prospectus, trade reporting and suitability requirements applicable to the Filer in connection with the operation of the Platform, subject to certain terms and conditions. The relief was varied and extended on March 12, 2025 until March 12, 2026 in the 2025 Decision.
8. The Filer has been actively and diligently working to transition to CIRO as an investment dealer and a CIRO member and seeks a short-term extension of the 2025 Decision as the transition may be completed after the expiry of the 2025 Decision.
9. The Filer has been in regular, ongoing communications with CIRO throughout this process, and will continue to work actively and diligently with CIRO to register in the category of investment dealer and become a CIRO member.
10. The Filer will provide the Principal Regulator with regular and timely updates relating to the Filer's CIRO membership process.
11. This Decision is based on the same representations as were made by the Filer in the 2025 Decision, which remain true and complete to the extent not modified by the representations in this Decision.
The Principal Regulator is satisfied that the Decision satisfies the test set out in the Legislation for the Principal Regulator to make the Decision and each Coordinated Review Decision Maker is satisfied that the Decision in respect of the Trade Reporting Relief, as applicable, satisfies the tests set out in the securities legislation of its jurisdiction for the Coordinated Review Decision Maker to make the Decision in respect of the Trade Reporting Relief, as applicable.
The Decision of the Principal Regulator under the Legislation is that the 2025 Decision is revoked and the Requested Relief is granted, and the Decision of each Coordinated Review Decision Maker under the securities legislation in its jurisdiction is that the Trade Reporting Relief, as applicable, is granted, provided that and for so long as the Filer complies with the following terms and conditions:
A. The Filer complies with all of the terms and conditions of the 2025 Decision as if the 2025 Decision had not been revoked, except in respect of Condition E, and Appendix B and Appendix C of the 2025 Decision.
B. Appendix B of the 2025 Decision is replaced with Appendix B of this Decision.
C. Condition E of the 2025 Decision is replaced with the following: The Filer will only engage in the business of trading Crypto Assets, or Crypto Contracts in relation to Crypto Assets, that (a) are not securities or derivatives, or (b) are Value-Referenced Crypto Assets, provided that the Filer does not allow clients to buy or deposit, or enter into Crypto Contracts to buy or deposit, Value-Referenced Crypto Assets that do not satisfy the conditions set out in Appendix C of this Decision;
D. The Filer will continue to work actively and diligently with the Principal Regulator, AMF and CIRO to transition the Filer's registration to investment dealer registration and obtain CIRO membership.
E. This Decision may be amended by the Principal Regulator upon written notice to the Filer in accordance with applicable securities legislation.
F. This Decision shall expire on the date on the earlier of: (a) six months from the date of this Decision, or (b) the date on which the Filer is registered as an investment dealer and becomes a CIRO member.
In respect of the Requested Relief:
OSC File #: 2026-34
In this Decision, "Local Trade Reporting Rules" collectively means each of the following:
(a) Part 3, Data Reporting of Ontario Securities Commission Rule 91-507 Derivatives: Trade Reporting;
(b) Part 3, Data Reporting of Manitoba Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting; and
(c) Part 3, Data Reporting of Multilateral Instrument 96-101 Derivatives: Trade Reporting in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan, and Yukon.
• Bitcoin
• Ether
• Bitcoin Cash
• Litecoin
• Solana
• A Value-Referenced Crypto Asset that complies with condition C of this Decision.
1. The Filer establishes that all of the following conditions are met:
(a) The Value-Referenced Crypto Asset references, on a one-for-one basis, the value of a single fiat currency (the "reference fiat currency");
(b) The reference fiat currency is the Canadian dollar or United States dollar;
(c) The Value-Referenced Crypto Asset entitles a Value-Referenced Crypto Asset holder who maintains an account with the issuer of the Value-Referenced Crypto Asset to a right of redemption, subject only to reasonable publicly disclosed conditions, on demand directly against the issuer of the Value-Referenced Crypto Asset or against the reserve of assets, for the reference fiat currency on a one-to-one basis, less only any fee that is publicly disclosed by the issuer of the Value-Referenced Crypto Asset, and payment of the redemption proceeds within a reasonable period as disclosed by the issuer of the Value-Referenced Crypto Asset;
(d) The issuer of the Value-Referenced Crypto Asset maintains a reserve of assets that is:
i. in the reference fiat currency and is comprised of any of the following:
1. cash;
2. investments that are evidence of indebtedness with a remaining term to maturity of 90 days or less and that are issued, or fully and unconditionally guaranteed as to principal and interest, by the government of Canada or the government of the United States;
3. securities issued by one or more Money Market Funds licensed, regulated or authorized by a regulatory authority in Canada or the United States of America; or
4. such other assets that the principal regulator of the Filer and the regulator or securities regulatory authority in each Canadian jurisdiction where clients of the Filer reside has consented to in writing;
(e) all of the assets that comprise the reserve of assets are:
i. measured at fair value in accordance with Canadian GAAP for publicly accountable enterprises or U.S. GAAP at the end of each day,
ii. held with a Qualified Custodian,
iii. held in an account clearly designated for the benefit of the Value-Referenced Crypto Asset holders or in trust for the Value-Referenced Crypto Asset holders,
iv. held separate and apart from the assets of the issuer of the Value-Referenced Crypto Asset and its Affiliates and from the reserve of assets of any other Crypto Asset, so that, to the best of the knowledge and belief of the Filer after taking steps that a reasonable person would consider appropriate, including consultation with experts such as legal counsel, no creditors of the issuer other than the Value-Referenced Crypto Asset holders in their capacity as Value-Referenced Crypto Asset holders, will have recourse to the reserve of assets, in particular in the event of insolvency, and
v. not encumbered or pledged as collateral at any time; and
(f) the fair value of the reserve of assets is at least equal to the aggregate nominal value of all outstanding units of the Value-Referenced Crypto Asset at least once each day.
2. The issuer of the Value-Referenced Crypto Asset makes all of the following publicly available:
(a) details of each type, class or series of the Value-Referenced Crypto Asset, including the date the Value-Referenced Crypto Asset was launched and key features and risks of the Value-Referenced Crypto Asset;
(b) The quantity of all outstanding units of the Value-Referenced Crypto Asset and their aggregate nominal value at least once each business day;
(c) the names and experience of the persons or companies involved in the issuance and management of the Value-Referenced Crypto Asset, including the issuer of the Value-Referenced Crypto Asset, any manager of the reserve of assets, including any individuals that make investment decisions in respect of the reserve of assets, and any custodian of the reserve of assets;
(d) the quantity of units of the Value-Referenced Crypto Asset held by the issuer of the Value-Referenced Crypto Asset or any of the persons or companies referred to in paragraph (c) and their nominal value at least once each business day;
(e) details of how a Value-Referenced Crypto Asset holder can redeem the Value-Referenced Crypto Asset, including any possible restrictions on redemptions such as the requirement for a Value-Referenced Crypto Asset holder to have an account with the issuer of the Value-Referenced Crypto Asset and any criteria to qualify to have an account;
(f) details of the rights of a Value-Referenced Crypto Asset holder against the issuer of the Value-Referenced Crypto Asset and the reserve of assets, including in the event of insolvency or winding up;
(g) all fees charged by the issuer of the Value-Referenced Crypto Asset for distributing, trading or redeeming the Value-Referenced Crypto Asset;
(h) whether Value-Referenced Crypto Asset holders are entitled to any revenues generated by the reserve of assets;
(i) details of any instances of any of the following:
i. the issuer of the Value-Referenced Crypto Asset has suspended or halted redemptions for all Value-Referenced Crypto Asset holders, and
ii. the issuer of the Value-Referenced Crypto Asset has not been able to satisfy redemption rights at the price or in the time specified in its public policies;
(j) within 45 days of the end of each month, an assurance report from a public accountant that is authorized to sign such a report under the laws of a jurisdiction of Canada or the United States of America, and that meets the professional standards of that jurisdiction, that complies with all of the following:
i. provides reasonable assurance in respect of the assertion by management of the issuer of the Value-Referenced Crypto Asset that the issuer of the Value-Referenced Crypto Asset has met the requirements in paragraphs (1)(d)-(f) as at the last business day of the preceding month and at least one randomly selected day during the preceding month,
ii. the randomly selected day referred to in subparagraph (i) is selected by the public accountant and disclosed in the assurance report,
iii. for each day referred to in subparagraph (i), management's assertion includes all of the following:
1. details of the composition of the reserve of assets,
2. the fair value of the reserve of assets in subparagraph (1)(e)(i), and
3. the quantity of all outstanding units of the Value-Referenced Crypto Asset in paragraph (b), and
iv. the assurance report is prepared in accordance with the Handbook, International Standards on Assurance Engagements or attestation standards established by the American Institute of Certified Public Accountants; and
(k) starting with the first financial year ending after December 1, 2023, within 120 days of the issuer of the Value-Referenced Crypto Asset's financial year end, annual financial statements of the issuer of the Value-Referenced Crypto Asset that comply with all of the following:
i. the annual financial statements include all of the following:
1. a statement of comprehensive income, a statement of changes in equity and a statement of cash flows, each prepared for the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any,
2. a statement of financial position, signed by at least one director of the issuer of the Value-Referenced Crypto Asset, as at the end of the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any, and
3. notes to the financial statements;
ii. the statements are prepared in accordance with one of the following accounting principles:
1. Canadian GAAP applicable to publicly accountable enterprises, and
2. U.S. GAAP;
iii. the statements are audited in accordance with one of the following auditing standards:
1. Canadian GAAS,
2. International Standards on Auditing,
3. U.S. PCAOB GAAS;
iv. the statements are accompanied by an auditor's report that:
1. if (iii)(1) or (2) applies, expresses an unmodified opinion,
2. if (iii)(3) applies, expresses an unqualified opinion,
3. identifies the auditing standards used to conduct the audit, and
4. is prepared and signed by a public accountant that is authorized to sign such a report under the laws of a jurisdiction of Canada or the United States of America.
3. The Crypto Asset Statement includes all of the following:
(a) a prominent statement that no securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the Crypto Assets made available through the platform;
(b) a prominent statement that the Value-Referenced Crypto Asset is not the same as and is riskier than a deposit in a bank or holding cash with the Filer;
(c) a prominent statement that although Value-Referenced Crypto Assets may be commonly referred to as "stablecoins", there is no guarantee that the Value-Referenced Crypto Asset will maintain a stable value when traded on secondary markets or that the reserve of assets will be adequate to satisfy all redemptions;
(d) a prominent statement that, due to uncertainties in the application of bankruptcy and insolvency law, in the event of the insolvency of [Value-Referenced Crypto Asset issuer], there is a possibility that creditors of [Value-Referenced Crypto Asset issuer] would have rights to the reserve assets that could outrank a Value-Referenced Crypto Asset holder's rights, or otherwise interfere with a Value-Referenced Crypto Asset holder's ability to access the reserve of assets in the event of insolvency;
(e) a description of the Value-Referenced Crypto Asset and its issuer;
(f) a description of the due diligence performed by the Filer with respect to the Value-Referenced Crypto Asset;
(g) a brief description of the information in section (2) and links to where the information in that section is publicly available;
(h) a link to where on its website the issuer of the Value-Referenced Crypto Asset will disclose any event that has or is likely to have a significant effect on the value of the Value-Referenced Crypto Asset or on the reserve of assets;
(i) a description of the circumstances where the secondary market trading value of the Value-Referenced Crypto Asset may deviate from par with the reference fiat currency and details of any instances where the secondary market trading value of the Value-Referenced Crypto Asset has materially deviated from par with the reference fiat currency during the last 12 months on the Filer's platform;
(j) a brief description of any risks to the client resulting from the trading of a Value-Referenced Crypto Asset or a Crypto Contract in respect of a Value-Referenced Crypto Asset that may not have been distributed in compliance with securities laws;
(k) any other risks specific to the Value-Referenced Crypto Asset, including the risks arising from the fact that the Filer may not, and a client does not, have a direct redemption right with the issuer of the Value-Referenced Crypto Asset;
(l) a direction to the client to review the Risk Statement for additional discussion of general risks associated with the Crypto Contracts and Crypto Assets made available through the platform;
(m) a statement that the statutory rights in section 130.1 of the Act and, if applicable, similar statutory rights under securities legislation of other Applicable Jurisdictions, do not apply in respect of the Crypto Asset Statement to the extent a Crypto Contract is distributed under the Prospectus Relief in the Decision; and
(n) the date on which the information was last updated.
4. If the Filer uses the term "stablecoin" or "stablecoins" in any information, communication, advertising or social media related to the Platform and targeted at or accessible by Canadian investors, the Filer will also include the following statement (or a link to the following statement when impractical to include):
"Although the term "stablecoin" is commonly used, there is no guarantee that the asset will maintain a stable value in relation to the value of the reference asset when traded on secondary markets or that the reserve of assets, if there is one, will be adequate to satisfy all redemptions."
5. The issuer of the Value-Referenced Crypto Asset has filed an undertaking in substantially the same form as set out in Appendix B of CSA Notice 21-333 Crypto Asset Trading Platforms: Terms and Conditions for Trading Value-Referenced Crypto Assets with Clients (CSA SN 21-333) and the undertaking is posted on the CSA website.
6. To the extent the undertaking referred to in section (5) of this Appendix includes language that differs from sections (1) or (2) of this Appendix, the Filer complies with sections (1) and (2) of this Appendix as if they included the modified language from the undertaking.
7. The KYP Policy of the Filer requires the Filer to assess whether the Value-Referenced Crypto Asset or the issuer of the Value-Referenced Crypto Asset satisfies the criteria in sections (1), (2), (5) and (6) of this Appendix on an ongoing basis.
8. The Filer has policies and procedures to facilitate halting or suspending deposits or purchases of the Value-Referenced Crypto Asset, or Crypto Contracts in respect of the Value-Referenced Crypto Asset, as quickly as is commercially reasonable, if the Value-Referenced Crypto Asset no longer satisfies the criteria in sections (1), (2), (5) and (6) of this Appendix.
9. In this Appendix, terms have the meanings set out in Appendix D of CSA SN 21-333.
RBC Global Asset Management Inc. and The Funds
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from sections 15.3(2), 15.3(4)(c), 15.6(1)(a)(i), 15.6(1)(d), 15.8(2)(a.1), 15.8(3)(a.1) of National Instrument 81-102 Investment Funds to permit a prospectus qualified mutual fund that has not distributed securities under a simplified prospectus in a jurisdiction for 12 consecutive months to include in its sales communications past performance data relating to a period when the fund's securities were previously distributed to investors on a prospectus-exempt basis -- Mutual fund is managed substantially similarly after it became a reporting issuer as it was during the period prior to becoming a reporting issuer and has similar fee and expense structure; Relief granted from Items 5(2), 5(3) and 5(4) and Instruction (1) of Part I of Form 81-101F3 in respect of the requirement to comply with sections 15.3(2), 15.3(4)(c), 15.6(1)(a)(i), 15.6(1)(d), 15.8(2)(a.1), and 15.8(3)(a.1) of NI 81-102 to permit the Funds to include past performance data in its fund facts documents, notwithstanding that such past performance data relates to a period prior to the Fund offering its units under a prospectus and that the Fund has not distributed its units under a prospectus for 12 consecutive months; Relief granted from section 15.1.1 of NI 81-102, Items 2 and 4 of Appendix F to NI 81-102, Item 10(b) of Part B of Form 81-101F1, Item 4(2)(a) of Form 81-101F3, Instruction (1) of Item 4 of Form 81-101F3 to permit the Funds to use this past performance data to calculate its investment risk level in accordance with Appendix F Investment Risk Classification Methodology; Relief granted from section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure for the purposes of the relief requested from Items 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1, and Items 3(1) and 4 of Part C of Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance, to permit the mutual to include in its annual and interim management reports of fund performance the past performance and financial data relating to a period when the fund was previously offered on a prospectus-exempt basis.
Form 81-101F1 Contents of Simplified Prospectus, Item 10(b) of Part B.
Form 81-101F3 Contents of Fund Facts Document, Item 4(2)(a), Instruction (1) of Item 4, and Items 5(2), 5(3), and 5(4) of Part I.
National Instrument 81-102 Investment Funds, ss. 15.3(2), 15.3(4)(c), 15.6(1)(a)(i), 15.6(1)(d), 15.8(2)(a.1), 15.8(3)(a.1), 15.1.1, 19.1, and Items 2 and 4 of Appendix F.
National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 4.4 and 17.1.
Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance, Items 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B and Items 3(1) and 4 of Part C.
March 26, 2026
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of BlueBay High Income Credit Fund and RBC Alpha Plus U.S. Equity Fund (collectively, the Funds, and each, a Fund), for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Funds from:
(a) Subsection 15.3(2), paragraph 15.3(4)(c), subparagraph 15.6(1)(a)(i), and paragraphs 15.6(1)(d), 15.8(2)(a.1) and 15.8(3)(a.1) of National Instrument 81-102 Investment Funds (NI 81-102) to permit each of the Funds to include its past performance data in sales communications notwithstanding that:
(i) the past performance data will relate to a period prior to the Fund offering its units under a simplified prospectus; and
(ii) the Fund has not distributed its securities under a simplified prospectus for 12 consecutive months;
(b) Paragraph 15.1.1(a) of NI 81-102 and Items 2 and 4 of Appendix F Investment Risk Classification Methodology to NI 81-102 (the Risk Classification Methodology) to permit each of the Funds to include its past performance data in determining its investment risk level in accordance with the Risk Classification Methodology;
(c) Paragraph 15.1.1(b) of NI 81-102, Item 4(2)(a) and Instruction (1) of Item 4 of Form 81-101F3 Contents of Fund Facts Document (Form 81-101F3) to permit each of the Funds to disclose its risk level as determined by including its past performance data in accordance with the Risk Classification Methodology;
(d) Item 10(b) of Part B of Form 81-101F1 Contents of Simplified Prospectus (Form 81-101F1), to permit each of the Funds to use its past performance data to calculate its investment risk rating in its simplified prospectus;
(e) Items 5(2), 5(3) and 5(4) and Instruction (1) of Part I of Form 81-101F3 in respect of the requirement to comply with subsection 15.3(2), paragraph 15.3(4)(c), subparagraph 15.6(1)(a)(i), and paragraphs 15.6(1)(d), 15.8(2)(a.1) and 15.8(3)(a.1) of NI 81-102 to permit each of the Funds to include in its fund facts documents, the past performance data of the Fund notwithstanding that such performance data relates to a period prior to the Fund offering its units under a simplified prospectus and that the Fund has not distributed its units under a simplified prospectus for 12 consecutive months;
(f) Section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) for the purposes of relief requested herein from Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance (Form 81-106F1); and
(g) Items 3.1(7), 4.1(1) of Part B of Form 81-106F1 in respect of the requirement to comply with subsection 15.3(2) and paragraph 15.3(4)(c) of NI 81-102, items 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1, and Items 3(1) and 4 of Part C of Form 81-106F1 to permit each of the Funds to include in its annual and interim management reports of fund performance (MRFP) the past performance data and financial highlights of the Fund notwithstanding that such performance data and financial highlights relate to a period prior to the Fund offering its units under a simplified prospectus.
(collectively, the Requested Relief).
Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator; and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11- 102 Passport System (Ml 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Ontario (together with Ontario, the Jurisdictions).
Capitalized terms used herein have the meaning ascribed thereto below (or in National Instrument 14-101 Definitions, MI 11-102 and NI 81-102, as applicable) unless otherwise defined in this Decision.
This decision is based on the following facts represented by the Filer:
The Filer
1. The Filer is a corporation formed by amalgamation under the federal laws of Canada and its head office is located in Toronto, Ontario.
2. The Filer is an indirect, wholly-owned subsidiary of Royal Bank of Canada.
3. The Filer 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.
4. The Filer is the investment fund manager of each of the Funds.
5. The Filer is not in default of securities legislation in any of the Jurisdictions.
The Funds
6. Each Fund is an open-ended mutual fund established as a trust under the laws of the Province of British Columbia.
7. The Filer established BlueBay High Income Credit Fund on March 21, 2022 and RBC Alpha Plus U.S. Equity Fund on May 31, 2016. Since the commencement of operations of each of the Funds, the units of the Funds have been distributed only to qualified investors by means of the prospectus exemptions in National Instrument 45-106 Prospectus Exemptions.
8. The Funds currently consist of the following series of units, which were first offered on the corresponding dates below (each, an Initial Effective Date):
(a) BlueBay High Income Credit Fund currently consists of Series F units and Series O units, which were first offered on March 21, 2022.
(b) RBC Alpha Plus U.S. Equity Fund currently consists of Series O units, which were first offered on May 31, 2016.
9. The Funds are not currently in default of securities legislation in any of the Jurisdictions.
10. The Filer anticipates filing a simplified prospectus and fund facts for each of the Funds (collectively, the Disclosure Documents) in order to qualify the units of the Funds for distribution to the public and that upon issuance of final receipts for the Disclosure Documents, each of the Funds will be a reporting issuer in each of the Jurisdictions.
11. Subject to any exemptions therefrom that have been, or may be, granted by the applicable securities regulatory authorities, the Funds will become subject to the requirements of NI 81-102 and the requirements of NI 81-106 that apply to investment funds that are reporting issuers.
12. The investment objective of each of the Funds is set out below:
Fund |
Investment Objective |
|
|
BlueBay High Income Credit Fund |
The fundamental investment objective of the Fund is to provide returns comprised of interest income and modest capital appreciation by investing primarily in asset-backed credit securities. The Fund may engage in borrowing and/or derivatives for investment purposes. |
|
|
RBC Alpha Plus U.S. Equity Fund |
The fundamental investment objective of the Fund is to generate returns that exceed the performance of the S&P 500 Index through an allocation to derivatives that provide exposure substantially equivalent to the performance of the S&P 500 Index and equity market neutral strategies or other alternative strategies designed to provide returns that exceed the financing cost of the derivatives portfolio. |
13. Except as set out in paragraph 14 below, each Fund will, after it becomes a reporting issuer, be managed in a manner which is substantially similar to the manner in which it was managed during the period commencing as of the Initial Effective Date until the date on which it becomes a reporting issuer. At the time each Fund becomes a reporting issuer:
(a) no material changes will be made to its fundamental investment objective(s);
(b) its fees will not change; and
(c) its day-to-day administration will not change, other than to comply with additional regulatory requirements associated with being a reporting issuer (none of which impact the portfolio management of the Fund), subject to any exemptions therefrom that have been, or may be, granted by the applicable securities regulatory authorities.
14. Currently, RBC Alpha Plus U.S. Equity Fund seeks to achieve its fundamental investment objectives by primarily investing its assets in an underlying fund (the Underlying Fund). At the time RBC Alpha Plus U.S. Equity Fund becomes a reporting issuer or thereafter, the investment strategies of the Fund may be modified such that RBC Alpha Plus U.S. Equity Fund will primarily invest in the same portfolio holdings as the Underlying Fund (rather than investing in units of the Underlying Fund itself).
15. Subject to the exemptions that have been granted by the applicable securities regulatory authorities, each Fund has complied with the investment restrictions and practices contained in NI 81-102, since inception.
16. The Filer proposes that the past performance data for the time period between the Initial Effective Date and the date on which the Funds have received a final receipt for the Disclosure Documents, which represents the actual performance data for the Series F units and/or Series O units of the Funds, be used as the past performance data of the same series of units of the Funds during such period. The only difference in performance between the Series F units and Series O units of a Fund since the Initial Effective Date would have been due to the different management fees paid by each such class of units of each of the Funds, as the same fixed administration fee is charged to each class of units to pay for certain operating expenses of each of the Funds.
17. The Filer proposes to present each Fund's past performance data for the time period commencing as of the Initial Effective Date, including as set out above in paragraph 16, as the performance data of the Series F units and/or Series O units of the Fund, as applicable, in the sales communications relating to such series of units of the Fund. Without the Requested Relief, the sales communications pertaining to each of the Funds would not be permitted to include past performance data of the Fund that relates to a period prior to the Fund becoming a reporting issuer, and each Fund would not be permitted to provide past performance data in its sales communications until it has distributed securities under a simplified prospectus for at least 12 consecutive months.
18. The Filer proposes to use each Fund's past performance data for the time period commencing as of the Initial Effective Date to determine the investment risk level of the Fund and to disclose that investment risk level in its Disclosure Documents for each series of units of the Fund. Without the Requested Relief, the Filer, in determining and disclosing each Fund's investment risk level in its Disclosure Documents would not be permitted to use the past performance data of the Fund that relates to a period prior to the Fund becoming a reporting issuer.
19. The Filer proposes to include in the fund facts for each existing series of units of each of the Funds, the past performance data for the time period commencing as of the Initial Effective Date in the charts required by items 5(2), 5(3) and 5(4) of Form 81-101F3, under the sub-headings "Year-by-year returns", "Best and worst 3-month returns" and "Average return", respectively, related to the periods prior to the Fund becoming a reporting issuer in each of the Jurisdictions. Without the Requested Relief, the Funds would not be permitted to include in their fund facts, past performance data that relates to a period prior to such Fund becoming a reporting issuer.
20. As a reporting issuer, each of the Funds will be required under NI 81-106 to prepare and send management reports of fund performance (MRFPs) to all holders of its units on semi-annual basis. Without the Requested Relief, the Funds would not be permitted to include in their MRFPs, financial highlights and the past performance data of the Funds that relates to a period prior to a Fund becoming a reporting issuer.
21. The past performance data and other financial data of the Funds for the time period commencing as of the Initial Effective Date and before a Fund became a reporting issuer is significant and meaningful information for existing and prospective investors of units of the Funds.
22. The Filer submits that reference to the performance data of a Fund for the period prior to the Fund becoming a reporting issuer would not be misleading to investors provided that the Fund includes appropriate disclaimers to such effect.
23. The financial statements for each of the Funds for the period before a Fund became a reporting issuer will be posted on the Fund's website and the Filer will deliver a copy of such financial statements to any investor upon request.
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 Requested Relief is granted provided that:
(a) any sales communication, fund facts documents and MRFP that contains past performance data of the units of a Fund relating to a period of time prior to when the Fund was a reporting issuer discloses that:
(i) the Fund was not a reporting issuer during such period;
(ii) the expenses of the Fund would have been higher during such period had the Fund been subject to the additional regulatory requirements applicable to a reporting issuer;
(iii) the Filer obtained exemptive relief on behalf of the Fund to permit the disclosure of past performance data of the units of the Fund relating to a period prior to when the Fund was a reporting issuer; and
(iv) with respect to any MRFP, the financial statements of the Fund for such period are posted on the Filer's website and are available to investors upon request; and
(b) the Filer posts the financial statements of the Fund since the Initial Effective Dates on each Fund's designated website and delivers those financial statements to investors upon request.
Application File #: 2026-58
SEDAR+ File #: 06393244
AGF Investments Inc. or an Affiliate
Relief granted from the single custodian requirement to permit the use of more than one custodian, subject to conditions.
National Instrument 81-102 Investment Funds, ss. 6.1(1) and 19.1.
March 27, 2026
The principal regulator in the Jurisdiction has received an application (the Application) from the Filer on their behalf and on behalf of AGF Enhanced U.S. Equity Income Plus Fund (the Existing Fund) and other existing and future investment funds managed by the Filer to which National Instrument 81-102 Investment Funds (NI 81-102) applies (together with the Existing Fund, the Funds) for a decision under the securities legislation of the Jurisdiction (the Legislation), to permit each Fund to appoint more than one custodian, each of which is qualified to be a custodian under section 6.2 of NI 81-102 and each of which is subject to all of the other requirements in NI 81-102 Part 6 Custodianship of Portfolio Assets other than the prohibition against the Fund appointing more than one custodian in subsection 6.1(1) of NI 81-102 pursuant to this decision (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 Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Québec, Prince Edward Island, Saskatchewan and Yukon (together with Ontario, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions (NI 14-101), MI 11-102, NI 81-102 and NI 81-107 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. AGFI is a corporation amalgamated under the laws of the Province of Ontario, with its head office located in Toronto, Ontario. AGFI and its affiliates are each directly or indirectly wholly owned by AGF Management Limited.
2. AGFI is registered in the categories of (a) exempt market dealer in the Provinces of Alberta, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan, (b) portfolio manager in each of the provinces and territories of Canada, (c) investment fund manager in the Provinces of Alberta, British Columbia, Newfoundland and Labrador, Ontario and Quebec, and (d) commodity trading manager in the Province of Ontario.
3. AGFI or an affiliate of AGFI is or will be the manager of the Funds. To the extent that AGFI or an affiliate of AGFI is the manager or portfolio manager of any future Fund, the representations set out in this decision will apply to the same extent to such future Fund and AGFI or its affiliates.
4. AGFI and any of its affiliates who intend to rely on a decision in respect of the Exemption Sought, if granted, are currently registered as investment fund managers and/or portfolio managers for any of the Funds and are not in default of securities legislation in any Jurisdiction.
The Funds
5. Each Fund is, or will be, an investment fund organized and governed by the laws of a province or territory of Canada or the laws of Canada.
6. Each Fund is or will be an investment fund to which NI 81-102 applies subject to any exemptions therefrom that have been or may be granted by securities regulatory authorities.
7. The securities of each Fund are, or will be, qualified for distribution in one or more of the Jurisdictions under a prospectus prepared and filed in accordance with the securities legislation of such Jurisdictions.
8. The Existing Fund is not in default of securities legislation in any of the Jurisdictions.
9. The Filer would like the flexibility for each Fund to engage additional custodians that are qualified to act as a custodian under subsection 6.2(3) of NI 81-102, (each an Additional Custodian), which Additional Custodians may include entities that act as, among other things, a borrowing agent to one or more Funds (each a Prime Broker) that satisfy such requirements.
10. The ability to appoint a Prime Broker to act as an Additional Custodian will increase operational efficiency and reduce execution risk and costs for a Fund as it will avoid the need to transfer the Fund's portfolio assets from a third party custodian to the Prime Broker to effect transactions conducted by the Fund through the Prime Broker.
11. The Filer and any Additional Custodians would be subject to all requirements applicable to custodians under Part 6 of NI 81-102, other than the requirement in subsection 6.1(1) of NI 81-102 that there only be one custodian.
12. An Additional Custodian may also be appointed as a securities lending agent of the Funds and, in such circumstances, would provide the Funds with the opportunity to enter into a greater number of agreements that effect securities lending, repurchase, or reverse repurchase transactions between a Fund, as lender of the securities, third party borrowers, and the Fund's securities lending agent (Securities Lending Agreements) than would be the case with a single custodian and would, therefore, have the potential to increase revenues to the Funds from securities lending activities.
13. Prime Brokers are not widely appointed as sub-custodians by custodians under NI 81-102 as it can be both operationally challenging for the custodian and the Filer to appoint them to act in such capacity.
14. If the Exemption Sought is granted, an Additional Custodian's responsibility for custody of a Fund's assets will apply only to the assets held by the Additional Custodian on behalf of the Fund (the Relevant Assets). The custodial arrangements between a Fund and an Additional Custodian will comply with the requirements of Part 6 of NI 81-102 other than subsection 6.1(1).
15. Any Additional Custodian will meet the requirements of NI 81-102 to act as a custodian for an investment fund and will have experience acting as custodian of the assets of public investment funds governed by NI 81-102. As custodian of the Relevant Assets, an Additional Custodian will comply with the standard of care applicable to qualified custodians under section 6.6 of NI 81-102, will hold the Relevant Assets in the name of the applicable Fund in accordance with section 6.5 of NI 81-102, and will include the provisions prescribed in section 6.4 of NI 81-102 in its custody agreement with the Filer and applicable Fund(s). Each Additional Custodian will complete the review and provide compliance reports to the Filer as contemplated in section 6.7 of NI 81-102.
16. The ability to terminate an Additional Custodian as custodian of the Relevant Assets of a Fund at any time without cause on written notice will ensure that the Filer maintains ultimate control over all of the portfolio assets of the Funds if the Filer considers it to be in the best interests of the Funds and their respective securityholders to do so.
17. The appointment of an Additional Custodian should not have an impact on the safety of the portfolio assets of the Funds while also enhancing the Funds' abilities to engage in the efficient short selling of securities under section 6.8.1 of NI 81-102 and to enter into additional Securities Lending Agreements.
18. Disclosure regarding the particulars of the appointment of any Additional Custodian of a Fund with respect to the Relevant Assets will be included in the next prospectus filed with respect to the applicable Fund after such appointment is made.
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) a single entity reconciles all the portfolio assets of the Fund and provides the Fund with valuation and unitholder recordkeeping services and will complete daily reconciliations amongst the custodians before striking a daily net asset value;
(b) the Filer maintains such operational systems and processes, as between two or more custodians and the single entity referred to in condition (a) above, in order to keep a proper reconciliation of all the portfolio assets that will move amongst the custodians, as appropriate; and
(c) Each Additional Custodian will act as custodian, securities lending agent and/or prime broker only for the portion of portfolio assets of the Fund transferred to it.
Application File #: App2026-81
SEDAR+ File #: 06396460
Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107), s. 5.1 -- the Filer is granted relief from the requirements under section 3.2 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises in order to permit the Filer to prepare its financial statements in accordance with U.S. GAAP.
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standard, ss. 3.2 and 5.1.
Citation: Re TriSummit Utilities Inc., 2026 ABASC 37
March 30, 2026
The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption (the Exemption Sought) from the requirements of section 3.2 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that the financial statements of the Filer (a) be prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) applicable to publicly accountable enterprises and (b) disclose an unreserved statement of compliance with International Financial Reporting Standards (IFRS) in the case of annual financial statements and an unreserved statement of compliance with IAS 34 in the case of an interim financial report.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(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 by it in each of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (the Passport Jurisdictions); and
(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
In this decision:
(a) unless otherwise defined herein, terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 52-107 have the same meaning if used herein;
(b) Existing Relief means the decision of the Decision Makers dated August 15, 2022 in Re TriSummit Utilities Inc., 2022 ABASC 108;
(c) Handbook means the Chartered Professional Accountants of Canada Handbook; and
(d) rate-regulated activities has the meaning ascribed thereto in the Handbook.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the laws of Canada. The head office of the Filer is located in Calgary, Alberta.
2. The Filer is a reporting issuer in each Jurisdiction and Passport Jurisdiction and is not in default of securities legislation in any jurisdiction of Canada.
3. The Filer carries on rate-regulated activities.
4. The Filer currently prepares and files its financial statements for annual and interim periods in accordance with United States generally accepted accounting principles (U.S. GAAP), as permitted by the Existing Relief.
5. The Filer is not an SEC issuer.
6. Were the Filer an SEC issuer, it would be permitted by section 3.7 of NI 52-107 to file financial statements prepared in accordance with U.S. GAAP.
7. The Existing Relief provides that it will terminate on the earliest of the following: (i) January 1, 2027; (ii) if the Filer ceases to have rate-regulated activities, the first day of the Filer's financial year that commences after the Filer ceases to have rate-regulated activities; and (iii) the first day of the Filer's financial year that commences on or following the later of: (A) the effective date prescribed by the International Accounting Standards Board (IASB) for a standard within IFRS for entities with rate-regulated activities (a Mandatory Rate-regulated Standard); and (B) two years after the IASB publishes the final version of a Mandatory Rate-regulated Standard. Accordingly, in the absence of further relief provided by Canadian securities regulators, the Filer will become subject to Canadian GAAP no later than January 1, 2027. Canadian GAAP includes IFRS as incorporated into the Handbook.
8. The issuance by the IASB of a Mandatory Rate-regulated Standard would result in the expiry of the Existing Relief, giving rise to the obligation of the Filer to commence financial statement preparation and reporting in accordance with IFRS pursuant to NI 52-107.
9. In January 2021, the IASB published the Exposure Draft -- Regulatory Assets and Regulatory Liabilities, which introduces a proposed standard of accounting for regulatory assets and liabilities applicable to entities with rate-regulated activities. In July 2024, the IASB concluded its re-deliberations and confirmed readiness to move forward with a new IFRS Accounting Standard to supersede IFRS 14. In October 2025, the IASB published an update on the review and comment process on the proposed standard, including the staff analysis and recommendations on certain issues, and indicated that the drafting and balloting process was continuing.
10. The IASB has publicly stated that it expects to publish the Mandatory Rate-regulated Standard in the second quarter of 2026, although the effective date (now expected to be January 1, 2029) has not been confirmed. The Filer will require sufficient time to: (a) interpret and implement such standard and transition from financial statement preparation and reporting in accordance with U.S. GAAP to IFRS; and (b) interpret and reconcile the implications on the customer rate setting process resulting from the implementation.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.
The decision of the Decision Makers under the Legislation is that:
(a) the Existing Relief is revoked;
(b) the Exemption Sought is granted to the Filer in respect of the Filer's financial statements required to be filed on or after the date of this order, provided that the Filer prepares such financial statements in accordance with U.S. GAAP; and
(c) the Exemption Sought will terminate in respect of the Filer on the earliest of the following:
(i) January 1, 2032;
(ii) if the Filer ceases to have rate-regulated activities, the first day of the Filer's financial year that commences after the Filer ceases to have rate-regulated activities; and
(iii) the first day of the Filer's financial year that commences on or following the later of:
(A) the effective date prescribed by the IASB for the Mandatory Rate-regulated Standard; and
(B) four years after the IASB publishes the final version of a Mandatory Rate-regulated Standard.
For the Commission:
"original signed by" |
"original signed by" |
______________________________________________________________ |
______________________________________________________________ |
|
|
______________________________________________________________ |
______________________________________________________________ |
Kari Horn, K.C. |
Deanna Steblyk, K.C. |
Vice-Chair |
Vice-Chair |
OSC File #: 2026-103
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the formal take-over bid and issuer bid requirements of National Instrument 62-104 Take-Over Bids and Issuer Bids in connection with acquisitions of shares of the Filer -- Filer is not a reporting issuer and there is no published market for the filer's shares -- If certain shareholders were treated as employees, the number of holders of each class of shares, exclusive of employees, would be fewer than 50 and the non-reporting issuer exemptions from the take-over bid and issuer bid requirements would be available -- Such shareholders devote a substantial amount of time to the business of the filer and are akin to employees -- Requested relief granted, subject to conditions consistent with the premise of the non-reporting issuer exemptions.
National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1(1).
Citation: Re Corus Orthodontists Inc., 2026 ABASC 39
March 31, 2026
The securities regulatory authority or regulator in each of the Jurisdictions (each, a Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the take-over bid and issuer bid requirements in Part 2 of National Instrument 62-104 Take-Over Bids and Issuer Bids (the Take-Over Bid and Issuer Bid Requirements) do not apply to acquisitions (Subject Transactions) of common shares of the Filer (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(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 jurisdiction of Canada, other than Alberta and Ontario; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions, MI 11-102 or National Instrument 45-106 Prospectus Exemptions have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the Business Corporations Act (Alberta) (the ABCA).
2. The head and registered offices of the Filer are located in Calgary, Alberta.
3. The Filer is not, and has never been, a reporting issuer in any jurisdiction of Canada and is not in default of Canadian securities legislation.
4. The Filer does not have any securities listed on any stock exchange in Canada or otherwise.
5. The Filer's authorized share capital consists of
(a) an unlimited number of Class A Common Shares (Class A Shares), issuable in series, and
(b) an unlimited number of Class B Common Shares (Class B Shares and, together with the Class A Shares, the Shares).
6. As of March 24, 2026, there were issued and outstanding 10 730 442 Class A Shares across fourteen series and 9 556 916 Class B Shares.
7. As of March 24, 2026, the Shares were held, directly or indirectly, by current and former Orthodontist Principals (as defined below) (or their permitted assigns), current and former employees of the Filer and 24 holders which were neither a current or former Orthodontist Principal or current or former employee of the Filer (nor, in each case, a permitted assign thereof).
8. As of March 24, 2026, there were 16 holders of Class A Shares (all of which were current or former Orthodontist Principals (or their permitted assigns) and non-employee shareholders of the Filer) and 131 holders of Class B Shares (73 of which were current or former Orthodontist Principals (or their permitted assigns), 34 of which were current or former employees of the Filer (or their permitted assigns) and 24 of which were neither a current or former Orthodontist Principal or current or former employee of the Filer (nor, in each case, a permitted assign thereof)).
9. All of the holders of the Class A Shares and the Class B Shares (other than the New Investors, as defined below) are parties to, and subject to the terms of, the Filer's shareholder agreement dated June 1, 2020 as amended from time to time (the Shareholder Agreement) or a share repurchase agreement with the Filer (collectively, the Share Repurchase Agreements and, together with the Shareholder Agreement, the Shareholders' Rights Agreements). The Shareholders' Rights Agreements provide certain rights and obligations with respect to, among other things, the ownership of Shares, including customary restrictions on transfer and drag-along rights, as well as optional rights of repurchase of the Shares in favour of the Filer and certain holders of Shares upon the occurrence of certain specified events in accordance with the terms set forth therein.
10. Pursuant to a transaction (the Transaction) with arm's length third parties (the New Investors), on January 29, 2026, certain holders of Shares (the Exchanging Shareholders)
(a) entered into share exchange agreements with the Filer, pursuant to which the Exchanging Shareholders exchanged an aggregate of 557 188 Class A Shares (representing approximately 4.94% of the issued and outstanding Class A Shares as of such date) for an equal number of Class B Shares, and
(b) together with certain other holders of Class B Shares (collectively with the Exchanging Shareholders, the Selling Shareholders), sold an aggregate of 1 075 874 Class B Shares (representing approximately 11.27% of the issued and outstanding Class B Shares as of such date) to the New Investors.
11. In connection with the Transaction, the Filer, the New Investors and the Selling Shareholders entered into an investors' rights agreement (the Investors' Rights Agreement), providing certain rights and obligations with respect to, among other things, the New Investors' ownership of Shares, including customary restrictions on transfer and pre-emptive, drag-along and tag-along rights, as well as optional rights of repurchase of the Shares in favour of both the Filer and the New Investors in accordance with the terms set forth therein.
12. Each Share is entitled to one vote in respect of all matters voted on by the holders of Shares, except where holders of a class or series are entitled to vote separately as a class pursuant to the ABCA or Canadian securities legislation. The holders of Shares are entitled to receive, if, as and when declared by the board of directors of the Filer, dividends and other distributions (including whether as a return of capital or otherwise), provided that no dividends may be declared on, or other distribution made in respect of, a class or series of Shares, unless, concurrently therewith, the same aggregate per Share dividend is declared on or other distribution is made in respect of each other class and series of Shares (provided that the characterization between dividend or other distribution need not be the same in respect of the other classes and series of Shares). The Shares have pro rata participation rights in connection with a liquidation, dissolution or winding-up of the Filer.
13. Shares are typically issued to one or more individual orthodontists (each, an Orthodontist Principal) or their applicable permitted assign in connection with transactions in which such Orthodontist Principals sell their existing orthodontist business and the Filer, or an affiliate of the Filer, acquires the healthcare portion of that orthodontist business (an Orthodontics Healthcare Endeavour). In addition, Shares may be issued to one or more Orthodontist Principals (or their permitted assigns) in connection with such Orthodontist Principal's admission as a doctor-partner within the Filer's network, in circumstances where no acquisition of an existing orthodontist business from such Orthodontist Principal occurs. In all cases, the Filer does not acquire the portion of the existing orthodontist business that relates to the professional practice of orthodontics (the Professional Orthodontics Endeavour), which remains at all times independently owned and operated by registered orthodontists (and such orthodontists remain responsible for the provision of professional orthodontic services and the orthodontist-patient relationship), with full autonomy and control, free from any influence or interference by the Filer or its affiliates, nor does the Filer acquire or control the professional licences under which clinical services are provided.
14. At each Orthodontics Healthcare Endeavour
(a) the Filer or its affiliates provide:
(i) support for the business, management, human resources and administrative aspects of the business operation,
(ii) in certain arrangements with Orthodontist Principals, non-clinical administrative, advisory, back-office and related support services that are typically provided at or in conjunction with a Professional Orthodontics Endeavour (which, for greater certainty, are not regulated or clinical orthodontics services) (the Healthcare Services) for a service fee based on the fair market value of such Healthcare Services, and
(iii) in certain arrangements with Orthodontist Principals, an all-inclusive clinic platform, including premises, equipment, staff, Healthcare Services and orthodontic products for a portion of patient collections (net of specified deductions), and
(b) the Orthodontist Principal undertakes, on behalf of the Filer or its affiliates, the delivery or supervision of Healthcare Services
(collectively, the Business).
15. The Filer, through its affiliates, conducts the Business at Orthodontics Healthcare Endeavours in Alberta, British Columbia, Manitoba, Nova Scotia and Ontario, and in the U.S. states of Alaska, California, Colorado, Maine, Massachusetts, Michigan, Mississippi, New Hampshire, New Jersey, Oregon, Pennsylvania, Washington and Wisconsin.
16. The relationship between each Orthodontist Principal and the Filer in respect of an Orthodontics Healthcare Endeavour is governed by the terms of a professional services agreement that is entered into between, among others, the Orthodontist Principal(s) and the Filer or an affiliate of the Filer (each, a Professional Services Agreement).
17. Pursuant to the terms of the Professional Services Agreement, each Orthodontist Principal
(a) provides or, in the case of a delegated service, supervises the provision of Healthcare Services at the Orthodontics Healthcare Endeavour, with a view to enhancing and improving the relationship between the Orthodontics Healthcare Endeavour and its clients,
(b) supports the interests of the Filer and its affiliates in the operation of the Business, and
(c) ensures that the Orthodontics Healthcare Endeavours operate in accordance with workplace policies, practices and guidelines established by the Filer.
18. Due to certain legal restrictions in respect of the professional practice of orthodontics in Canada, including restrictions under the Health Professions Act (Alberta) and regulations thereunder, the Orthodontist Principals are not employees of the Filer or any of its affiliates and operate as independent contractors.
19. The Filer has entered into a Professional Services Agreement with and issued Shares to an aggregate of 81 current or former Orthodontist Principals (or their permitted assigns) who continue to hold Shares as of March 24, 2026 (six of which held only Class A Shares, 10 of which held both Class A Shares and Class B Shares, and 65 of which held only Class B Shares).
20. As a condition to acquiring any Shares, each Orthodontist Principal (or its applicable permitted assign) is required to become a party to and agree to be subject to the terms and conditions of a Shareholders' Rights Agreement. The terms and conditions of the Shareholders' Rights Agreements do not, in any way, govern the operation of any Orthodontics Healthcare Endeavour or the provision of any Healthcare Services.
21. Each Orthodontist Principal
(a) is provided with
(i) the Filer's annual audited financial statements following the end of each financial year, and
(ii) high-level operational information regarding the Filer, in each case pursuant to the applicable Shareholders' Rights Agreement and the Filer's governance practices,
(b) has the right, pursuant to the ABCA, to access the corporate records of the Filer, including the securities register, during the usual business hours of the Filer,
(c) has the right, under their Professional Services Agreement, to access the books and records of the applicable Orthodontics Healthcare Endeavour, and
(d) is invited to attend an annual meeting of holders of Shares, at which the Filer provides additional information regarding the Business and the Filer's financial and operating results,
(collectively, the Information and Access Rights).
22. Sections 4.3 and 4.9 of National Instrument 62-104 Take-Over Bids and Issuer Bids provide exemptions (the Exemptions) from the Take-over Bid and Issuer Bid Requirements in respect of a non-reporting issuer if
(a) the issuer is not a reporting issuer,
(b) there is no published market for the securities that are the subject of the bid, and
(c) the number of security holders of that class of securities at the commencement of the bid is not more than 50, exclusive of holders who
(i) are in the employment of the issuer or an affiliate of the issuer, or
(ii) were formerly in the employment of the issuer or in the employment of an entity that was an affiliate of the issuer at the time of that employment, and who while in that employment were, and have continued after that employment to be, security holders of the issuer.
23. As the Filer has more than 50 holders of Class B Shares (including 73 current or former Orthodontist Principals (including their permitted assigns)) that are not current or former employees of the Filer or an affiliate thereof (because the Orthodontist Principals are not employees of the Filer or its affiliates), the Exemptions from the Take-over Bid and Issuer Bid Requirements are not available in respect of the Subject Transactions involving Class B Shares.
24. Given that the Filer is not a reporting issuer in any jurisdiction of Canada and there is no published market in respect of the Shares, if the Orthodontist Principals (and their permitted assigns) were treated in the same manner as employees, the number of holders of each class of Shares, exclusive of current and former employees, would be fewer than 50 and the Subject Transactions would be exempt from the Take-Over Bid and Issuer Bid Requirements.
Each of the Decision Makers is satisfied that the decision meets the test set forth in the Legislation for the principal regulator to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that at the time of each Subject Transaction
(a) the Filer is not a reporting issuer,
(b) there is no published market for the applicable class of Shares,
(c) the Information and Access Rights have been and are being fulfilled by the Filer, as applicable, and
(d) the number of holders of the applicable class of Shares is not more than 50, exclusive of holders who
(i) are in the employment of the Filer or an affiliate of the Filer,
(ii) were formerly in the employment of the Filer or in the employment of an entity that was an affiliate of the Filer at the time of that employment, and who while in that employment were, and have continued after that employment to be, security holders of the Filer,
(iii) are Orthodontist Principals who have entered into a Professional Services Agreement that remains in force (or permitted assigns of such Orthodontist Principals), or
(iv) were formerly Orthodontist Principals who had entered into a Professional Services Agreement (or permitted assigns of such Orthodontist Principals) and who, while party to such Professional Services Agreement were, and have continued after the termination of the Professional Services Agreement to be, security holders of the Filer (directly or indirectly through permitted assigns).
OSC File #: 2026-52
Temporary, Permanent & Rescinding Issuer Cease Trading Orders
Company Name |
Date of Temporary Order |
Date of Hearing |
Date of Permanent Order |
Date of Lapse/Revoke |
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THERE IS NOTHING TO REPORT THIS WEEK. |
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Company Name |
Date of Order |
Date of Revocation |
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THERE IS NOTHING TO REPORT THIS WEEK. |
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Temporary, Permanent & Rescinding Management Cease Trading Orders
Company Name |
Date of Order |
Date of Lapse |
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THERE IS NOTHING TO REPORT THIS WEEK. |
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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 |
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Performance Sports Group Ltd. |
19 October 2016 |
31 October 2016 |
31 October 2016 |
__________ |
__________ |
Company Name |
Date of Order |
Date of Lapse |
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Agrios Global Holdings Ltd. |
September 17, 2020 |
__________ |
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Sproutly Canada, Inc. |
June 30, 2022 |
__________ |
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iMining Technologies Inc. |
September 30, 2022 |
__________ |
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Alkaline Fuel Cell Power Corp. |
April 4, 2023 |
__________ |
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mCloud Technologies Corp. |
April 5, 2023 |
__________ |
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FenixOro Gold Corp. |
July 5, 2023 |
__________ |
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HAVN Life Sciences Inc. |
August 30, 2023 |
__________ |
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Perk Labs Inc. |
April 4, 2024 |
__________ |
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FuelPositive Corporation |
January 29, 2026 |
__________ |
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Filing #: 06406773
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Filing #: 06400154
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Filing #: 06408308
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Filing #: 06411601
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Filing #: 06377691
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Filing #: 06393805
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Filing #: 06144411
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Filing #: 06394675
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Type |
Company |
Category of Registration |
Effective Date |
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Change in Registration Category |
Wealthsimple Inc. |
From: Portfolio Manager |
March 30, 2026 |
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To: Portfolio Manager and Investment Fund Manager |
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New Registration |
FSI Investment Corporation |
Exempt Market Dealer |
March 27, 2026 |
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Voluntary Surrender |
TD Waterhouse Private Investment Counsel Inc. / Gestion Privee TD Waterhouse Inc. |
Portfolio Manager and Exempt Market Dealer |
March 26, 2026 |
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Consent to Suspension (Pending Surrender) |
Aryeh Capital Management Ltd. |
Portfolio Manager, Exempt Market Dealer, Investment Fund Manager and Commodity Trading Manager |
March 31, 2026 |
Canadian Investment Regulatory Organization (CIRO) -- Amendments Respecting Reasonable Expectations to Settle Short Sales -- Notice of Commission Approval
The Ontario Securities Commission has approved CIRO's proposed amendments to the Universal Market Integrity Rules (UMIR) and Investment Dealer Partially Consolidated (IDPC) Rules that would:
• require all Investment Dealers to have a reasonable expectation to settle trades in listed securities on settlement date
• introduce a "deemed to own" exception to the reasonable expectation to settle requirement (the Amendments).
CIRO published the Amendments for comment on January 9, 2025 in CIRO Request for Comments 25-0001 -- UMIR and IDPC Rules -- Proposed Amendments Respecting Mandatory Close-out Requirements. 22 comment letters were received and a summary of the comments received and CIRO's responses were provided in the CIRO Bulletin. No changes were made to the Amendments.
A copy of the CIRO Bulletin, including text of the Amendments, can be found at www.osc.ca.
The Amendments will be effective August 11, 2026.
In addition, the Alberta Securities Commission; the Autorité des marchés financiers; the British Columbia Securities Commission; the Manitoba Securities Commission; the Financial and Consumer Services Commission of New Brunswick; the Office of the Superintendent of Securities, Digital Government and Service Newfoundland and Labrador; the Office of the Superintendent of Securities, Northwest Territories; the Nova Scotia Securities Commission; the Office of the Superintendent of Securities, Nunavut; the Prince Edward Island Office of the Superintendent of Securities; the Financial and Consumer Affairs Authority of Saskatchewan; and the Office of the Yukon Superintendent of Securities have either not objected to or have approved the Amendments.
Canadian Investment Regulatory Organization (CIRO) -- Proposed Amendments Respecting Client Delivery Obligations -- Request for Comment
CIRO is publishing for comment proposed amendments to the Investment Dealer and Partially Consolidated (IDPC) Rules respecting client delivery obligations (the Proposed Amendments).
The Proposed Amendments would require applicable investment dealers to:
• establish, maintain, and apply policies and procedures reasonably designed to detect and address client failures to deliver after selling a listed security on a marketplace, when the security is not held by or under the control of the investment dealer,
• commence action to address the failure to deliver no later than five business days following settlement date where the failure relates to a short sale of a listed security on a marketplace.
CIRO is proposing a conduct-based approach that focuses on the investment dealer's policies and procedures governing client delivery failures as a policy alternative to the close-out requirements previously proposed in CIRO Request for Comments 25-0001 -- UMIR and IDPC Rules -- Proposed Amendments Respecting Mandatory Close-out Requirements on January 9, 2025.
A copy of the CIRO Bulletin, including the text of the Proposed Amendments, is also available on the Commission's website at www.osc.ca. The comment period ends on July 3, 2026.
TSX Inc. and TSX Venture Exchange Inc. -- Notice of Approval
(APRIL 2, 2026)
In accordance with the "Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 and the Exhibits Thereto" for recognized exchanges, TSX Inc. ("TSX") has adopted, and the Ontario Securities Commission has approved, the proposed introduction of a new suite of managed co-location products and certain related fee changes, as set out in the Request for Comments (as defined below) (the "Amendments").
TSX Venture Exchange Inc. ("TSXV", and together with TSX, the "Exchanges") has adopted, and the Alberta Securities Commission and British Columbia Securities Commission have approved, the Amendments.
Capitalized terms used and not otherwise defined in the Notice of Approval shall have the meaning ascribed to them in the Request for Comments.
A copy of the Amendments can be found here.
On January 29, 2026, each of TSX and TSXV published a Notice of Proposed Amendments and Request for Comments (the "Request for Comments") for a 30-day period, and one comment letter was received. A summary of the comments submitted, together with the Exchanges' responses, is attached at Appendix A. The Exchanges thank the commenter for their feedback and suggestions.
The Amendments will be implemented on May 1, 2026.
List of Commenters:
• Canadian Forum for Financial Markets ("CFFiM")
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Summarized Comments Received |
The Exchanges' Response |
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1. |
CFFiM noted the EMA Products help to address the need for accessible, flexible, and scalable co-location offerings to lower existing barriers to market access and to enable market participants to tailor their colocation operations to their business needs. CFFiM welcomed innovation of this type across market data offerings. |
The Exchanges thank the commenter for its feedback. |
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2. |
CFFiM was of the view that in the context of a broader market structure evolution where low latency has been historically tied to greater bandwidth, products should be introduced to allow smaller participants to better compete with larger participants. The commenter requested quantitative data to assess whether the EMA Products would disproportionately advantage one tier of issuers over another. |
We respectfully disagree with the assertion that the EMA Products would disproportionately advantage or disadvantage a specific issuer tier or participant. The EMA Products aim to support the maintenance of fair and competitive markets. The introduction of EMA Products provides an additional avenue for access, which may be more cost effective for smaller participants. This additional access is designed to broaden opportunities for participants to provide liquidity for all tiers of issuers. |
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3. |
CFFiM requested enhanced transparency, including network diagrams and disclosure of latency variance and architecture data and/or related information, to confirm the EMA products are fair and reasonable, which it viewed as dependent on cabling equidistance and demonstration that there are no architectural advantages provided to one party over another. |
The Exchanges continuously operate on a foundational principle of fair access, in compliance with our regulatory obligations under National Instrument 21-101. |
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The implementation of the EMA Products does not create new latency arbitrage opportunities, whether between tiers of the EMA Products or relative to traditional co-location. Expected latency outcomes are, and will continue to be, subject to factors outside the Exchanges' direct control, including a participant's choice of EMA hardware tier, operating system, proprietary trading software, and trading algorithm. |
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The Exchanges are of the view that the level of technical disclosure provided is sufficient for market participants to evaluate the service and maintain that detailed information, such as network architecture diagrams, is commercially sensitive and proprietary. |
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4. |
CFFiM was of the view that the attractiveness of market access products, such as the EMA Products, is not as clear for less liquid securities and the participants who trade them, and that the continued focus on latency as part of market access products raises competition concerns as such focus may not serve the needs of the Canadian market. |
The Exchanges disagree with the view that the EMA Products do not serve the needs of the Canadian market, and do not believe that providing alternative avenues to access our markets would eliminate or reduce liquidity for any type of security. The Exchanges believe that additional alternatives for access may result in more liquidity rather than less. As noted by the commenter, the EMA Products are responsive to a need for increased flexibility for smaller participants to co-locate. The innovations underlying the EMA Products are not primarily aimed at further reducing latency but rather at reducing the upfront capital investments and requirements for clients to manage their own hardware infrastructure on an ongoing basis. The Exchanges believe expanding available offerings encourages market participants to grow and maintain their presence within the Canadian markets, and may encourage foreign market participants to trade Canadian securities if a cost-effective virtual presence is available to them. The Exchanges believe that this initiative may support overall liquidity provision across the entire spectrum of Canadian equities, including less liquid securities. In this context, the Exchanges believe the assertion that the EMA Products will not serve the needs of less liquid securities and the participants who trade them is unsubstantiated. |
