OSC  |  May 6, 2013

On May 2, 2013, the annual EMDA Exempt Market Conference was held at the National Club in Toronto’s financial district.  It was a full day affair with a stellar line-up of exempt market industry leaders, providers and sponsors covering the key discussions and topics pertinent to the $28 billion that was raised in the exempt market in Ontario by non-investment funds in 2011 (out of a reported total distribution of approx. $87 billion).  The Honourable Howard Wetston, Chair of the Ontario Securities Commission (OSC), kicked off the EMDA conference with a speech entitled “Regulatory Vision for the Exempt Market”.  Highlights include:

Background

• Small and medium-sized companies play a significant role in driving economic growth.  They represent more than half of Canada’s GDP yet struggle to raise capital when they need to grow.

• Regulators around the world are facing 3 challenges:
  • Structural changes in markets
  • Financial innovation and complexity
  • Globalization

• Effective securities regulation must be balanced and address 3 fundamental objectives:
  • Improve efficient access to capital for issuers
  • Increase access to investment opportunities for investors
  • Provide appropriate protection for investors

OSC’s approach to the Exempt Market

• Agree that something needs to be done
• Received more than 100 comment letters to their OSC’s Exempt Market Review consultation paper issued last December 2012
• Held 4 town hall sessions with approx 165 stakeholders to solicit feedback
• Consulted over 40 interested stakeholders including NCFA Canada and the EMDA
• Conducted an online survey to over 1,500 Canadian investors

On Crowdfunding

• OSC is considering and examining the issue of crowdfunding by asking 3 key questions:
  • Would crowdfunding be an effective capital raising tool for companies?
  • Are investors interested in these types of investment opportunities?
  • Can we find ways to address investor protection concerns regarding the potentially high risk and illiquid nature of these types of investments?

• OSC’s objective is to attempt to harmonize Ontario’s exempt market regulatory regime, as appropriate, with other Canadian jurisdictions.  The CSA has agreed to explore ways to achieve harmonization of these exemptions to the extent possible

• OSC is considering feedback from investors, issuers, dealers and other stakeholders and plans to publish a progress update of a possible new exemption in late summer.

Source:  OSC speech "Regulatory Vision for the Exempt Market"