As many seasoned mining professionals know, two of the key ingredients to survive the often-harsh world of mining and exploration are hope and enthusiasm. At this year’s PDAC conference in Toronto, however, there was something more in the air – a feeling that has been missing for some time – excitement.
Despite political uncertainties at the start of the year, prices for commodities and precious metals have rebounded enough compared to last year to give the mining and investment communities many more reasons to smile and, most importantly, to make deals. And it appears that deals are happening. In the fourth quarter of 2016, for example, CSE-listed companies in the mining sector managed to raise over $30 million signaling that deal flow, while modest, is improved over the same point a year prior for junior and small cap companies.
With the PDAC typically drawing in well over 20,000 delegates (this year they pulled in 24,000), hundreds of exhibitors and dozens of sessions and networking opportunities, it’s not enough to walk the walk – to get the most out of this show, companies and investors must also talk the talk.
In recognition of how important (and daunting) the PDAC can be for small cap mining firms looking to raise capital or for investors trying to navigate opportunities, the CSE, along with several like-minded event partners and sponsors, sought to help by putting the right ingredients in place to enable entrepreneurs and investors to have a positive PDAC experience.
PreDAC: Building Connections Early
Whether it’s polishing a pitch or simply mastering the subtle art of balancing finger foods, a drink and a conversation with an industry colleague, networking with the right people at the right time makes all the difference to an entrepreneur. Of course, it helps to get a head start.
To that end, the CSE along with its event partners, aimed to help PDAC attendees – as well as those who might not be able to attend the convention itself – connect with one another at two pre-PDAC sessions, known as PreDAC, in Toronto and Vancouver.
In each case, not only was there a solid turnout, but attendees were genuinely excited to connect and discuss the industry and outlook for the near term ahead of the whirlwind that is the PDAC. Based on the level of interest and enthusiasm with attendees of these events, PreDAC sessions were on point in getting folks in top form for PDAC 2017.
In Toronto, PreDAC was held at the fun East Thirty-Six resto-bar. Co-hosted by OCI Group, the session included insightful presentations from Dr. Francis Manns, Consultant & Independent Geologist; Krystal Ramsden, Mining Analyst at Extract Capital; Peter Campbell, Investment Banker at OCI Inc; Lawrence Devon Smith, Consulting Engineer; and Katherine Fedorowicz, VP Marketing & Investor Relations at Red Cloud, Klondike Strike Inc. To view more images from PreDAC Toronto, check out the Facebook album here.
PreDAC Vancouver took place at event co-host Clark Wilson LLP’s scenic downtown offices. Joe Mazumdar, Analyst and Co-Editor at Exploration Insights and Matt Zabloski, Founder and Lead Portfolio Manager of Delbrook Capital, provided attendees with their perspectives on what to look at when evaluating a mining company as well as the investment landscape for natural resources respectively. To view more images from PreDAC Vancouver, check out the Facebook album here.
Following the presentations at both the Toronto and Vancouver events, attendees enjoyed networking opportunities, appies and drinks with industry peers, investment professionals and others during the networking session.
The CSE at PDAC 2017
PDAC is always a busy but this year was busier than most for the Canadian Securities Exchange. In addition to exhibiting at the Investor’s Exchange, the CSE hosted the increasingly popular PDAC Investor Luncheon, launched a special edition of the CSE Quarterly and co-sponsored an evening networking reception. All this in addition to the many meetings with investors, entrepreneurs and other industry professionals in and around the convention.
PDAC Investor Luncheon
The PDAC Investor Luncheon continued its growth in both attendance and popularity again in 2017, making it a must-attend event for those interested in the CSE as well as companies listed on the CSE.
In addition to a delicious buffet, attendees were treated to quick pitch-style presentations from several CSE-listed company executives, as well as a keynote special presentation on raising capital in the US by guest speakers Kenneth Sam from Dorsey Whitney LLP and Chris King from OTC Markets Group.
On the exhibition floor, the infamous CSE booth and lectern made their return to the PDAC. With a larger crowd at this year’s show, there was a noticeable bump in traffic to the CSE booth. In addition to the exchange itself, the CSE was also well represented around the convention floor with nine CSE-listed companies exhibiting.
It wasn’t all work at the PDAC. CSE team along with friends from MNP LLP and Aird & Berlis LLP got together at Taverna Mercatto to celebrate another successful PDAC. This event, like many others around the show, was also busy and offered up the chance to recount stories of the day and to make plans for future meetings.
Recipe for Success
PDAC 2017 was undeniably great for the CSE as well as for CSE-listed issuers and the growing number of investors who are interested in the Exchange for Entrepreneurs.
As this world-class event continues to grow, so too does the importance of getting the most out of the time spent at the show. Judging by the response from industry experts, investment community professionals and investors who attended the CSE’s events, the extra support these activities provided might just be the extra ingredient needed to stay a step ahead.
The Special PDAC Edition of the CSE Quarterly is Now Live!
As the world’s leading mining conference, the PDAC is a great example of how truly global the mining industry is.
This special issue of the CSE Quarterly profiles several CSE-listed mining and exploration companies on their global journey to seeking out interesting projects from Montana to Mongolia and many points in between.
In addition to the profiles and update on the CSE provided by CEO, Richard Carleton, this edition of the CSE Quarterly contains some new features.
First, a “Company Snapshot” has been embedded at the end of each article providing a more well-rounded view of the company as an investment opportunity. Second, the Quarterly now more clearly identifies companies who also trade in the US on one of the OTC Markets tiers.
Featured in this special PDAC edition of the Quarterly are:
Many junior and small cap companies have seen a resurgence in market caps as well as investor confidence. For public companies and their shareholders, however, one recurring question is – does where a security is listed make a difference to either the degree to which it will trade (i.e. liquidity) or to the amount of money that it can raise?
Based on data detailing financing and trading activity on Canada’s most popular small/junior cap exchanges, the TSX Venture and the Canadian Securities Exchange, the answer appears to be a resounding no.
Starting first with capital raised, the following table summarizes the amount of money raised as a proportion of the total market cap of the exchange on both the TSX Venture Exchange and the Canadian Securities Exchange in January and December of 2016. This metric provides a measure of effectiveness for a particular company at raising capital relative to its market value.
Table 1: Capital raised divided by market capitalization of CSE and TSX Venture listed securities
TSX Venture Listed
While January 2016 was a tough month for small cap entities raising capital, December 2016 was much better. For CSE listed companies, the dollars raised in December 2016 as a portion of the total market cap worked out to be 2.85% – more than double the 1.14% for TSX Venture listed companies.
Despite external market conditions, in both December and January of 2016, CSE listed companies were able to raise a greater percentage of their market capitalization from investors than TSX Venture listed companies were. This implies that investors were more interested in the deals taking place on the CSE rather those on the TSX Venture.
In terms of liquidity, data once again demonstrates that where securities are listed does not appear to determine whether or not investors wish to trade in those particular securities.
As shown in the following table, for both December 2016 and January 2017, the aggregate trading value divided by the total market cap was about two percentage points higher for CSE listed companies than those listed on the TSX Venture.
Table 2: Trading value divided by market capitalization of CSE and TSX Venture listed securities
TSX Venture Listed
Clearly, the perception that trading is more liquid or that companies are more readily financed if a company is listed on a larger exchange is not borne out by the data. Although a fraction of the size of the TSX Venture, the relative outperformance of the Canadian Securities Exchange shows that ultimately it is the companies and their respective investors that drive interest in deals and liquidity.
Nevertheless, as awareness of the choice available to publicly listed securities in Canada improves, factors such as total value to shareholders will become the more important benchmark for publicly-listed companies to consider when evaluating which venue to list on. As trading, financing and listing data have shown, however, an increasing number of companies and their shareholders are being rewarded for listing on the CSE.
With trading volume, capital raised and listings on the CSE achieving their highest levels in the exchange’s 13-year history, the Exchange for Entrepreneurs continues to prove that small-cap companies, as well as those who invest in them, benefit from having real choice in the Canadian securities landscape.
And, while the numbers themselves are impressive, the numerous examples of continuous innovation this past year at the CSE demonstrate why they are committed to making 2017 even better.
Strength in Numbers
From a trading perspective, 2016 was the best year on record for the CSE. Order flow came through at 6.4B shares worth a total value of over $1.5B – the highest amount ever since launching in 2003 and a 159% increase over 2015. In addition to the secondary market, investors were also interested in directly funding CSE listed companies. CSE-listed companies participated in 364 deals raising over $400 million in 2016.
While these figures are a great endorsement of companies being able to raise capital on the CSE, the bigger win for companies as well as their investors is that more of that capital could be used for their own growth plans rather than go towards the ‘middlemen’. As shown in the image below, unlike competitor exchanges, the CSE does not take a percentage of the funds raised which means more money in the hands of entrepreneurs as well as their shareholders. For additional information on why companies are choosing to list on the CSE, click here.
On the listings front, the CSE saw a record high number of listed securities in the summer of 2016, reaching 328. In addition, the CSE’s commitment to innovation meant that, despite a relatively challenging IPO market, five companies elected to go public on the CSE and 38 listings joined the exchange in 2016. The CSE saw the composition of securities listed on the exchange shift to include firms participating in emerging industries like drone transportation, fintech as well as medical marijuana.
Finally, with regards to performance, the CSE Composite Index, a benchmark of performance of the CSE, finished 16.1% higher compared to 2015 and the 103 firms (as of December 19th) that constitute the index had a collective market cap of over $2.3B.
The Value of a Handshake
Part of what has contributed to this record-breaking year has been a consistent focus on the entrepreneurs, companies and investors that choose to work with the CSE. Despite the realities of operating in an increasingly digital world, the CSE made a concerted effort to reach out in person to entrepreneurs and investors across the globe.
From coast to coast across Canada, as well as throughout the US, Europe and even as far away as Mongolia, the CSE team members attended, sponsored or hosted over 40 events throughout the year. In those travels and conversations with many entrepreneurs, it was abundantly clear that modern capital markets are global in nature and that the CSE has an increasingly global reach. Many of the chronicles of the CSE team’s travels from 2016 can be found on the CSE Facebook page here.
Another important outcome of talking to entrepreneurs in person was the discovery that many of them were curious to understand the requirements and realities of taking a company public. As a result, this past year marked the launch of the first ‘Going Public’ boot camps in 2016.
These one day workshops were held in Vancouver and Toronto and brought together capital markets professionals and entrepreneurs for an intensive and informative session on what it takes to succeed as a growing company.
Both sessions were met with an overwhelmingly positive response, indicating that, regardless of what stage they may be at with their respective businesses, entrepreneurs value learning about the path to going public. For those who missed it, recordings from the Vancouver session are available on the CSE YouTube channel here.
Committed to Innovating
Capital markets are rapidly evolving and becoming increasingly reliant on technology to power all parts of the capital formation ecosystem. In 2016, the CSE implemented a number of enhancements to the overall technology infrastructure that helped pave the way for expansion and improved service delivery.
In April of 2016, the CSE rolled out its newly designed responsive website. Rebuilt from the ground up, this new website streamlined the user experience to enable visitors from screen size to access data on the CSE as well as the companies listed on it. In addition to the design and layout changes, the addition of integration with social media, such as Twitter, enabled website users to stay updated on the latest developments and activities at the Exchange for Entrepreneurs.
Another important development to the CSE’s digital evolution in 2016 was the increased focus on digital communication, specifically across social media.
A photo posted by Canadian Securities Exchange (@canadiansecuritiesexchange) on
The CSE added another digital channel, Instagram, into its stable of digital social media channels. Over the past year, followers of the CSE as well as listed issuers and investors were able to get an increasingly detailed view of the work of the CSE as well as exclusive access to what goes on behind the scenes at the Exchange for Entrepreneurs.
Finally, one of the big technology projects of 2016 was the rollout of a new trading engine that improved performance, decreased latency as well as enhanced stability all the while consuming less resources than the previous system.
Looking Forward to 2017
With such a strong performance in 2016, the bar has been set high for 2017. While it is difficult to predict exactly what the year ahead will bring, the CSE will continue to stick to its winning formula of putting entrepreneurs first, committing to innovation and providing real value to public markets.
2016 will officially go down as one of the best years in the Canadian Securities Exchange’s history.
At the outset of the new year, CEO of the CSE, Richard Carleton, sat down with Peter Murray of Kiyoi Communications to discuss and reflect on the achievements of the CSE in 2016 as well as to provide insight on the capital markets ecosystem and what’s around the corner for the CSE in 2017.
Below is the full text from both parts of their interview (for ease of navigation, links to each part and topic have been provided).
The first portion of the interview focused on the performance of the Canadian Securities Exchange in 2016, including the record trading and capital raising efforts from companies listed on the exchange. In addition, Richard Carleton highlighted a number of important operational and technical investments that were made to facilitate future growth and enhance investor experiences at the CSE.
Peter Murray (PM): The year 2016 was a particularly good one for the CSE and the financial community is interested to learn what the exchange’s plans are as we enter 2017. I’ll begin by asking you to walk us through some of the milestones and accomplishments at the CSE during the year just finished.
Richard Carleton (RC): The headline event would be the performance of our overall market, where we enjoyed record trading volume, trading value and number of trades for our CSE listed companies. We saw very strong momentum begin to build about halfway through the year and it grew to a crescendo in the month of November. For all members of the team, and perhaps particularly those of us who have been working with the organization from near inception, it was tremendously gratifying to see the investing public accept our issuers to the extent they did. From an external perspective, I think that is the headline story.
At the same time, I would say some of the things we did behind the scenes were equally important. We invested very heavily in our infrastructure in 2016. The first tangible evidence of this effort was the new website launched early in the year. Though we received plenty of positive feedback on the improved look and usability of the website, we worked to further refine it on a continuous basis over the balance of the year. I think the website presents a clean, professional and complete view of the Canadian Securities Exchange to all visitors.
We also invested in our trading infrastructure. In mid-December, we completed the final stage in launching a new trading system that is approximately 11 times faster than our former system but requires considerably less hardware to operate. For us, that means we are offering a higher level of service at a lower operating cost.
In addition, we bundled the new trading system with order routing solutions, compliance and risk management services. For example, we provide features such as “fat-finger” protection, credit limits, risk limits, and risk tolerance limits to assist dealers trading on our exchange with meeting their risk management obligations to clients. Basically, it gives dealers new tools that enable them to provide a higher level of service to their clients. Back to top
PM: You mentioned new volume and value records. Statistics released by the CSE during the year showed year-on-year volume growth of over 100% in some months. What drove these increases?
RC: There clearly was a lot of investor interest in the legal cannabis sector, both in Canada and the United States. With propositions on the ballot during the US election in eight states to either permit medical marijuana or legalize it outright, the belief was that companies active in the US market could have a tremendous increase in business opportunities available to them. In the run-up to the election we saw a big increase in trading and price performance for names in the sector.
Canada-focused cannabis companies were also caught up in the investor interest given the posture of the federal government toward liberalizing laws in this country.
But I’d hasten to point out that cannabis-related companies weren’t the only ones fueling the growth. A number of natural resource issuers and technology companies also traded heavily in the latter half of the year. The result was a string of monthly records for share turnover, value traded and number of trades as we went from September through November. Back to top
PM: On the oversight front, there is an ongoing effort to update the rules companies must abide by while on the exchange, as well as during the listing process. Where do things stand currently?
RC: Most of the work has been taken up in two specific areas: original listing requirements and continued listing requirements. The new requirements for original listings have been implemented. We increased a number of the thresholds, which essentially had not been adjusted since the exchange began business in 2003. In the intervening 13 years, some of the numbers came to need a reassessment. Still, I would say that all of the companies approved for listing prior to the adoption of the new requirements would have made it under the new rules as well.
If you consider this together with the work we did in 2015 on plans of arrangement, we are trying to communicate to the investment community that we need to see companies with a business plan and sufficient capitalization to meet financial requirements for that plan over a 12 to 16 month period prior to listing.
To assist companies in meeting their disclosure obligations, both as they list and subsequent to listing, we retained two very important individuals in 2016. Dr. Francis Manns is now our consulting geologist working with prospective issuers to provide expert-level peer review of 43-101 reports, or in the case of oil and gas issuers 51-101 reports. Francis is universally respected in the mining and financial communities and is a real asset for resource companies to work with as they list with us.
Another strong addition is John Hughes, who joined our compliance team in a management capacity. John is a consulting accountant who advises firms on the impact of IFRS and other contemporary accounting issues. John reviews financial statements and other disclosure documents from prospective and current issuers with a view to helping companies meet the highest standards when it comes to financial reporting and disclosure.
For companies listing with us, having Francis, John and the other experts on our team to turn to is a real benefit.
We are still working on the continued listing requirements and the idea there is to establish minimum criteria a company must meet to remain listed on the exchange. The objective of the exercise is to ensure companies on the exchange are actively pursuing the business they have set out in their disclosure materials and listing statement. If a company decides that it needs to raise additional capital or find another business, it has a period of time in which to do that, but we are not going to allow inactive companies to reside on the exchange indefinitely. Back to top
PM: Quite clearly, 2016 was a year of progress on multiple fronts. What is the CSE team preparing to focus on as we enter 2017?
RC: Now that we’ve got the new trading system running we are really going to shift our attention to improving market making and overall market quality for our issuers. We have been working with several dealers on ways for market makers to deepen liquidity and reduce the choppiness in prices by contributing buy and sell orders to the CSE book. Ensuring that companies have a continuous two-sided market is quite important for issuers and their investors.
We are also going to be continuing our efforts to bring companies listed on the exchange to the attention of investor audiences in Canada, the United States and beyond. We are planning quite a few events over the course of 2017 designed to introduce more potential investors to our issuers. And, of course, that has the side benefit of demonstrating to entrepreneurs deciding where to list that they should choose the CSE ahead of some of the alternatives, as we quite actively support the efforts of our issuer community in markets around the world. This is going to be another important focus of our energies over the course of 2017. Back to top
PM: The CSE approach to issuers and markets has some unique aspects to it. Do you think the CSE has helped change the environment for securities listings in Canada?
RC: Well, we sure hope so. Our Senior Vice President of Market Development, Rob Cook, said the other day that when the organization launched in 2003, while we may not have been re-inventing the wheel, we certainly set out to apply a healthy degree of lubrication to the process. And in many respects we have successfully done that. We are continuing our mission to facilitate the lowest cost of public capital for small-cap companies in Canada. The principal means by which we do that is improving the listing process and the secondary trading environment, and we work with as many parties as we can to accomplish our objectives. This is our core strength and we will retain that commitment to a higher level of service for our issuers. Back to top
Part 2: Industry Insights
In the second portion of the interview Richard Carleton provided his insights on a spectrum of issues facing Canadian capital markets. In particular, Carleton provided his take on the evolving landscape for IPOs, performance of commodities markets, algorithmic trading and opportunities for Canadian listings in the US.
Peter Murray (PM): Data shows that 2016 was a slow year overall for Initial Public Offerings in Canada. What is your viewpoint on what has happened to the IPO and what is going to be its role for future public financings and listings?
Richard Carleton (RC): I don’t think there is any doubt that the decline in the number of IPOs is more than a cyclical phenomenon. We have witnessed a sea change in how early stage corporate finance is conducted in Canada. Participants are voting with their feet and avoiding the IPO process. They are doing so because of concerns about cost, concerns about delay in having their prospectus approved, and also that there are now very few dealers who have the capacity, willingness or business model to support a small-cap IPO and distribute the securities to their clients and to the clients of other members of an underwriting syndicate.
The so-called “exempt market” has really stepped into the gap. Here, I am talking about dealers (specifically “exempt market dealers”) who are able to distribute securities on the basis of one or more prospectus exemptions in the different securities acts. The most common means, the “accredited investor” exemption, where securities may be distributed to high net worth individuals and institutions without a prospectus, accounts for the lion’s share of the funds raised by early stage companies in Canada today. I prefer to think of this development as less as of an IPO crisis than as the emergence of a new dynamic, the funding of new businesses via the exempt market. Typically, a new company will conduct a reverse takeover of an existing listed company, or existing listed company management may decide to undergo a fundamental business change. In both cases, the exempt market is where 90% to 95% of the funds are being raised for new CSE companies. This development means we are working not just with the traditional IIROC dealers on their underwriting activities, but also with exempt market dealers who are the lead actors in this new access to private capital for public companies. Back to top
PM: In the last two months of 2016, investors moved out of some sectors and into others with unusual force. Many equity indices hit all-time highs as the global reach for yield unwound. Meanwhile, industrial commodity prices rose and precious metals prices fell. What is this telling you and how will this influence issuers and investors on the CSE?
RC: I am somewhat concerned about the state of the equity markets in the short term only because I think a lot of the historical correlations broke down after the US election. Everything went up, and everything can’t go up because there are some things that should be going down while others are going up, and vice versa. We have seen something of a return to normal over the last couple of weeks. But I am a little concerned about where the markets might be in three to six months.
Now, as the exchange operator we can’t let ourselves become preoccupied with shifts in the market. What we are looking to do is provide a good, safe home where issuers can raise public capital, regardless of prevailing market conditions. So, while we might see interest moving from one sector to another, at any given time there is usually something that investors are interested in supporting. As an example, we have had two oilfield services companies join the CSE in the past couple of months. This sector has been devastated over the last few years. It is very encouraging that experienced professionals in the field are of the view that it is an opportune time to get back into the business. Again, as an exchange we have to focus on the long game. Back to top
PM: A year or two ago when junior markets were having a particularly tough time, some observers criticized predatory trading practices for contributing to the weakness. Are such things as high-frequency trading and black boxes issues for companies on the CSE?
RC: We saw the first consistent participation by high-frequency trading firms on the CSE this year. These firms were pursuing a market-making strategy, which means they are significant contributors to the available liquidity in a particular stock. The firms are very competitive; they tend to narrow spreads and provide for deeper order books. I believe it has contributed in a positive way to liquidity on the CSE. There were complaints voiced about “HFTs” a few years back when there was a lot of selling pressure, but we didn’t hear so much in the way of concern when the early stage markets began to recover. Back to top
PM: Given the differences in the two markets, there seems to be an opportunity to harmonize Canada’s public venture market with capacity in the United States for deal flow and retail investing. How do you see this developing and what role can the CSE play?
RC: There is no doubt Canada is an extremely advantageous jurisdiction in which to launch a smaller public company. The economics don’t really support it in the US, UK or EU. Arguably, Australia is the only other place in the world where small companies without revenues – typically mineral exploration companies – have an opportunity to raise public capital.
We know from experience that there is a lot of interest in our companies from investors in the United States. We have a close working relationship with the OTC Markets Group in the US and in many cases we encourage issuers to obtain a quotation on one of the OTC’s regulated boards and to make sure their securities are properly registered with the clearing and settlement agency in the United States. With these measures, US-resident retail investors will be able to trade these stocks via their discount brokerage accounts.
Issuers end up enjoying the best of both worlds. They have a relatively low-cost jurisdiction in which to list their company, but at the same time can tap the US capital markets for both investment capital out of the gate and further rounds once they are trading in the secondary market. That is something several of our companies have taken advantage of. Generally, companies that obtain a US quotation have seen an immediate improvement in liquidity and it gives them additional fundraising opportunities in the US. The fact is that Canadian public companies travel very well internationally. Back to top
PM: Do you have any closing thoughts for issuers and investors, perhaps on issues we have not addressed so far?
RC: I would more so just take the opportunity to state again that the two things we will focus on in 2017 are working more with market-making and other groups to improve liquidity, and secondly that issuers should expect opportunities to work with us to promote both the exchange and their companies on an international basis. We are going to be very active in the US, in Europe and potentially in Asia as well.
Really, what this is all about is proving the value of a listing on the CSE, and in so doing make the challenge facing our issuer companies of raising funds significantly easier. Back to top
Just in time for the holidays, the latest issue of the CSE Quarterly is now available.
This year has been another record-breaking one at the Canadian Securities Exchange. Thanks to growing interest from investors who are paying more attention to the innovative companies choosing to list on the CSE, trading volume and value have eclipsed last year’s numbers.
Whether it’s the disruption of delivery logistics with drones or redrawing the map on payment processing, the diversity of innovative stories contained in this issue of the CSE Quarterly highlight the fact that innovation is alive and thriving at the CSE.
Many people know the Canadian Securities Exchange as the Exchange for Entrepreneurs, but did you know that the people behind the CSE are a very colourful bunch?
From motorcycle instructors to master chefs, gospel stars to goal scorers, there are some talented individuals working to make the CSE not only Canada’s most innovative exchange, but also Canada’s most interesting one.
So, in keeping with the holiday spirit, staff at the CSE have put together an Advent Adventure that features a daily fun fact about a special skill, talent or quirky story of someone at the CSE.
Every day in December up to Christmas Day, one of these individuals will be revealed. Follow the clues on Twitter or Facebook.
Think you can guess who it is? Scroll down below for the clue and the link to an answer.
On behalf of the entire team at the CSE, we want to wish you and your loved ones the very best for this holiday season! Thanks for playing along for the Advent Adventure, we hope you’ve learned some interesting and fun facts about the people behind the Exchange for Entrepreneurs.
As the president of a hockey league, his oval office is actually made of ice. Find out which CSE team member spends his time helping future hockey stars develop here.
With only two more clues left in the Advent Adventure , this one is the ultimate challenge. So, what does Santa have in common with this CSE team member? They both like flying objects. Think you can figure out who it is based on the disc-ription? If not, here’s the answer.
Although he enjoys playing in the snow, as a true entrepreneur, this CSE team member is asking Santa for an angel investor or two to make it rain. Oh and some skis. Think you can guess who today’s clue is? Find out here.
The only thing sketchy about this CSE team member is that he likes to keep his hidden talents as an artist on the down-low. Think you can connect the dots on this mysterious artist? Find out who likes to colour between the lines here.
Not only is this CSE team member great at balancing numbers, he’s also got great balance period. Think you know who at the CSE gets a real kick out of keeping the numbers in line in this accrual world? Find out the answer here.
Some people set goals, some people score goals and this CSE team member does both. Among his many claims to fame, he once shocked the ‘electric city’ of Peterborough by scoring 7 goals in one hockey game. Take your best shot at guessing who today’s clue is about.
This CSE team member knows how to have boatloads of fun. From the balmy beaches of Toronto to the tropical shores of Hawaii, this CSE team member is always up for the row less traveled. Canoe guess who today’s clue refers to? Find out here.
After 16 rounds we’re nearly at the end of the Advent Adventure and as we head into the home stretch, today’s clue is on par with the best of them. This CSE team member is an avid golfer, has played on most of the world’s best courses (including Pine Valley) and will be headed to the Masters this year in Augusta. Take a shot at guessing the fairway or find out who it is here.
You’ll have to try extra hard to guess the answer to today’s pitch perfect clue. This CSE team member is not afraid of a good scrum & loves to cheer on Team Canada, the Glasgow Warriors & New Zealand’s All Blacks. Think you can guess who it is? Click here to find out.
Everything was awesome for this CSE team members’ intrepid adventure into the Sahara Desert. Among his claims to fame is that there are very few regions of the world in which he could not find a comfortable spot to take a nap. Find out who today’s clue refers to here.
From blockbusters to flops, this master of montages has scene them all. This CSE team member has been keeping it reel as a film critic for over seventeen years. Find out who you’ll want to help you choose your next Netflix video here.
He’s traveled near and far, but for over 19 years, this CSE team member has managed to avoid watching Titanic. Not to worry, his heart will go on and you will have him to thank for getting the movie theme song stuck in your head for the rest of today. Find out who today’s clue refers to here.
This “foodpreneur” is no stranger to hard work. Having run her own catering business as well as a few half marathons, this CSE team member kneads no introduction. Think you can guess who it is? Find out here.
While working at the CSE is this team member’s mane gig, she certainly likes to horse around outside of the office. Think you know who today’s clue refers to? Better hop to it then, it won’t be around furlong. Find out who it is here.
Adventure is this CSE team member’s middle name. This intrepid globe trotter recently cruised the coastlines of the Adriatic Sea where the only servers he had to deal with were the ones who would ask him what kind of drink he wanted. Find out who today’s clue refers to here.
From MAC addresses to mag wheels, this CSE team member is the unofficial combination of Mr. Robot and Top Gear! Find out who today’s clue refers to here.
Not only did this CSE foodie flex his brunch building prowess in a televised competition, but he proved his icebreaking skills are unrivaled. Find out who smashed his way into our hearts here.
Not only did this CSE team member break hockey sticks, but he also broke records as the youngest assistant coach of Stanford University’s hockey team in school history. He may also be the best dressed house league coach ever, although that’s yet to be confirmed. Find out who this acclaimed style savvy advent adventurer is here.
Even though this CSE team member has not been a wedding singer but that hasn’t stopped him from appearing in a televised wedding. Find out who today’s clue refers to here.
As the lead instructor at one of Canada’s most recognized riding schools, this CSE team member teaches motorcycle riders how to (safely) live at full throttle. Find out who today’s advent adventure clue is about here.
Tony Stark might take a cue or two from this CSE iron man who’s ran, biked and swam his way to 10 half-ironman races across North America and the Caribbean. Think you can catch today’s advent adventurer? Find out here.
With a passion for music, a pair of gospel albums and a new single in the works for 2017, this CSE team member is one half of the real life sister act HerCastleGirls. Find out which CSE staff member is bringing together fashion, music and business here.
This CSE staff member has been walking the walk, literally every year, in support of a great cause since 2002. The annual Walk So Kids Can Talk celebrated their 15th anniversary this year and has raised money and awareness for child and youth emotional health and well-being and directly supports Kids Help Phone. Think you can guess which CSE team member has been there every step of the way? Find out here.
In 2015, an avid fan of Murdoch Mysteries and William Shatner found himself to be the catalyst in bringing one to the other in the infamous episode entitled Marked Twain. Here’s the backstory behind the episode and the tweet that proves it. Curious which CSE team member it is? Find out here.
For many entrepreneurs, the decision to go public is a significant milestone. Getting to that point, however, requires sound preparation and the right partners around the table.
Fortunately for those seeking to go public in Canada, there is now more choice, innovation and value than there has ever been in the past.
To help entrepreneurs navigate the journey to going public, the Canadian Securities Exchange organized their first ever Go Public Boot Camp. This event, co-sponsored by McMillan LLP, brought interested entrepreneurs together with a great team of thought leaders from across the capital markets landscape who offered their perspectives on important components of the public listing process.
Included in the list of presenters were:
James Black – VP Listings Development, CSE
James Munro – Partner at McMillan LLP
Quinn Martin – Audit Principal at Davidson & Company LLP
Simon Thomas – VP at Computershare Canada
Mark Faulkner – VP Listings and Regulation, CSE
Justin Meiklem – VP of Sales and Marketing at Stockhouse
Bryan Henry – Senior Investment Advisor, PI Financial
Brayden Sutton – President Sutton Ventures
Collectively, these presenters covered topics relevant to the process of taking a company public. Subjects discussed included how to properly prepare financial statements for a public listing, the importance of working with right brokers, what it takes to successfully structure a capital raise and much more.
Alongside the presenters and panelists were members of the CSE team including Mark Faulkner, Vice President Listings and Regulation, who provided an in-depth look at the requirements and better practices for successfully listing on the CSE.
Unlike a fitness boot camp, where the goal is to run around, attendees of the Go Public Boot Camp were glued to their seats. The thoughtful speakers in combination with the Q&A session definitely resonated with the audience, who were keenly interested in hearing about the shifting landscape of capital markets and how to overcome hurdles to raising capital in Canada.
All entrepreneurs know that learning ‘on the job’ comes with the territory. For attendees of the CSE Go Public Boot Camp, in addition to learning what it takes to go public, the more valuable lesson learned was how to prepare to do so well. That is a distinction that can save time, money and ultimately bring entrepreneurs one step closer to reaching that significant milestone.
This past summer, the CSE team set out to meet and greet entrepreneurs all across Canada.
From Bay St boardrooms to Alberta badlands and a few golf courses on either side , the CSE team had a great time connecting with listed issuers as well as with folks interested in learning more about how the CSE can help junior companies improve access to the lowest-cost of public capital.
Check out the highlights from this summer’s adventures below and be sure to stay on top of all of our upcoming events by visiting the new and enhanced events calendar here or by following us on Twitter or Facebook.
The CSE was thrilled to welcome a record setting crowd to this year’s breakfast (150+!), an annual institution for the CSE and its network of friends and supporters in Calgary.
Along with a healthy spread of pancakes, sausage, and other breakfast staples, the crowd was treated to a welcome address from CSE CEO Richard Carleton who dusted off his best western wear for the occasion.
Mark your calendar for next year’s occasion which is slated for July 6th! Yahoo!
Summer Golf was in full swing for the CSE in August, where amateur golfers across the organization gathered to crush drives, sink puts, and network over 18 holes of scenic golf courses.
Our team hosted the first annual Montreal Summer Golf at the members only Mr. Bruno Country Club – an event so exclusive we could not even take photos! Rumour has it that it was a competitive round highlighted by exceptional play of CSE Senior Advisor Scott Pritchard.
Toronto was also on the tour, where Senior VP Rob Cook and Director – Listed Company Services Barrington Miller showcased their game at the TechConnex golf tournament.
Finally, in Vancouver, another “first annual” golf tourney was hosted at Northlands Golf Course – where a group of 24 played a friendly round of Texas scramble on what was agreed to be “the nicest day of the year” – a claim supported by the photos included in this gallery.
Canadian Securities Traders Association Conference
A marquee event of any Summer is the annual CSTA (Canadian Securities Traders Association) Conference – held this year in beautiful Whistler, BC.
Often a productive mix of both business and pleasure, the CSE managed to strike a good balance between both.
From a business perspective, CSE CEO Richard Carleton participated on the much anticipated marketplaces panel, lending his thoughts on the status of exchanges and leading trends in the trading world.
Afterward, CSE offered up an equally substantial piece of hospitality, hosting an exclusive dinner at the renown Araxi Restaurant + Oyster Bar. A truly spectacular meal (accompanied by choice wines) was followed by an impromptu lottery and betting pool in anticipation of the Tragically Hip’s final song during the next evening’s concert.
The first half of 2016 has been eventful for the CSE as well as for early-stage securities markets more broadly. With a return in trading activity and prices in the shares of early stage companies, investors are once again shifting focus back to growth stage firms.
While price action is one part of the story of any publicly listed entity, there are also other forces that influence the health, competitiveness and overall sustainability of the growth stage marketplace.
In a recent interview with Peter Murray of Kiyoi Communications, CEO of the CSE Richard Carleton discussed some of the milestone achievements at the Exchange for Entrepreneurs thus far in 2016, as well as his take on the forces shaping capital raising structures and participants.
Below is the transcript of their interview:
(PM) Earlier this year the Investment Industry Regulatory Organization of Canada (IIROC) requested written proposals for addressing market structure issues facing small-cap issuers. What were some of the important themes identified in the CSE’s response?
(RC) IIROC asked a variety of participants in the small capitalization space – exchanges, issuers, broker dealers and other stakeholders – to comment on, and propose potential solutions to, a number of specific issues raised over the last few years within the industry. This took place on a couple of levels, one being the technicalities of such things as short sale rules, tick size and board lots.
The CSE thought it was also important to look at the bigger picture and where the industry can go over the longer term to address what we think is a significant issue, which is a noticeable reduction in buyer interest.
When we look at what has happened to the junior capital space in Canada over the last five to seven years, the decline in commodity prices has clearly had a major influence. For certain, it has encouraged some investors to look at opportunities outside the small-cap space. But we think that the problems afflicting small-cap formation in Canada go beyond the decline in commodity prices.
Broad industry change is continuing to take place, a big one being the decline of the independent brokerage firms in Canada, and a rising concentration of assets under management at bank-owned dealers. The independent firms have long been an important part of the community helping to finance resource exploration, technology research and other forms of business development important to the Canadian economy.
What we see in the current environment, however, is that many of the independent firms have disappeared, with the remaining firms experiencing extreme pressure on their business models. These firms are an important source of retail investor interest in small-cap stocks through the support of their investment advisors, where a dealer will commit to an underwriting or participate in a dealer syndicate supporting an underwriting or capital raise. And in the secondary market they support trading through stock recommendations and research.
That model has broken down to a significant extent over the past five years and instead what we increasingly see is corporate finance being conducted through the exempt market. Speaking from the perspective of the CSE, we see about 90% of the money raised by our issuers coming from the exempt market.
So-called accredited investors are the primary source of capital in the exempt market. But accredited investors in Canada only represent about 1-2% of all households. This sharply narrows the number of investors eligible to participate in small-cap financings and, needless to say, limits the amount of money available for companies to raise.
The industry has adjusted to the decline of the independent broker by leaning more and more on the exempt market. But at the CSE, we are concerned that this is far from a complete answer to corporate finance challenges moving forward.
(PM) What do you see as some of the solutions to reinvigorating the early stage capital formation process in Canada?
(RC) One of the things we really need to do is engage the next generation of investors. The industry is not doing a good job of encouraging the next generation of investors to come into the Canadian equity markets. One approach to consider is providing a very clear set of guidelines for early stage crowdfunding. It is a potential source of modest amounts of money, say around $1 million to $1.5 million, but the funds can be acquired at relatively little cost to the companies raising the money.
The problem in Canada is that we have a fragmented regulatory regime with different sets of rules dictating how crowdfunded offerings can be marketed, depending on the residency of the potential investor. This makes it confusing for people to know if they can participate or to what extent they can participate in a given offering.
It also makes it difficult for those managing the websites that people use to find out about different investment opportunities to carry out compliance activity on a national basis. The whole process becomes complicated and the likelihood of making mistakes rises significantly. You have to decide between limiting an offering to a province or group of provinces that have the same rules, or taking on the compliance risk associated with doing a national offering across Canada.
That’s a real problem that adds cost, complexity and confusion for everyone involved.
The other issue is that once a company is beyond the crowdfunding stage, there really isn’t much other than the accredited investor exemption to help companies to raise funds.
The CSE is looking very carefully at new legislation in the United States that has come into force just recently under the JOBS (Jumpstart Our Business Startups) Act. The objective in that case was to provide a relatively simple means of raising equity capital from the public that eliminated the necessity of having to file a prospectus with the Securities and Exchange Commission (SEC) or become a reporting issuer with the SEC.
In the United States, companies will be permitted to raise up to $50 million per year and to market these offerings to individual investors subject to participation limits of $1,500 per opportunity and an aggregate of $10,000 per year for each investor. These rules are in place across the United States and require a relatively limited amount of work on behalf of an issuer. For companies on the CSE it would be a very cost effective means of raising capital from individual investors because our companies already meet most of the requirements to participate in such offerings. They file quarterly financial statements, their audits are subject to annual review, secondary trading is monitored by an independent third party, plus they have continuous disclosure requirements and are regularly providing updates to the investing public.
With all of those benefits available, CSE companies are positioned well to take advantage of such funding opportunities. In fact, we already have one company in the process of marketing an offering under the JOBS Act right now.
We would really like to see a similar mechanism put into place in Canada because it would provide a bridge between crowdfunding and full-blown prospectus-led offerings, which have to be reasonably large before the associated cost begins to make sense.
One of the key things to understand here is that instead of limiting participation to accredited investors – people with large investment portfolios or substantial annual incomes – the new rules actually present the opportunity to engage a whole new generation of investors in the equity market. And really it is that generation that we have to bring into the market in order to provide a successful and healthy ecosystem for capital formation in the coming 15-20 years.
When I go to industry events, I am often surprised at the average age of people in attendance. The average is quite high and that is not a sign of an industry positioned to continue supporting the needs of growing enterprise in Canada for the next generation. We need more young people engaged and we feel that a clear-cut means of permitting them to invest in companies directly and trade the shares afterward is very important.
(PM) What specifically is the CSE doing to help ensure this new environment is fostered?
(RC) I think one of the challenges we have in Canada is the fragmented regulatory regime when it comes to equities. It is pretty clear if you look where we are with crowdfunding rules and how different they are across Canada that we don’t have an awful lot of commitment to broadening access to the equity markets from the various securities commissions. I think what we are going to have to do is engage the political side.
When you look at any of the provincial governments, and certainly the federal government, they frequently talk about supporting innovation, new technology development and entrepreneurship. You can’t read a press release from any of the governments over the last little while without seeing those ideas held up as a means to promote economic growth in Canada.
The problem is that none of this is going to happen if these new companies can’t get funding. And there is a limit to the amount of public funds that can be devoted to the space, so we are going to have to figure out ways to engage the private investor in these companies.
This is a long-winded way of saying I think we are going to have to actively engage the political side, which is exactly what happened in the United States with the JOBS Act. That in fact was not an initiative of the Securities and Exchange Commission, but something that came from Congress as a means of promoting investment in early stage enterprise in the United States. We think there would be substantial political will for a similar approach at the provincial and federal levels in Canada. I think that is the path to genuinely reforming the investment process here in Canada.
(PM) The CSE recently launched a new website that clearly was created with a specific vision in mind. How has the reaction been so far?
(RC) The response has been almost universally positive. People really like the modern, clean design and particularly how easy it is to navigate on the website using a mobile device.
We are learning a lot about where visitors go and what types of information are most important to them. This enables us to be responsive in making sure it is easy to get to the most popular types of information. You can plan all you want, but when the real-life data comes in you always see things you were not aware of.
I’m also excited by our greater use of social media, which includes promoting our blog through Twitter plus posting photos, and sometimes even real-time video, of specific events. That is an area where I think we will continue to extend our presence as the website evolves.
Actually, social media is a topic worth discussing further. Most, if not all, dealers in Canada prevent their investment advisors from using Twitter, Instagram and other social media platforms for communicating with existing and potential clients. From a compliance perspective, they want the ability to control and edit messages before they go out, but the immediate nature of social media makes it a difficult fit for that type of tightly controlled environment.
Now, contrast that with the US JOBS Act provisions, which allows securities to be marketed over the Internet. That is something perhaps the older generation may not be so comfortable with, but it is how younger people get their information and shop and interact with the rest of the world. If we as an industry are not prepared to engage with people using social media, we’re in trouble.
(PM) The new website and social media are not the only ways in which the CSE interacts with its audience. You are doing quite a bit to help issuers tell their stories via the CSE Quarterly magazine, company-specific articles, video opportunities, an extensive blog and person-to-person interaction at CSE Days. What is the ultimate objective of these activities, as they obviously require the exchange to commit significant resources?
(RC) We want to provide multiple platforms on which issuers can tell their stories. One of the challenges you have as an early stage entrepreneurial company is that there are not usually a lot of specialized public relations and investor relations professionals around to help out. Everybody at the company is too busy trying to build the business. Whether it is development of a technology, or if it is to advance an exploration program if you are a resource company, they often don’t have the time or resources necessary to engage with those in the community who are potentially interested in their story.
As an exchange, we can help our issuers to help themselves by providing all of these different vehicles for conveying their excitement about their businesses to a broader community than they might otherwise reach.
(PM) Toward the end of February, the CSE requested comment on proposed changes to its listing requirements. What kind of feedback have you received and how close is the exchange to implementing some of its ideas?
(RC) We received approval from the Ontario Securities Commission in late June to implement the proposed changes, so you’ll be seeing them take effect shortly. We had not amended our listings criteria since we launched in 2003. With the benefit of over a decade of operating the exchange, and also given the price inflation that has taken place over that time frame, we felt it appropriate to update a number of the financial measures in the original rules. We have also provided a lot of guidance around certain types of transactions, whether it be reverse takeovers or companies creating reporting issuer subsidiaries through plans of arrangement. We want to provide very clear guidance about what our approach is to all types of prospective applicants.
We first worked with the securities commission on the proposed amendments, and then put them out for public comment. The comments were quite supportive and we also received some questions that were addressed through minor amendments to the proposals.
I would point out that we expect to shortly be proposing further amendments to our listings policies and requesting comment on them as well. The new proposals will mostly focus on continued listing requirements so that we have certain financial and other measures companies have to meet if they are to remain listed on the exchange.
By and large they are not focused on the price of the shares or trading activity because that can be a result of factors beyond a company’s control.
The exchange’s list of issuers continues to expand and we are seeing more and more fast-growing, high-profile companies choose the CSE as the exchange on which they want to build their business. It is important that we keep pace with this interest and expansion by continually reviewing how we operate as an exchange and make sure we are serving our user community in the best way possible.