All posts by Hamish Khamisa

Public Entrepreneur Magazine – The Inspiration Issue – Now Live!

Over the inaugural year of the Public Entrepreneur Magazine, we’ve featured stories on a variety of topics including women leaders in the cannabis industry, predictions on the future of blockchain, and companies involved in battery metal exploration. Despite the diversity of industries and endeavours, companies featured across all four of these issues share one common ingredient: an inspired entrepreneur.

This issue of the magazine features interviews from a diverse range of entrepreneurs with different backgrounds in their industry. They share with us their insight, advice, inspiration, and goals for the upcoming year.

CSE-listed companies featured in this issue include:

Also featured in this issue is a Year In Review for the CSE, with 2018 considered to be its most transformational year.

Check out the latest issue of Public Entrepreneur magazine below.

 

(Trouble accessing the publication below? CLICK HERE TO ACCESS THE ISSUE)

Year-end 2018 interview with Richard Carleton

Last month, CEO of the Canadian Securities Exchange, Richard Carleton, sat down with Peter Murray of Kiyoi Communications to discuss the record-breaking year for the CSE in 2018.

From major milestone achievements, to trends and updates in listings to where the CSE is looking next in 2019, scroll down to read the full transcript of this interview.

For ease of navigation, a list of hyperlinked topics is included below.

  1. Standout achievements in 2018
  2. Increased size of listed companies
  3. US cannabis companies choosing to list on the CSE
  4. Status on listings outside of cannabis
  5. Growth of institutional investment
  6. Managing margin eligibility of CSE-listed securities
  7. Updates on blockchain-enabled clearing & settlement
  8. Moving to a new office
  9. Focus on the future
PM: As we approach the end of 2018, the CSE is positioned to report another year of records in trading volume, trading value, financings, and other metrics illustrating the exchange’s success. What achievements stand out in your mind, and why are they important to your vision for where the CSE is going?

RC: Clearly, standout events have been taking place over the last few months, with the number of very large US-based cannabis issuers that have joined the CSE. It is companies such as Curaleaf, Harvest Health, Acreage, Green Brands, and more to come over the next few months. We are seeing the most rapid expansion of market capitalization and impact on the exchange since our inception.

I will say that the opportunity to work with management teams who are representing, in some respects, the pinnacle of US business is one that the CSE really values. Finance professionals and advisors are involved from bulge-bracket US brokers. And there are experts highly experienced in consumer products and the consumer packaging industry from companies such as Procter & Gamble.

The opportunity to work with people of this calibre is validation of the proposition that the CSE has been working to build and illustrates that we are headed in the right direction.

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PM: Cannabis continues to be a big driver of the growth being experienced by the CSE. In 2018, the sector brought several of the largest financings to ever take place on the exchange, and some of the issuers have market caps that place them well beyond the microcap category. Does the increasing size of the average listed company present any new opportunities or challenges?

 

RC: I don’t know that the increasing size presents any unique challenges. Certainly, what it means is that, given the size of the financings and the overall enterprise value of these companies, we are seeing, for the first time, significant institutional participation. This is a very important development, because last year and in the early part of this year the money was principally coming out of the retail space or Canadian accredited investors through private placement financings.

What we are seeing now is institutions from Europe, the United States, Canada and Asia participating in these financings. And this really is the first time we have had this community involved with the Canadian Securities Exchange.

We are being exposed to advisors in the United States who are beginning to understand that the Canadian public equity markets are in fact a viable alternative for US companies looking for growth capital. We’ve had conversations with a number of these professionals about taking what we have learned from the capitalization efforts in the US cannabis space and applying that to companies from other sectors that perhaps have not been that well served by the venture capital and private equity models that are the principal source of growth capital for early stage US companies.

That is a thesis we have had for a number of years and I think the cannabis industry is bringing the capabilities of our market to light. And not just of the Canadian Securities Exchange, but really the whole ecosystem that we represent, be it the investment dealers or the law firms that work with these issuers. We really do hope to leverage the relationships that we have built in the cannabis space to bring a whole new category of companies into the Canadian public equity markets.

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PM: The CSE remains the best choice for companies in the cannabis sector looking to list in Canada, especially those with assets in the United States. What will be the approach to protecting the CSE’s lead in cannabis listings if the US chooses to make cannabis legal on a federal level, thus opening the door to cannabis companies listing on US exchanges?

 

RC: We have been asked this question quite frequently over the last little while, and I think the answer falls somewhere along the following lines. In my experience in the exchange business in Canada, people have always looked at market share of trading for inter-listed companies between Canada and the United States and tried to think about how to change that dynamic. How do we increase market share?  How do we increase order flow from the United States?

The simple fact of the matter is that the percentage of market share is almost exactly the same as the percentage of the country of residence of the shareholders.

To illustrate, if a company has 50% of its shareholders resident in Canada and 50% in the United States, the market share of trading if the company is listed on both a Canadian and US exchange is about 50/50. There is not a lot you can do about that because of regulations that make it difficult for dealers in the United States to route client order flow to Canada, and Canadian dealers to route order flow to the United States.

There is a little bit of a closed shop operating. What we will have to do is look at which companies have a predominantly Canadian shareholder base and convince them to retain their Canadian listing as and when regulations are further loosened in the United States and cannabis is removed from Schedule 1 of the Controlled Substances Act.

One of the other things we are going to be looking to do is develop some index products early in 2019 around the US cannabis space. We are the only location globally where you see as heavy a concentration of US cannabis issuers, so we are the logical place for that index to be calculated and disseminated.

Obviously, what we would like to see is exchange traded fund products developed off that index, so that people are able to not just purchase the equities of individual companies but diversify across the entire sector with an exchange traded fund product. That is another way in which we hope to increase the stickiness, if you will, of the relationships we develop with these issuers.

And last, but not least, we want to continue to build deep relationships with the management teams of these companies and put ourselves in that situation kind of like Nasdaq back in the day, when Microsoft and Cisco and Intel and Apple and all of those companies didn’t qualify for the New York Stock Exchange. And when they did, and the New York Stock Exchange knocked on their door and said, “Hey, Mr. Gates, it’s time to move up to the Big Board,” Bill Gates said, “No thanks, we are very well served by our present exchange relationship.”  So, that is the kind of brand loyalty we would like to build with these management teams and service them well into the future regardless of how the regulatory landscape changes.

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PM: How about other industry sectors on the exchange?

 

RC: It is interesting because the cannabis space has obviously had the headlines, but we have in fact seen a significant number – and in absolute numbers almost a record – of mining companies get onto the exchange and receive funding this year.

My sense is that some of the profits from trading in the cannabis space over the last couple of years are being applied to the mining sector. Notwithstanding the fact that there is a drag on the mining sector right now because of the low price of most of the commodities, we are seeing mining companies get funded and come onto the exchange at a higher rate than in many years. And as I say, it gets a little bit lost in the shuffle of all the cannabis news, but they are getting funded in quite considerable numbers at this point.

In tech, we are seeing some struggles in the crypto space and that seems to have put a chill on the entire blockchain sector, which was red hot just a year ago. But we are also seeing a number of technology stories get funded. We would like to see more and that is one of the great focuses of our efforts with the new business relationships we are developing in the United States. Having a pipeline of companies in the tech sector from the US come public here would be very interesting for investors.

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PM: The amount of capital being raised by companies on the exchange continues to skyrocket – it looks as if the final number for 2018 is going to settle somewhere around $5 billion. You can’t reach this level without funds playing a big part. Can you comment on the changing role of institutional investors in the CSE marketplace?

 

RC: As I mentioned, we are seeing great institutional participation in financing transactions as they get larger and larger. And one headline from the Curaleaf financing, which was approximately $520 million, was that there was something like a hundred institutions, as I understand it, on the investor list. We know that institutions have increasingly participated in the space as the year has progressed. Large institutions from all over the world are beginning to participate in this space, and as I mentioned we want to work with these people, ensure they have a good experience, and that they are prepared to back CSE listed stories again in the future.

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PM: Marginability is an important issue for many large investors and the CSE has been working to achieve some changes in the way this is managed. Why is this issue important and what can you tell us about where the discussion is headed?

 

RC: The marginability issue has a number of different components to it, but you can essentially look at things in two ways. If the shares of a company are not margin-eligible, it means an investor cannot hold the shares in a margin account, and the dealer cannot lend them money to purchase the shares. Instead, the investor must use cash to purchase them.

Many higher priced securities are margin-eligible. With these securities, an investor doesn’t have to use most, or all, of the money in their account to make a purchase and can instead borrow from their broker.

The other way this impacts issuers is that the dealer is required to post capital with the clearing house against the possibility of failure on the other side of the trade. And that is what people mean when they refer to T+2: the transaction is only finally settled after two days plus the day of the trade, when it clears with securities and cash changing hands.

The dealers are required to post capital against the potential of that trade failing – in effect one side not showing up with the stock or cash to settle it.

For margin-eligible securities, they don’t have to post the full amount. The idea is that it is not volatile, there is lots of value there, the likelihood of failure is low, and if there was a default you could sell the shares to get the money.

For companies that aren’t margin-eligible, the dealers have to post 135% of the trade value with the clearing house. To be eligible, a stock has to trade at a price higher than $3.00, so there is a relatively small number of stocks trading on the CSE that qualify.

We are looking to help dealers free up capital in two ways. One is being able to provide customer service in their margin accounts. And the second way is to reduce the capital posted at the clearing house in the two-day settlement cycle.

We are working with regulators to remedy this situation as quickly as we can. And we have reason to believe that we have made a good deal of progress. When change takes place, it certainly should increase the liquidity of the stocks. It will certainly make them less expensive for people to trade. And it should bring even more participation in CSE names.

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PM: What can you tell us about the blockchain-enabled clearing and settlement facility you have been working on?

 

RC: We are in the late stages of quality assurance on the new system. We have been working with our developer to make some changes on the robustness of the system. And this is really in anticipation of questions and comments we would receive from the users and from the regulators.

We hope to get the system up in our external test environment so that dealers and some other interested parties can begin testing in their own environments before Christmas. And at that point we will be working closely with them to understand what our timelines are from an implementation perspective. We have to respect the amount of work the dealers will have to do to integrate their existing cash management systems and client reporting systems into our clearing settlement facility. We’re hopeful that the effort will not be too lengthy and we’re pleased that there is a relatively small number of vendors who provide the services. So, it’s not a case where 125 dealers suddenly have to make changes, but one where a small number of vendors have to make changes that will then be extended to the entire industry.

Dealers continue to be extremely eager to get their hands on it. They understand the business case and the client service benefits, as well as the number of companies that would like to use security tokens as a means of securing capital. We continue to be very excited about this facility and it is going to be one of the things on the agenda for 2019.

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PM: The exchange’s Toronto team is relocating to a new space early in 2019 — First Canadian Place. Insofar as you can comment, how well is the exchange doing as a business, and how does this provide you with new and/or better resources to make the organization even stronger?

 

RC: We are a private company, so our financials are not available publicly. I will say, and this should come as no surprise to anybody, that with the volume of trading and listings we’ve had this year, as well as continued strong performance from our market information businesses, the exchange is on very solid financial footing.

We will be moving to new premises early in the New Year. This was really brought on by the anticipated growth in our staffing levels, particularly in the listings regulation area. It is important that we continue to maintain high service levels for our issuers and deploy our regulatory responsibilities as an exchange.

At this point, it is a pretty tight fit for the team at our present location. As well, and I think this is one of the important incentives for us to move to new premises, we really want to provide a better listings and presentation experience for our issuers. Everybody expects a bell-ringing or market-opening ceremony with a proper backdrop. The new First Canadian Place location will give the space and a spectacular backdrop to have exactly that kind of experience for the issuers. We really want to be able to step up our game with providing companies a memorable experience on their first day of trading, or whenever they have the opportunity to visit the exchange and have their listing recognized by us and the rest of the community. We are all really excited about moving into the new premises, probably at some point toward the end of January.

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PM: As we head into 2019, what can issuers and investors anticipate from the CSE?  And looking further into the future, how is the CSE positioning itself to keep momentum going into 2020 and beyond?

 

RC: We covered the outlook in some detail already, but I’ll elaborate on a few items. The blockchain initiative will be a significant focus for the organization as we move into 2019. And it will take much of the year before it is ready. That will give us a great platform to track new and interesting securities in the marketplace.

I also mentioned new index products with a cannabis focus. Again, we are the most logical source in the world to provide those sorts of index products. And clearly our motivation there is to provide those indices as an underlying interest for ETF products. My sense from traveling in the US recently is that we have many more companies of significant size, business operations and profits who will be looking to come into the Canadian market to fund further growth and provide liquidity for their early stage investors.

Over and above that, we will be building out the CSE team. We plan to pay particular attention to the continuous disclosure program for existing companies. As we attract issuers with larger and more complex business operations, we need to do more work with them to ensure they stay on top of their continuous disclosure requirements under the Ontario Securities Act.

We hope that we can realize improvements to margin eligibility for stocks early in 2019 and we believe that would further improve liquidity in the marketplace.

We will continue to build relationships with markets around the world. As I think is well known at this point, we have a close working relationship with the OTC Markets Group in the United States. CSE issuers have had a very positive experience working with them in building liquidity, adding to the shareholder base, and as a platform for fundraising activities in the US. And we are looking to build partnerships in the UK, in Australia and the European Union to provide similar managed relationships with marketplaces in those jurisdictions.

Having a dual-listing or an over-the-counter arrangement really does help the ability of companies to raise funds in those marketplaces. And given the existence of sophisticated arbitrage trading, it can help to build an even better liquidity profile.

Building relationships with more international companies choosing to access Canadian markets for capital to expand their businesses is also an important agenda item. I visited Israel twice this year and we expect to see the first Israeli companies list toward the end of this year or early in 2019. We will see a healthy cohort of companies from Israel – some of them are in technology, some are in the cannabis space. We want to see people in different markets around the world look to Canada and our world-leading position in small-cap finance to help them secure growth capital.

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Crossing the Pond: CSE-listed Auxico Resources Canada becomes first dual-listed Canadian stock on UK’s NEX Exchange

Earlier this year, Auxico Resources Canada Inc. (CSE:AUAG) became the first Canadian security to be dual-listed on the Canadian Securities Exchange and the NEX Exchange in the United Kingdom. Auxico Resources is the first Canadian company to become dual-listed on the NEX Exchange using the fast track procedure, which the London-based exchange has established to help expedite access to its market from companies listed elsewhere around the globe.

NEX Exchange, a NEX Group business, operates a regulated stock exchange in the U.K., with a particular focus on entrepreneurial and growth-stage companies.

Patrick Birley, Chief Executive of NEX Exchange said: “We are delighted to welcome Auxico Resources as our first dual quoted stock with the Canadian Securities Exchange. We have long admired the approach of the CSE and hope that by working together we can offer dual quoted companies greater access to a wide range of investors.”

With this new listing milestone, the CSE continues to grow its international reach. Several securities listed on the CSE also trade on markets in Europe (Frankfurt Exchange) and in the U.S. (OTC Markets).

Richard Carleton, CEO of the CSE, said of the announcement: “We congratulate the team at Auxico Resources for taking advantage of the fast-track procedure we have developed with our colleagues at the NEX Exchange. The listing will open new opportunities for capital raising and secondary market liquidity in the U.K. for Auxico. We hope that Auxico will be the first of many CSE issuers to join the NEX Exchange.”

According to the NEX Exchange’s fast-tracking admissions process, companies already admitted to CSE are eligible to use their accelerated admissions process to join the NEX Exchange Growth Market.

The access granted to CSE-listed firms to this streamlined process is a further recognition of the CSE as a qualified market with international stature and puts the CSE in strong company with some the largest and well-known stock exchanges across the world who also have qualified for access to the NEX Exchange’s fast-track admission process.

Hear from the CSE’s Senior VP of Market Development, Rob Cook, explain more about how companies from outside of Canada are also choosing to list on the CSE in the video clip below.

Bringing Extraordinary Ideas into Focus: Review of Extraordinary Future 2018

The energy and enthusiasm entrepreneurs have for change is something the CSE is fortunate to encounter on a regular basis. Regardless of which sector or industry growth-stage entrepreneurs happen to be in, they are collectively immersed in bringing their vision of the future into being.

With that backdrop in mind, the second edition of the Extraordinary Future conference took place in Vancouver on September 19th and 20th and offered the opportunity for thought leaders, investors and entrepreneurs to converge and explore the ideas and technologies driving innovation and growth across the economy.

Extraordinary Future 2018: Bigger, Better, Bolder

Like last year, this year’s show was produced by Cambridge House International and featured an impressive roster of exhibitors, speakers and panelists covering forward-looking topics such as quantum computing, blockchain, finance, eSports and biotech just to name few.

In true entrepreneurial fashion, this year’s show sought to do something ambitious. Building on last year’s positive results, the 2018 conference was extended to two days instead of one and had more speakers, networking opportunities and covered more innovative topics than the inaugural show last year.

Attendance was also strong this year. With over 2000 attendees coming to the show itself. Like all powerful ideas today, however, the impact of the show has only begun to take shape. With almost 50 videos from the conference capturing conversations with panelists and presentations by entrepreneurs, the online reach of Extraordinary Future will continue to ripple outward for months to come.

As the title sponsor for Extraordinary Future, the Canadian Securities Exchange was actively visible at this year’s show on stage as well as around the exhibition floor.

On stage, the CSE cast the spotlight on blockchain – a technology that has the potential to reshape how financial transactions and services are delivered.

Last year the Canadian Securities Exchange became the first exchange in Canada to announce it would enable trading of tokenized securities in conjunction with the launch of a blockchain-based clearing and settlement system.

To that end, CEO of the CSE, Richard Carleton spoke with Dean Sutton from Northstar Venture Technologies Inc. in a fireside chat on the role that distributed ledger technologies will play in capital markets and, in turn, how capital markets can prepare for a significant step change in the investing ecosystem. Included in that discussion was the CSE’s tokenized security program and further details on the clearing and settlement engine.

On day two of Extraordinary Future, James Black, VP of Listings Development, moderated a panel discussion on the future of blockchain and the capital markets. Featured on the panel were Dean Sutton of Northstar Venture Technologies, Zayn Kalyan of Trackloop Analytics Corp. and Shone Antsey of Blockchain Intelligence Group.

The CSE was also visible on panel discussions and around the show floor. Nine exhibitors listed on the CSE and representing a diversity of sectors and technologies – including several companies working on technology to innovate the fast-moving cannabis sector – were on hand to showcase their companies.

Check out the CSE’s Facebook page for more pictures from around the show floor.

A Space for Bold Ideas and Bleeding-Edge Innovation

Extraordinary Future also featured panelists and presenters on topics with massive implications to the way in which live our lives.

Famed whistleblower Christopher Wylie provided a fascinating narrative of the power of personal data and how it can be leveraged or exploited to impact society on a massive scale, as evidenced by the role of data-driven campaigning in the US elections. In the biotechnology sphere, the conversation about psychoactive substances was put into perspective by Hamilton Morris, star of VICELAND’s “Hamilton’s Pharmacopeia”

Extraordinary Future was not only about close-to-market opportunities like augmented reality or quantum computing, the show also gave space to ideas and technologies that are on the cutting edge of the innovation conversation.

The panel on hydrogen-powered autonomous underwater vehicles, for example, illustrated how advances in clean fuel, telemetry and machine learning are likely to lead to many fascinating permutations and applications of these technologies in the future.

Of course, it’s one thing to dream big, but another to turn those grand visions into real products or solutions, which is where another key feature of the conference steps in, namely investment capital.

Capital-Powered Innovation

As with last year’s show, there were several keynote presentations focused on where investment capital can play a role in helping to fund and grow ground-breaking companies.

The deal room was a central part of the show floor design, with the fishbowl-style setup enabling attendees to watch in real-time, the organic process of deals happening between investors and entrepreneurs.

Another favourite of this year’s show was the “Off the Radar” pitch competition, which took place on the first day and featured technology entrepreneurs from healthcare, eSports and caregiving.

The competition featured a panel of distinguished investors and entrepreneurs as well as a top prize of media services valued at $50,000. Amir Heyari, founder of Diabits, took top spot in the competition describing machine learning and its application to healthcare data systems in the management of diabetes.

 Can’t Wait for Extraordinary Future 2019

Suffice to say there was lots to take in at this year’s show. Entrepreneurs of all stripes demonstrated the creativity and innovation that is alive and thriving here in Canada and the impact it is having across the globe.

This year’s show reiterated a basic tenet of growth stage opportunities: that innovators and capital markets will have to work hand in hand to bring game-changing technologies to market.

Another point that this year’s show reinforced is the value of giving bold ideas (and the entrepreneurs putting them forward) a platform to showcase their stories.

For the Canadian Securities Exchange, one of the best things about working towards an extraordinary future is that we look forward what every day brings. Stay tuned for more content and see you in 2019!

Public Entrepreneur Magazine – Extraordinary Future Issue – Now Live!

With technologies like blockchain, clean tech and AR/VR poised to change the way we live, work and invest, there has never been a more exciting time to be an entrepreneur.

This “Extraordinary Future” edition of Public Entrepreneur casts its gaze forward to highlight the promising technologies of tomorrow and the entrepreneurs working to bring those stories to market.

CSE-listed companies featured in this issue include:

  • BIG Blockchain Intelligence Group Inc. (CSE:BIGG)
  • Victory Square Technologies Inc. (CSE:VST)
  • Copperbank Resources Corp. (CSE:CBK)
  • Cellcube Energy Storage Systems Inc. (CSE:CUBE)
  • Pacific Rim Cobalt Corp. (CSE:BOLT)
  • One World Lithium Inc. (CSE:OWLI)
  • Cannvas Medtech (CSE:MTEC)

Also featured in this issue is an insightful interview with thought leaders in the blockchain space from Blocktech Ventures, Venzee Technologies and BIG Blockchain Intelligence Group.

Check out the latest issue of Public Entrepreneur magazine below and be sure to check out highlights from the Extraordinary Future conference on our Facebook page and YouTube channel.

 

Five Things the CSE is Excited About for Extraordinary Future 2018

Canada’s leading technology and innovation conference, Extraordinary Future, is just around the corner and this year’s show is bigger, better and bolder than the highly successful first edition held in 2017.

Featuring a unique blend of both publicly traded and private companies, Extraordinary Future showcases cutting-edge ideas and products as well as the companies bringing them into reality.

Produced by Cambridge House International, this year’s show will take place over two days, September 19th and 20th, at the beautiful Vancouver Convention Centre in downtown Vancouver.

With over 2500 attendees forecasted to attend and 70+ companies exhibiting spanning everything from quantum computing, to blockchain to healthcare, there’s lots to be excited about at this year’s show.

Here are five things the Canadian Securities Exchange is particularly excited about for Extraordinary Future 2018:

Dynamic Speakers

This year’s speakers represent a diverse cross section of the innovation spectrum. Starting first with a central figure in the conversation around weaponizing data, Christopher Wylie. As a social researcher and data scientist, Wylie also formerly served as the Director of Research for Cambridge Analytica and has witnessed first-hand the power of data analytics and the increasingly sophisticated targeting that such information tools can create.

Another reason to attend this year’s show will be to take a glimpse into the power of quantum computing. A global leader in this space, Vancouver-based D-Wave Systems is writing the book on this frontier technology that may one day introduce dramatically more powerful computing systems. Dan Cohrs, CFO at D-Wave, will walk attendees through quantum computers and how they’re poised to fundamentally change information technology and the pace at which innovation can happen.

For those interested in understanding blockchain and how it will transform money, finance and the business world in general, internationally recognized thought-leader Alex Tapscott will be a must see.

The CSE will also be on stage during this year’s show. On Wednesday, September 19th, be sure to check out a presentation by CEO of the CSE, Richard Carleton, on the innovative tokenized securities program being launched by the CSE.

Extraordinary Future 2017 - Blockchain

Thought-Provoking Topics

It’s not just the dynamic speakers themselves that are also a big draw to the show, but also the lively discussion around the bold ideas set to innovate the world in which we live.

Undoubtedly, one of the biggest technology talking points will be blockchain. In a relatively short amount of time, the proposed uses for this technology have expanded well beyond bitcoin and this year’s show will highlight the diversity of use cases for blockchain in the securities marketplaces, for intellectual property – including in the music industry, as well as cashless payment.

Another big topical theme of this year’s show will be battery technology. The combination of power-hungry devices with the increasing consumer demands for computational power has translated into an explosion in the use of batteries and the need for battery technology to evolve quickly. On the horizon, of course, is the next big wave of battery technology that will be required to support electric vehicles and complex energy storage solutions.

Finally, the ever-popular and constantly evolving healthcare space will be up for discussion at Extraordinary Future. The conversation will focus on mental health and longevity and the technology required to extend both the quantity and quality of life. Cannabis will also be in the spotlight. Technological advancements in delivery systems offer new ways for the medicinal benefits of cannabis to be administered.

Extraordinary Future 2017 - Augmented Reality

Extraordinary Exhibitors

As with last year’s Extraordinary Future, this year’s show features a mix between innovative private and publicly listed companies working across diverse sectors. The Canadian Securities Exchange will also be well represented on the show floor, with at least five CSE-listed companies scheduled to exhibit. The CSE team will also be on hand to answer questions and meet with investors and entrepreneurs.

In addition to companies working directly in these frontier industries, there will an ecosystem of service providers who will also be present. Some of the notable firms in attendance include media organizations such as BNN Bloomberg, BTV, Smallcap Power and more.

Innovation-Hungry Investors

Another reason the CSE is looking forward to Extraordinary Future 2018 is the opportunity to connect with the Canadian investor community. Both retail and institutional investors will be on hand, so companies can pitch deals and arrange for meetings on site in the ‘deal rooms’ section. As part of this year’s show there will also be a startup competition to recognize emerging tech talent.

New Edition of the Public Entrepreneur Magazine

Finally, the special Extraordinary Future issue of the CSE’s magazine, Public Entrepreneur, will also be launched and ready for this year’s show. Public Entrepreneur rolled out in 2017 as a successor to the CSE Quarterly magazine to provide a voice and platform for entrepreneurs in public markets. The upcoming #XF2018 edition will offer up a compelling read so be sure to register here to receive your copy when it goes live.

Vancouver continues to play host to a rich and diverse ecosystem of innovation. As a founding sponsor of Extraordinary Future, not only is the CSE excited to help bring the next wave of technologies into focus, but the CSE is equally proud to support and celebrate Canadian innovation, entrepreneurship and the ability of Canadian capital markets to foster bold ideas.

Interview with Richard Carleton First Half Review — June 2018

Earlier this month, CEO of the Canadian Securities Exchange, Richard Carleton, sat down with Peter Murray of Kiyoi Communications to discuss a number of topics related to the progress of the CSE in 2018 so far, the investment landscape for growth-stage companies and what’s on the horizon for the CSE heading into the second half of the year.

Scroll down to read the full transcript of this interview. For ease of navigation, a list of hyperlinked topics is included below.

  1. First Half Performance in 2018
  2. Blockchain-based Clearing and Settlement – Updates
  3. Cannabis Sector Perspectives
  4. Growing the CSE Brand
  5. Keeping Pace with Expansion
  6. Trading Enhancements & Liquidity Growth
  7. Share Structures and US Issuers
  8. What’s Next for 2018

First Half Performance in 2018

PM: Performance at the CSE as measured by standard metrics – listings, financings, trading volume – was strong yet again in the first half of 2018.  Can you recap some of the key numbers for us?  And were there any trends that you feel really stood out?

RC: By every metric, we are ahead of 2017’s record pace.  Whether we measure our performance by trading volume, value traded, number of trades, or financings conducted by companies listed on the Canadian Securities Exchange, the numbers are considerably ahead of where we were at this time last year.

I am particularly pleased that on a 12-month trailing basis, companies have raised almost $2 billion via the facilities of the CSE, either through an IPO or as a secondary offering once the issuer was listed with us.

And with every additional listing, we reach a new benchmark in terms of the number of securities trading on the exchange.  We are above 380 securities at this point, and about 360 companies.

I’d also note that this performance comes at a time when the industry in general is not setting new records.  Measures of liquidity confirm that companies listed on the Canadian Securities Exchange trade at better levels than their counterparts on other exchanges in Canada.

When assessing liquidity, we use a measure of share value traded versus market capitalization.  In Canada’s large cap space, approximately 5% of a company’s market capitalization by value will turn over in a typical month.  In the junior markets, that number tends to be a little higher.

On the Canadian Securities Exchange, we regularly see our companies turn over at almost twice that rate.  And in January 2018, when there was an enormous amount of market activity, principally in the blockchain and cannabis sectors, our average turnover was almost 35% of a company’s market capitalization.

In previous interviews, I have talked about some of the challenges and hurdles the exchange has overcome during the last several years.  There was, for some time, a persistent view in investment banking and trading circles that we might not have the liquidity which some of the other trading centres did.  But the statistics now demonstrate that Canadian Securities Exchange issuers are among the most liquid traded instruments in Canada.
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Blockchain-based Clearing and Settlement – Updates

PM: In February, the CSE announced plans to launch a blockchain-based clearing and settlement facility.  That was near the height of the blockchain mania and triggered a tremendous amount of discussion within the securities industry.  What can you tell us about progress since the announcement?

RC: We’ve been working a lot with dealers and other entities involved in providing services to the securities processing side of the business.  And we have also been working with companies who would like to issue tokenized securities.  We’d like to be in a position to offer companies who are interested in raising capital by way of a tokenized security a place not only where they can list – because if the instrument is a security we can list it tomorrow, as a securities exchange – but to extend the full power of blockchain technology to the clearing and settlement process.  By doing so, we can eliminate a lot of cost and friction that exists with the current processes provided by the Canadian Depository for Securities.

One of the principal issues companies deal with is the cost of processing dividend or royalty payments to their shareholders.  The cost of doing this can be prohibitive to smaller companies, or to companies that wish to have a payment stream to shareholders more frequent than quarterly or semi-annual.

The other thing is that the current system is extremely inefficient when it comes to corporate governance.  Shareholder documents often go through multiple hands before they get from the company issuing the document to the beneficial owner of shares.  It goes to the transfer agent, to the clearing and settlement organization, and to the broker before it finally reaches the investor.  What we would like to do is eliminate the middlemen who are not adding value and enable companies to seamlessly communicate with their shareholders.

Take corporate governance as an example.  Proxy voting using the blockchain would be secure and inexpensive.  And going back to my previous example, it would enable companies to design securities where there are regular streams of income from different types of assets that move into the hands of shareholders.

Since we announced our plans in February, we’ve had a large number of people spend time with us from different industries.  For example, royalty streams are very common private equity instruments in the mining industry but less so on the public company side.  Some groups would like to be able to use the power of our system to issue new types of securities to public investors, instead of just to a small group of extremely well-funded private equity participants, as is currently the case.

We are in the process of working through the system we will be offering, though we’re slightly behind schedule from a technology perspective.  We had a significant new release of trading system technology which consumed a little more of our resources than I had hoped.  But I will say that the reception we have received from the industry – be it the investment banking side, the trading side, or the back-office side – is extraordinarily enthusiastic and supportive.
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Cannabis Sector Perspectives

PM: The CSE continues to attract new issuers doing business in the US cannabis market.  What are your latest observations on the sector, and can we anticipate more listings to come?

RC: It does seem that a lot of people who were invested in Canadian MMPR (Marihuana for Medical Purposes Regulations) licensees over the last couple of years have shifted their investment focus to companies with exposure to the cannabis business in the United States.  Quite a few large US-based companies have listed on the exchange recently, and more such companies are currently in the application pipeline.  And, clearly, they are being funded by Canadian and US investors.  Pre-IPO financings are heavily subscribed, and often oversubscribed, so we are far from being at the end of investor appetite for the cannabis space generally, and companies with a US focus specifically.

We are heartened by some of the regulatory developments in the United States.  It appears that there may well be a federal bill that provides additional comfort to companies operating within the legal framework at the state level, such that they will not be subject to federal prosecution, which would obviously benefit the entire sector.  We find ourselves in a situation where the Canadian public markets are funding the rise of a new and potentially quite large and interesting industry in the United States, and it really shows no signs of slowing.
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Growing the CSE Brand

PM: As noted earlier, demand by entrepreneurs to list companies on the CSE remains strong.  Your fee structure and streamlined listing process are a big reason why, and it doesn’t hurt that the exchange works hard to support its issuers with outreach events, visits overseas, and recently the launch of a new magazine, Public Entrepreneur.  Can you talk about why you devote so many resources to these efforts, and the feedback you receive from issuers and investors?

RC: I’ve commented before that after taking this job I learned that the brand of an exchange – brand awareness and brand identity – is extraordinarily important.  In order to reach the level of acceptance we now enjoy, it’s been necessary to assure people across every part of the industry – from issuers to dealers, traders, investment bankers, and, of course, investors – that we are a well-regulated exchange, and that we are thought-leaders committed to supporting the efforts of our issuer companies to achieve the kind of investor access and visibility they might potentially get with other marketplaces.  And instead of just comparing ourselves to other markets, we wanted to do a superior job so that investors interested in the types of issuers we have could get efficient access to information about them.

That’s really what has directed our efforts – awareness efforts with different brokers and in different marketplaces to provide our issuers with better access to capital and to secondary market trading liquidity.  That explains, for example, the work we have done with the OTC Markets Group in the United States, and some of the work we have done internationally with brokers to increase their coverage and visibility of CSE listed companies through their networks.

We are really committed to building our brand and providing everyone with a degree of confidence that we are a responsible, reputable, accessible, fair, and cost-effective source for capital, as well as a provider of robust and cost-effective secondary market liquidity.
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Keeping Pace with Expansion

PM: The CSE’s Vancouver team just moved into a new office at the beginning of June and you’ve added some more members to the organization, as well.  Tell us about expansion of the exchange on the corporate side and the benefits this has for issuers.

RC: Our focus has really been in two areas: our sales and marketing group as well as in our issuer regulation group.  Let me talk about the latter first.

As noted, the exchange is growing very, very quickly and we continue to receive listing applications at a record rate.  As a result, we have retained a number of additional professionals to help us maintain service levels.

Although some nasty rumours have been spread about our timelines extending, a cool-headed review of the statistics shows that our turnaround time is about the same as it was over the last three to five years.  And I am pleased about that because I can assure you we are handling a significantly higher volume of business these days.

On the sales and marketing side, we are expanding to better promote the exchange within specific markets, particularly Toronto and Vancouver.  We know that we need to have team members charged with the responsibility to meet with the investment banking and dealer communities to further build our core message, which is that we are the best place for companies, especially in the earlier stages of development, to seek public capital.

We’ve invested in that effort with new hires in Vancouver and Toronto and we plan to become even more active in hosting events, showing our thought-leadership, and helping our issuers tell their stories to an ever-broadening audience of investors.
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Trading Enhancements & Liquidity Growth

PM: Is there anything new on the trading platform front that dealers and professional traders should be aware of?

RC: We just had a new release of our trading system technology, and while there is nothing bold in the features and functionalities, we are constantly refining this service offering by providing different order types that can be used by the various players in the marketplace.  And we do this with a view to maximizing the liquidity that issuer companies enjoy from being on the Canadian Securities Exchange.

What we are seeing with the increase in volume is the arrival of what some call a virtuous liquidity cycle, where, because there is more trading and participation, interest grows from new participants, especially internationally, and that drives more volume.  The old saying in the market that liquidity begets liquidity is something we have definitely been seeing.  The pace we are at now is roughly 10 times where we were just two years ago.  It is magnificent progress that we have managed to make in a relatively short period of time.
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Share Structures and US Issuers

PM: The listing of subordinated voting shares by MedMen Enterprises and FSD Pharma during the half generated a lot of comment.  Can you walk us through the issues involved and give us some perspective on how to interpret those decisions?

RC: There are two ways of looking at it.  The first is that subordinated voting shares have been a feature of the Canadian public equity markets for a few generations.  And the fact that they are now showing up on the Canadian Securities Exchange is probably as strong an indication of our maturity as any I can cite.

If you go back in Canadian corporate finance history, they were used when there was a founding individual or family that wanted to retain a control position in a company but raise equity from outside investors at the same time.  Really, we have the same dynamic in play with the companies who have listed these subordinated shares.

The second component is that US issuers are essentially required to have a majority of their shares issued outside of the United States in order to not become reporting issuers in the United States, which for a number of cost reasons they would prefer to avoid.  Directors and officers insurance premiums are considerably lower in Canada, legal and civil liability risks are lower, and audit fees are less because in Canada you don’t have Sarbanes-Oxley compliance in addition to your regular public audit.  Regulatory fees are higher in the US, too.

If you can avoid having to become an SEC (US Securities and Exchange Commission) filer, that is a positive thing for a company from a cost perspective.  And if they issue the majority of their shares outside of the country, that is a legitimate way to not be required by the SEC to become a US reporting issuer.

I think it is a structure you are likely to see more of with companies we have looking to list in Canada.

Now, we need to make sure that the holders of those securities have a variety of protections in the event of mergers and acquisitions activity and some other issues, but we are aware of these concerns and are working with securities regulators and the companies on those questions.
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What’s Next for 2018

PM: The CSE is clearly coming off a very successful first half.  What initiatives are on the go for the balance of 2018 to maintain the momentum?

RC: With assurance, we know we will continue to be listing companies at a fast pace because of the number of applications and conditional approvals we are working on at the moment.  We have more than six months of business in the queue, if you will.

We will continue to work on developing the clearing and settlement system for tokenized securities.  That will be a key focus.  We also expect to welcome our first Israeli companies in the second half of 2018.  I have visited Israel twice in the past six months with a view to tapping into one of the world’s most dynamic start-up cultures and to provide these companies with a very cost-effective means of coming to North America, becoming a reporting issuer, getting a listing on a recognized stock exchange, and also building a shareholder following and profile in the United States by way of a quotation on the US OTC market.

We think that is very powerful, not just for Israeli companies but also for other international issuers looking to access public capital.  For example, we expect to visit Singapore later in the year, and we have also had discussions with companies located in Jamaica, in Colombia, and recently met with a delegation from Barbados on some listing opportunities there.  In summary, we’ll do more of the same, but I would expect to see an increasingly international flavour among our issuer community as we progress further into 2018.
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Public Entrepreneur Magazine – Cannabis Industry Issue – Now Live

With legalization of marijuana a hot topic heading into the summer of 2018, the newest issue of the CSE’s flagship publication, Public Entrepreneur, focuses on the highly dynamic cannabis industry.

This edition of the magazine features interviews with a diverse range of cannabis entrepreneurs, a reflection of just how far the industry has come in the span of about five years. From stories about firms cultivating cannabis to the variety of delivery systems to the expansion into consumer products such as beverages and more, this issue provides interesting perspectives on the cannabis industry from the folks working to bring ideas to market.

CSE-listed firms featured in this edition of the magazine include:

In addition, this issue also features an in-depth interview with four women cannabis influencers who share their perspectives about being a woman in this fast-moving space and where they see opportunities to change perspectives, both about marijuana as well as what defines an entrepreneur and business leader in the cannabis industry.

Click below to view the latest issue.

First edition of the Public Entrepreneur magazine is now live

Welcome to inaugural issue of Public Entrepreneur, the new magazine published by the Canadian Securities Exchange (CSE).

Public Entrepreneur represents a bold and exciting new chapter in the CSE’s story, one that will better reflect the growing presence of the “Exchange for Entrepreneurs” in the Canadian public market space.

With over 350 securities now listed on the CSE and more joining every day, share turnover measured in the billions and innovative new services, like tokenized securities being brought to market, we believe this new magazine will chronicle the next chapter in the CSE’s storied commitment to public entrepreneurship.

To that end, Public Entrepreneur will continue the traditions started by its predecessor, the CSE Quarterly, namely, to focus on the stories and entrepreneurs that emerge from CSE-listed issuers. Publication will also continue to take place quarterly. What is new, however, is that Public Entrepreneur will also broaden its scope to include coverage of the opportunities and personalities that shape life in Canadian public markets.

CSE-listed firms profiled in this issue include:

  • Bunker Hill Mining Corp. (CSE:BNKR)
  • Global UAV Technologies Ltd. (CSE:UAV)
  • MGX Minerals Inc. (CSE:XMG)
  • International Cobalt Corp. (CSE:CO)

We hope you enjoy this first issue of Public Entrepreneur and look forward to bringing readers even more great content in the next issue. For readers interested in accessing archives of the CSE Quarterly,  click here.

CSE Quarterly – Final Issue

The “final” edition of the CSE Quarterly is now live. It has been a great run, with inspiring stories of ingenuity, intrepidness, and excellence of companies listed on the Canadian Securities Exchange in every issue.

Thank you to the entrepreneurs for helping to make the CSE Quarterly such a success over the past several years.

Though this will be the final issue of the CSE Quarterly, there is another exciting project on the horizon that will carry the entrepreneurial torch forward.

Click to below to read the last issue.

To read previous issues of the CSE Quarterly, click the archives here.