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.
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.
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.
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!
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:
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.
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.
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.
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.
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.
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. Back to top
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. Back to top
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. Back to top
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. Back to top
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. Back to top
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. Back to top
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. Back to top
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. Back to top
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.
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.
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.
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.
With 2017 now officially in the record books, CEO of the Canadian Securities Exchange, Richard Carleton sat down with Peter Murray of Kiyoi Communications, to discuss the best year on record at the CSE. Included in the discussion were important developments that took place at the exchange, the evolution of the cannabis investment landscape as well as opportunities in blockchain, fintech and more that the CSE will be looking to next in 2018.
PM: It has been a truly phenomenal year for the CSE in terms of growth in trading volume/value, capital raised and many other measures. This has particularly been true in the fourth quarter, with the most active issues routinely trading well over 20 million shares per day. As the exchange’s CEO, what would you point to as the highlights of 2017? What is driving the success?
RC: There are multiple factors working in our favour at the moment, but clearly our decision more than three years ago to welcome the original applicants for the MMPR (Marihuana for Medical Purposes Regulations) licenses in the Canadian cannabis space is one that has proven to be quite sound as far as growth and development of the exchange is concerned.These companies have caught the attention of the retail investing public in particular, although the broader investment community is beginning to support and invest in them as they mature and grow.
We have seen a tremendous increase in trading volume in the cannabis space, and it has had a knock-on effect on technology, mining and other sectors on our exchange.
Overall, it has served to dispel a number of the incorrect, but in some cases widely held, beliefs about companies listed on the Canadian Securities Exchange in terms of liquidity and challenges to completing secondary financings. Given the trading turnover and secondary financings completed by issuers in multiple industry sectors on the CSE this year, I think we have laid those concerns to rest for good.
At the end of the day, our success in 2017 was simply a case of presenting companies to the marketplace that the investment community was interested in, and the community responded accordingly. Back to top
Market participants: Proprietary traders and retail investors
PM: Looking at just trading volume for a moment, are program traders, algorithmic trading and high-frequency traders accounting for a considerable percentage of the activity? Some people in the markets don’t like their presence, whereas others appreciate the liquidity they bring. What is their status on the CSE?
RC: We have a pretty good idea where the trading volume is coming from, and we have seen increased participation from proprietary traders, which I would define as people who tend to pursue relatively short-term strategies such as market-making or cross market arbitrage. By and large, that activity is not driven by computers but by actual human traders pursuing these strategies in the market.
But far and away the largest percentage of participants are in fact investors and individual traders. It is human beings hitting the enter button, and doing that, generally speaking, through the facilities of one of the discount brokers in Canada. Back to top
On tap for 2018: Cannabis, blockchain and more
PM: How do you follow up on a successful year like 2017? What is the 2018 game plan?
RC: We certainly think the cannabis space has a way to run, and we see that in our pipeline of applicants seeking to list on the CSE. We expect to see additional companies looking for growth capital to serve a particular segment of that market, whether it be recreational cannabis in the United States, cultivation internationally, or some aspect of the therapeutic market.
And, of course, with legalization anticipated at some point in Canada during 2018, it will be interesting to see how the industry develops specifically here at home.
We are also seeing a tremendous number of companies with some component of blockchain technology in their business development mandate, many of them looking to address some inefficiency, cost or risk for people on the payment side. There are quite a few interesting applications of blockchain technology to reduce the cost and risk of the payments process both for the customer and for companies.
We have a number of blockchain companies on the exchange already, there are more coming, and based on the funds raised and the interest in existing issuers, I think we will see a continuation of the high level of trading activity witnessed in the latter part of 2017. Back to top
Growth in new listings
PM: The CSE welcomed over 50 new issuers in 2017. What is the pipeline looking like as we begin 2018, and where are the issuers coming from in terms of sectors?
RC: The interesting thing is that even as the pace of listings reached record levels in the fourth quarter, each month we received more applications than companies listed. In other words, even though we were listing more companies than we ever had before, the pipeline was growing.
As a general observation, the companies listing now tend to be larger, more mature and better capitalized than at any other time in the history of the Canadian Securities Exchange.
I mentioned the cannabis and financial technology sectors, with a particular focus on blockchain, but a number of the more traditional sectors are also seeing investor attention. There is certainly interest in the mining space. We have seen a number of transactions funded for later-stage mining projects, often with a clear path to initiating production. Those companies do tend to be larger and are looking to raise substantial amounts of capital to complete their business programs.
It really is a situation where, with the possible exception of the oil and gas space, we are firing on all cylinders. Back to top
PM: Cannabis is a relatively new business sector for public markets and the CSE deserves credit for providing a platform enabling a substantial number of these companies to obtain the funding needed to carry their businesses forward. We now see a similar dynamic with companies in the blockchain space. Does the CSE have a unique proposition for these companies and is the exchange itself looking at opportunities with this technology?
RC: Let me begin with the first part of the question. The CSE’s proposition is really the same for all companies looking to access the public markets. We seek to facilitate the lowest cost of public capital for these companies, principally by providing a very streamlined listings process, and then once the company is listed to provide cost certainty in the form of fixed fees, regardless of how active the company is in secondary financings, changing its business, making acquisitions and other activities.
Our promise is that those companies will be able to conclude those transactions with more disclosure to the marketplace, but with less interference and second-guessing of their business plans from the exchange as their principle regulator.
Fundamental to the DNA of the CSE is that we believe the marketplace is best suited to price the risk and benefits of management’s business decisions, and not somebody at the exchange. To ensure this is the case, we must make sure the companies are providing the best possible disclosure to the marketplace so those decisions can be made.
I think it is interesting to see how fintech, and blockchain in particular, has come to the public markets. In past years I have talked about the challenges the public markets in Canada have had in attracting technology companies. These types of companies have often elected to raise their capital from private equity and venture capital firms as opposed to seeking a public market listing.
The fintech and blockchain space seems to have taken on a different dynamic, as these companies are in fact coming into the public markets, and to be fair it is probably a result of the capabilities demonstrated by the public markets in funding the cannabis space. Entrepreneurs in the fintech and blockchain space look at the public markets and acknowledge that we were able to back the creation of an entirely new industry with significant amounts of capital at competitive costs vis-a-vis private alternatives.
As far as the CSE goes, we are very much interested in looking at the potential to apply new technologies to reduce cost and risk. We have a number of experts looking at smart contracts and in effect tokenizing a security with a view to a potential listing on the exchange. We are going to have more to say about that in the very near future and are looking carefully at the potential to adopt a number of those technologies.
I will say that our systems developers have deep experience in the space and as a result we do have some excellent partnerships already developed that will give us a real leg up if we choose to become early adopters. Back to top
Enhanced disclosure: A better model for investors and companies
PM: One of your competitors suggested recently that the CSE’s suitability standards for officers and directors might be too lenient. What would you say to this opinion? And what about disclosure of issuers listed on the CSE in general?
RC: To be blunt, I was confused by that statement. I have no idea what that person was referring to. The rules in place for suitability for officers and directors are essentially identical across all exchanges operating in Canada, whether it be the NEO Exchange, the CSE, the Venture Exchange or the Toronto Stock Exchange. The spokesperson from the Toronto Stock Exchange would have no idea what our policies and procedures are in administering the rules. We can, and do with some regularity, exercise our discretion to prevent individuals being involved with particular companies. I think that was not an informed opinion being voiced by the spokesperson from the TMX Group.
The CSE believes that in return for the exchange not being as involved in a company’s decisions as perhaps other exchanges are in Canada, the company must agree to adhere to higher disclosure standards.
In addition to the work we do on a company’s initial listing statement, as well as their legal obligations to provide continuous disclosure, companies are required to file monthly reports that are effectively an update to the Management’s and Discussion and Analysis from the listing statement or prospectus. Companies find that it is a helpful part of their investor relations activities, and not a burdensome extra piece of exchange regulation.
That disclosure record builds for the companies and it is easy for people to see which companies are executing against the plan they set out, and which companies are not making the progress they set for themselves in their business plan. Back to top
Regulatory outlook for cannabis-related businesses
PM: There was a degree of controversy this year about Canadian stock exchanges listing companies that operate cannabis-related businesses in the United States. Can you comment on the CSE’s policies and how your regulatory model held up in the face of this debate? Do you foresee policy at the CSE changing at all in 2018?
RC: The answer to the latter question is that I do not see our policies changing. We may learn things as time goes on from the legal position in the United States, but this to us was a relatively straightforward call.
The basic principle is that all companies listing on the Canadian Securities Exchange, and for that matter any exchange in Canada, must provide a positive representation that they are operating in accordance with applicable law in the jurisdictions in which they conduct business.
To that end, and particularly with companies in the cannabis space in the United States, we can and do require the company to provide a legal opinion and analysis demonstrating how it is that they are operating in accordance with the licensing regime in place in the particular state or states in which they do business.
From an investor’s perspective, clearly there are risks in investing in these companies given the uncertainties in the legal framework in the United States. That is why companies who have come to us with US exposure, either in the listing statement or in a prospectus cleared with one of the provincial regulators, must spend a lot of time explaining the legal position of the company, and what the position of the company would be assuming various changes took place. Investors need to know what the impact on the company would be if the rules changed in the US.
This was formalized by the Canadian Securities Administrators in a guidance notice a couple of months back and it’s an approach, because it’s based on disclosure, that is entirely in line with the one we’ve taken to these companies coming into the public markets.
So, again, we see that there is considerable investor interest in these opportunities, there is considerable interest from entrepreneurs based in the United States to raise growth capital from the Canadian public markets, and we expect to see more of these companies, not fewer, coming to us in the months ahead. Back to top
Strength behind the bench at the CSE
PM: The CSE’s largest shareholder is Urbana Corporation, which holds just under half of your common equity. This is different to the other major Canadian exchange groups, which often have a wider base of shareholders. Is there a benefit to having a concentrated ownership structure and, presumably, the relative independence it provides for?
RC: I don’t know if I can speak to the benefits of having a relatively concentrated shareholding. What I can speak to is the benefit of having Urbana Corporation as our principal shareholder, and that of course is that Urbana made its name some years ago for its successful investments in the exchange space, not just in Canada but around the world.
The team there, led by Tom Caldwell, who is also our chairman, is regarded as one of the most knowledgeable there is when it comes to the business of exchanges. Tom has access to many different types of people in the industry. Whether it be senior management at other exchanges or analysts and investment bankers, they all know Tom and if we need to meet these people, the opportunity is there because of our chairman and Urbana Corporation.
I believe we are very fortunate to have an engaged, supportive and extremely knowledgeable main shareholder. We really couldn’t have wished for anything more. Back to top
Hitting its stride as a full-service stock exchange
PM: In some respects, the CSE is fighting a two-front war with other exchanges, both in attracting exciting young companies and in retaining your maturing issuers. Do you think it makes sense for companies to leave the CSE if they qualify for a “senior” exchange? Conversely, does the CSE still maintain its advantages as an exchange suited for early-stage companies? Can you realistically cater to both?
RC: Branding is obviously extremely important in the exchange world, and probably more than I understood when I became CEO. There is very little difference in what we do versus the so-called senior exchanges. The access that we provide, the systems that we deploy, the rules governing the companies and so on – there is an awful lot of commonality among us.
However, some institutional investors and retail investors believe, for some reason, that these senior markets will provide higher multiples, better liquidity, more access to investors both in Canada and internationally, and a better experience for the issuer.
I think that is a very difficult proposition to support, especially on a cost-benefit basis, when somebody looks at the increased costs of being, for example, on the Toronto Stock Exchange versus the Canadian Securities Exchange. It would be difficult to justify on an objective basis in a lot of cases.
The one area that really is one of the last mountains for us to climb as an organization is the institutional investment community in Canada. Some institutions have hard-coded into their mandate the requirement that a public equity in the portfolio must be listed on one of the TMX Group exchanges, or specifically on the TSX. They don’t mention the Canadian Securities Exchange and they don’t mention the NEO Exchange.
When we hear from a company that an interested investor has said they would invest in them but for the fact they were listed on the CSE, those are barriers that we need to continue to work to knock down. That is not just perception but a genuine issue that exists.
Our challenge as an organization is to try to reduce the number of institutions with those restrictions in their investment mandates. Our goal is to provide an identical or better experience than the other exchanges, where companies are going to pay considerably more for the privilege of being listed.
One other concern is that if a company believes it is on its way to joining one of the major indices on the Toronto Stock Exchange, there is a rule that to be in the long-established national indices, those stocks have to be listed on the Toronto Stock Exchange. It is sort of like back in the day on the S&P 500 when you had to be listed on the New York Stock Exchange. And as a result, companies such as Microsoft and Apple and Cisco and Intel didn’t qualify for the S&P 500 for a number of years because they were on Nasdaq. Eventually it got to the point where S&P had to do the right thing and permit companies from exchanges other than the NYSE into the index.
Our goal is to have companies stay on the CSE and get big enough and relevant enough to the broader market that people lean on the S&P and TSX to allow them into the indices. I think we may have our first billion-dollar company relatively soon, and with that achievement we might then have investors lobbying Standard and Poor’s to change the rules.
Vancouver is no stranger to bold ideas. Home to the internationally renowned TED conference since 2014, another conference focused on the pursuit of big ideas has now also come to Vancouver.
The inaugural Extraordinary Future Conference (XF), launched this past September, was a joint initiative by the Canadian Securities Exchange and Cambridge House International to shine the spotlight on the robust technology scene in Western Canada and to highlight revolutionary technologies that will help to shape many facets of society in the years to come. Whether it was the latest developments in personalized medicine, the seismic shift in financial technology being caused by blockchain, or the advancements in virtual and augmented reality, there was no shortage of fascinating and engaging content for attendees to take in at this year’s show.
Held at the beautiful Vancouver Convention Centre, the first edition of the Extraordinary Future conference brought together over one thousand attendees, including investors, technology entrepreneurs, capital markets professionals as well as other stakeholders working in and supporting the innovation economy. Additionally, there were 33 guest speakers as well as 26 companies representing a variety of technology-driven sectors.
As a technology investment conference, an important objective of this event was to showcase both public and private companies and the entrepreneurs working on cutting-edge technologies. It was also especially encouraging to see the number of organizations and entrepreneurs present at the show that were located in the Lower Mainland or in Western Canada.
Highlights of the Talks
Many of the industries featured at this year’s show were either growing in popularity or beginning to hit their stride, and as such, the enthusiasm around these technologies was palpable.
That said, most of the technologies being discussed at this year’s show are still not mainstream. As such, it was incredibly valuable to have assembled thought leaders and entrepreneurs who are actively working in these areas to explain the state of their respective industries, and to highlight for attendees, where there might be opportunities for investors to engage.
Below are highlights from topics covered during panel discussions that took place at this year’s show.
The conversation around the role of technology and how it is shaping healthcare was a fascinating one. Moderated by Dean Sutton, CEO of Victory Square Health, panelists Dr. Brendan Byrne (TELUS Health), Dr. Tom Elliott (Personalized Biomarkers), Rashid Ahmed (BioMark Diagnostics) and Norma K. Biln (Augerex) provided a variety of perspectives on how technology can deliver a more personalized and customized approach to healthcare delivery. In particular, several panelists highlighted the role that detection technology will play in recognizing health issues as well as how technology can help intervene at a much earlier stage in a disease to facilitate better outcomes.
Investing in Blockchain
One of the hottest topics of discussion at the Extraordinary Future conference this year was blockchain. As part of a broader discussion on the evolution of financial technology, blockchain has the power to radically shift the landscape of the financial ecosystem. Moderated by Blake Corbet, the Head of Technology and Healthcare Investment Banking at PI Financial, there was a capacity crowd on hand to hear from panelists Guy Halford-Thompson (BTL Group), Harry Pokrandt (Hive Blockchain Technologies), Marc van der Chijs (First Block Capital) and Alex Tapscott (NextBlock Global). It was clear from the perspectives shared by the panelists that the move to the ‘internet of value’ is still in its early days, but that momentum is strong and changes are occurring at a rapid pace.
Vancouver as a Leader in VR/AR
When it comes to the rapidly evolving world of visual content development, Vancouver stands out as an international leader. The combination of talent in the visual effects industry and entrepreneurial culture have created an exciting environment for leading edge VR/AR technology and content to be developed. The panel discussion on the future of VR/AR was moderated by Dan Burgar, President of the VR/AR Association in Vancouver and Director of Business Development at Archiact and included panelists Nancy Basi (Vancouver Economic Commission), Anne-Marie Enns (Archiact), Kevin Oke (LlamaZoo) and Ryan Peterson (Finger Food Studios). A key takeaway of this discussion was that the growth of the VR/AR technology is already taking place in the enterprise market and wider consumer adoption is on the horizon. This insight was also a takeaway from the AR/VR session hosted by Equity.Guru’s own Chris Parry who profiled several choice companies including INVRS3D Cinematic Reality, uForis VR, Ampd GameTechnologies and Ydreams Global Interactive.
Unlocking Capital to Fuel Innovation
One of the biggest challenges to overcome in becoming a leader in the innovation economy is making capital accessible to entrepreneurs. James Black, VP of Listings Development at the Canadian Securities Exchange, moderated the panel discussion on the intersection of technology and finance, which spoke to the different strategies available to early-stage technology companies that require capital to scale their growth. On the panel were Aimee Gagnon (Dojo Card), Bill McGraw (Wavefront), Jamie Brown (Canaccord Genuity) and Tom Rossiter (RESAAS) each of whom lent their own perspectives on how technology entrepreneurs can navigate the growing number of options help finance their growth.
Looking Forward to Extraordinary Future 2018
For its part, the CSE recognizes the important role that public markets can play in driving capital formation which in turn can help early-stage companies scale up and compete globally. The scope of Extraordinary Future, however, extended beyond just the public capital markets sphere, a recognition that innovation ecosystem is diverse and needs support in a number of different aspects to fully succeed.
As James Black, VP of Listings Development at the CSE stated: “The excitement and enthusiasm shown by everyone at our first Extraordinary Future conference was incredible. For all involved, it is a clear indicator that Canada can play a major role in popularizing the next wave of technological innovation. As the Exchange for Entrepreneurs, the CSE is proud to support connecting the many stakeholders required to grow Canada’s emerging wave of technology companies. I have no doubt that we can build XF into one of the premium gathering places in North American for capital and emerging technology companies as well as thoughtful discussion on the intersection of tech and finance.”
As this year’s show clearly demonstrated, bringing together a dynamic mix of industry analysts, investors, technology entrepreneurs, and a diverse selection of public and private companies working to advance the innovation economy, is fertile ground for exciting conversation, connections and catalysts.
In the leadup to next year’s conference, it will be interesting to see how many of the bold predictions and forecasts made at this year’s show unfold. One thing is for certain, however, and that is for organizations such as the CSE, the future of Canada’s innovation economy continues to look extraordinary.
This past summer, the Canadian Securities Exchange, in partnership with Stockpools, Lift Cannabis Expo, and Abattis Bioceuticals Corp. (CSE:ATT), successfully ran the first-ever CSE Stockpools Cannabis Investment Challenge.
This 11-week fantasy stock trading competition attracted over 1,000 participants from across North America and beyond who were each vying for the chance to win weekly cash prizes as well as the chance to win the grand prize, valued at $3,000.
The challenge helped investors understand more about the pool of companies in the competition; specifically, all of the companies that investors could choose from are CSE-listed companies involved in the cannabis sector. In total, there were 45 companies that investors could choose from in order to put together their fantasy portfolio.
In addition to some colourful usernames, weekly winners of the competition (listed below) posted some impressive gains, with the range of returns spanning from 0.28% in week 6 to 15.12% in week 4. The grand prize winner, John Terry from Rhode Island (USA), won the final three-week stretch with a gain of 13.21%.
As part of the competition, select CSE-listed companies also shared their unique insights and experiences on the shifting landscape facing public cannabis companies. Included below is a list of companies that shared their perspectives on the cannabis markets:
Rob Abanante, CEO of Abattis Bioceuticals Corp. (CSE:ATT), a lead sponsor of the challenge, shared his thoughts on challenge’s performance and had a few kind words to say about working with the CSE and Stockpools:
“We at Abattis Bioceuticals Inc. would like to first thank all of the participants in the CSE Cannabis Investment Challenge, as well as Lift Cannabis Expo, the Canadian Securities Exchange, and of course the other featured companies; I hope you all enjoyed participating as much as we did. After this success, we are looking forward to working with Stockpools and the CSE again on future contests. There is so much to learn about this diverse and volatile industry that is changing rapidly. We wish to continue educating new investors through Stockpools’ unique platform and invite them to our website for more information. Thanks again everyone!”
This competition not only helped to highlight the cannabis sector, it also provided investors with a risk-free opportunity to learn more about investing online as well as about the diversity of companies in the cannabis space and the Canadian Securities Exchange. “Our partnership brought together a select group of CSE-listed companies in the Cannabis space,” explains Anil Mall, CEO of Stockpools, “and gave our global audience a unique opportunity to hone their trading skills on Stockpools’ risk-free educational platform.”
The focus of the CSE Stockpools Investment Challenge was to provide an educational opportunity as well as engage retail investors in the cannabis space, an objective the CSE is confident was met. “The initiative ended as a huge success in August with more participants than expected across the globe,” said Anna Serin, Director of Listings Development and challenge organizer. “The Canadian Securities exchange continues to work to engage the investment community in the small cap space, always striving to build more engaged and liquid markets for the benefit of its issuers.”
Thank you to our sponsors and to everyone who participated in the CSE Stockpools Investment Challenge. Congratulations to the following weekly winners:
Week 1 – michelrbrunet (1.58%) – Quebec, Canada
Week 2 – Krab – (4.26%) – Delta, BC
Week 3 – dancep (6.02%) – Ontario, Canada
Week 4 – arod (15.12%) – Ontario, Canada
Week 5 – Beausoleil (5.64%) – Quebec, Canada
Week 6 – Excelsior (0.28%) – Tennessee, US
Week 7 – chriscam(9.01%) – Has not sent in claim form yet
Week 8 – Tiekam (11.71%) – Kitchner, ON
Week 9-11 (Grand Finale) – Jt420money (13.21%) – Rhode Island, USA