All posts by Hamish Khamisa

Keeping it Simple: CSE Unveils Streamlined Trade Execution Pricing

For many in the securities industry, complexity is the new norm. Whether because of technology infrastructure, regulatory compliance or simply keeping pace with innovation, there’s simply just more to manage – everywhere. And, wherever complexity seems to appear, cost seems to show up like a faithful wing-man.

It seems reasonable, therefore, that one promising strategy to lower costs would be to decrease complexity – especially at the trade execution level. At the Canadian Securities Exchange, it is precisely the idea of making the current Canadian securities landscape more efficient that underpins their latest move to simplify access for a key stakeholder in the market ecosystem: the dealer community.

Lower Trade Execution Fees: A Bold Step Forward

As announced in an earlier news release, the CSE is taking a bold step to simplify pricing and access for the dealer community by eliminating the ‘maker/taker’ model and, in its place, implementing equal pricing for both active and passive sides of the trade.

The table below summarizes the new trade execution fee structure as it applies to three tiers of securities trading price. Under this fee structure, both active and passive fees are priced at the same rate on each tier.

Trade Execution Fees

This announcement is a win for the dealer community and for the trading public for two important reasons.

First, with better pricing comes improved participation and better functioning marketplaces. Second, by eliminating the maker/taker price distinction, the playing field has been leveled for liquidity provider and liquidity consumer.

Ultimately, however, the change in fee structure is a natural consequence of the need for innovation. According to CSE CEO Richard Carleton:

As the exchange for entrepreneurs, we are committed to bringing innovative solutions to market operations. We understand that by simplifying the moving parts of the market, we’ve not only lowered industry costs but we’ve enabled wider participation and access to trading of junior public companies.

Getting Noticed

The message of “simpler is better” is gaining traction with many junior public companies. The number of listed issuers on the CSE is up substantially through the first quarter of 2014 and trading volumes are also at historical highs.

While there are still many hurdles to clear, a streamlined and more cost effective framework for dealers is an important step towards making simple the new normal.

Angels & Devils: The promise and pitfalls of crowdfunding for capital raising

The following views and opinions presented in this post are solely those of the author and do not necessarily represent those of CSE – Canadian Securities Exchange.

Crowdfunding conceptLove it or hate it, crowdfunding looks like it is here to stay. Although the debate on whether crowdfunding is ultimately beneficial or harmful is still ongoing, it appears that major stakeholders from investor groups to securities regulators are beginning to take the idea of crowd-sourced capital raising seriously.

Fairness is a Two-Way Street

Like most promising ideas, the devil, it seems, is in the details.

The spirit of crowdfunding espouses greater access to investing opportunities by smaller, non-accredited investors.  On the other hand, the rules currently in place are designed around curbing widespread participation in “risky” investments.

Striking a balance between investor participation and protection is no easy feat. This balancing act directly impacts industry’s ability to access capital while meeting disclosure requirements.

To be considered as an alternative to current methods of capital raising, crowdfunding needs to be in-line with existing controls on capital raising in a heavily regulated and highly structured capital market infrastructure. After all, the premise is that crowdfunding should increase the ‘fairness’ of market participation.  In the spirit of ‘fairness’ however, that should mean that crowdfunding doesn’t undermine the existing regulatory checks and balances put in place to protect both investors and industry.

Exactly how stakeholders will come to some consensus of balancing participation and protection is still being ironed out. One of the voices in the ongoing conversation about crowdfunding in Canada is the well-respected angel investor, Mike Volker.

A Moving Target

In a recent blog post – entitled “Crowdfunding = Going Public“, Volker presents a picture of an evolving capital-raising landscape in which crowdfunding will essentially mirror the existing landscape but in a much more fragmented way.

Volker’s article highlights the key issues confronting crowdfunding and makes several interesting points.

First, it simply is not fair to exclude investors based their economic standing (ie. the 99%), and that fundraising should be more democratic and inclusive of “non-accredited investors”. (Note the recently implemented “Existing Security Holder Exemption” is a step in the right direction).

In addition, Volker challenges the assertion that fraud is the bigger culprit for investors losing money, pointing instead to businesses failures that plague early stage companies. Simply put, the overriding risk that investors must take-on when making an investment in an early-stage company is that the company or idea simply won’t succeed.

Regardless of fairness or risk,  the main point Volker highlights is that capital is being left on the sidelines as a result of the current system. Non-accredited investors are being held out of the market, due to regulation, and not able to participate in the high-risk, high-reward investments extended to the “wealthy” 1%.

Crowdfunding Hurdles

Letting non-accredited investors participate in earlier stage deals is a key driver behind crowdfunding, but as Volker points out, implementation will be a challenge.

Three points in particular stand out:

  • Share registration and logistics of shareholder management;
  • Standardized continuous disclosure, and
  • Enabling liquidity for investors.

Volker tallies all of the above points and comes to the conclusion that innovations at the stock exchange level, similar to what the CSE has undertaken, could be a good answer to the questions that crowdfunding is trying to answer.

Specifically, with innovation, existing infrastructure can enable companies to efficiently raise growth capital from the public while enabling all investors with adequate, continuous disclosure within a regulatory framework that is fair to all parties involved.

Change is Inevitable

The writing on the wall is clear. There is an appetite by both investors and companies to connect and participate in capital flow in ways that the current system just isn’t providing. Whether this participation need is met by crowdfunding or via existing channels, it is clear that the angels and demons would be better served preparing for change rather than arguing over it.

To read Mike Volker’s full post, click here: http://mikevolker.com/crowdfunding-going-public/

Reminder: OSC Participation Fee Relief Application Deadline Coming Up

The March 31st deadline to apply for OSC participation fee relief is just around the corner.  As a reminder, earlier this year OSC Staff Notice 13-704 mentioned that certain reporting issuers (class 1 and 3C) and smaller registered companies may be eligible for OSC participation fee relief.

According to the OSC, this initiative was developed as a response to the challenging conditions faced by market participants, specifically those who experienced significant decreases in market capitalization (for reporting issuers) and revenues (for registered companies).

For reporting issuers, the fee relief may range from $160 to $13,350 and for registered firms, the range is projected to be between $235 and $17,725. The notice states that most firms will end up qualifying at the lower end of the range.

To help ensure the application process goes smoothly, it is recommended that supporting documentation be provided on how previous fiscal market cap has been calculated.

The full details on eligibility, documentation and support can be found by clicking on the following link.  There is no cost to apply.

Medical Marijuana Stocks: A Look at the Budding Industry

Colbert_Marijuna_webThe recent interest in marijuana as an investment idea is garnering more than just a little buzz from the investment community and beyond.

As the regulatory landscape around marijuana continues to evolve in the US and here in Canada the conversation has also begun to change. The concerns, it appears, have been shifting away from whether or not it is acceptable to use, and towards understanding circumstances for appropriate use and how best to structure as well as regulate the cultivation, processing, distribution and (of course) taxation.

While some of the conversation on the wave of ‘ganjapreneurs’ is tongue-in-cheek (see Stephen Colbert’s recent view on the matter here), the Canadian conversation is currently focused on how marijuana for medicinal purposes can be made more widely available.

The following piece by Proactive Investors, provides some background to the recent interest in medical marijuana stocks here in Canada.  It highlights two CSE-listed companies, Enertopia (CSE:TOP) as well as Abattis Bioceuticals (CSE:ATT) as emerging players in this space.

Another recent addition to the CSE listed company roster – Next Gen Metals (CSE:N) – has also identified itself as a participant in the hemp and medical marijuana space having recently created a division to address this market opportunity. Southbridge Resources (CSE:SOU), a CSE listed company, also recently announced that they are making possible inroads into the sector with the potential acquisition of Vodis Innovative Pharmaceuticals Inc.

Without question, the road ahead on marijuana as investment appears to be paved with uncertainties. Nevertheless, entrepreneurs and investors are already at work trying to find where and when ‘budding’ opportunities in the ‘pot-com’ industry are going to present themselves next.

For further context, read the full article on the topic at Proactive Investors.

Event Review: The CSE at PDAC 2014

This year’s PDAC was a great opportunity to connect with the mining & exploration industry, government, investors and more.  For the Canadian Securities Exchange it was particularly eventful because in addition to having a very busy booth at the Investor’s Exchange,  our team was also involved in keynote addresses, panels, networking events (including the parties!) and interviews.

The PDAC has continued to be the conference where mining and exploration companies and investors (big and small) converge to talk about the state of the industry, raise capital and talk about what’s coming next.

With so much going on, there’s no shortage of things to reflect on, however here is a sample of what we got up to at the convention and our thoughts on what the remainder of 2014 holds for the industry.

CSE Booth & Investor Exchange

ConferenceSwag_PDAC2014_webOur booth was a hub of activity over the course of the conference.  Representatives from the CSE team were available at the booth to answer questions about the many exciting developments underway and for those who simply wanted to learn more about us.  We were also joined by some of our listed issuers at the booth including Augustine Ventures (WAW), Copper Reef Mining (CZC), Newlox Gold (LUX), Tartisan Resources (TTC), Excalibur Resources (XBR) and BacTech Environmental (BAC).

Click here for a full gallery of images from the show floor.

Our conference swag also brought in curious passers by who were interested in getting their “shine on” with our CSE-branded screen wipes and shoe shiners.

Convention Activities

There were lots of exciting conversations, sessions and activities outside of the exhibition hall that we participated in. Here are some of the highlights:

Mining Outlook Luncheon

One of the first big events was the sold-out mining outlook luncheon. Deputy Chairman of the CSE, Ned Goodman, was the keynote speaker at this session and he provided the audience with an entertaining and thoughtful perspective of the current state of the global economy with a particular focus on currency and gold.  We’ve pulled together an interesting selection of tweets from folks in the audience at the presentation.


An Exchange with the Exchanges

CSE’s CEO Richard Carleton participated in the panel discussion on the role that stock exchanges can play in assisting mining (and in particular junior mining) and exploration companies in navigating the current capital raising crisis. Joining Richard on the panel was Eddie Grieve of the Australian Stock ExchangeFrancis Stenning of Bolsa de Valores de Lima, Peru and John McCoach of the TSX Venture Exchange.

ExchangeWithExchanges_PDAC2014_webAt this event Richard outlined some important points about what exchanges can do and what other stakeholder partners can do in order to help companies adapt to the new market realities. On the exchange side, the CSE is lowering the cash and operational burden for companies to maintain a public listing and making it easier for trading desks to access market data.

Examples of  the impact of disclosure policy on companies was also highlighted. The Australian Stock Exchange was shown as an example of an exchange that confronted the issue of regulatory burden and the success and challenges it experienced as a result.

One very interesting point that came up was the idea of regulatory-driven restrictions on the kinds of investments that could be recommended to individuals based on their age. Richard Carleton aptly framed what he found troublesome about this when he pointed out that by restricting the age that certain products could be recommended to individuals, people such as Ned Goodman would be steered away from investing in equities.

Networking Lunch/Make the Switch Seminar

A packed house attended the networking lunch co-sponsored by the CSE, MNP LLP and Chitiz Pathak LLP. Attendees were treated to lunch as well as some food for thought as several CSE-listed companies presented a brief snapshot of their company story. A hats off goes to CSE Senior VP Robert Cook for being able to keep everyone on course during the presentations.

MakeTheSwitch_PDAC2014_webCEO Richard Carleton also provided some brief highlights on the recent performance of the exchange and on the exciting forthcoming developments at the CSE – including further progress with getting more online brokerages to provide online trading and real-time data to their clients.

After the networking lunch, the CSE provided a quick overview of what was involved in transitioning to listing on the CSE, including details on timing and the steps required.  For more information on the process, click here.

Click here for a full gallery from the event.

Ned Goodman on BNN

For those who know Ned Goodman, he is not one to beat around the bush. The electric interview between him and Howard Green of BNN’s Headline was a great snapshot of Ned’s views on gold and on what it takes to successfully run and manage mining companies. Click the following link to access this interview.

PDAC_2014_BNN_Interview_NedGoodman_web

Overall Impressions

The PDAC, especially this year, exemplified the resilient spirit of the mining industry. When faced with adversity, the industry is working creatively to adapt to the current market and the CSE, with its advocacy efforts and solutions for industry partners, is proud to be a part of that solution.

With the number of deals, announcements and meetings that took place at the PDAC, 2014 looks to be an exciting year ahead for the industry and most certainly for the CSE and our partners. We’re grateful for the connections we have made and look forward to building off the positive momentum from PDAC.

Preview: Canadian Securities Exchange at PDAC 2014

PDAC_Logo_webIn just a few days, the 2014 edition of the PDAC conference will take place. Hundreds of exhibitors and thousands of attendees from all over the world are expected to converge at the Toronto Convention Centre to learn about and discuss the latest trends, thoughts and technologies impacting the mining industry.

Among the dozens of topics that will be discussed in various panels and workshops, one of the burning issues on the minds of many attendees will be the current capital raising climate.

As many readers may already know, the CSE has been actively engaging in the conversation about finding ways to enable junior mining and exploration companies to successfully weather the current capital raising storm.

From the exhibition floor to the podium, the CSE will continue in its efforts to promote innovative and pragmatic solutions for junior mining and exploration companies as well as for the industry as a whole.

Here is a rundown of the events and activities the CSE will be participating in at PDAC 2014:

Mineral Outlook Luncheon, Monday March 3rd

Ned Goodman, Deputy Chairman of the CSE and President & CEO of Dundee Corporation will be the keynote speaker at the (now sold out) Mineral Outlook Luncheon on Monday March 3rd from 12PM-2PM

An Exchange with the Exchanges: The Role of Stock Exchanges in Facilitating Capital-Raising, Tuesday March 4th

CSE CEO Richard Carleton will be a member of a panel of guests representing stock exchanges in Canada, Australia and Peru as part of the session entitled “An Exchange with the Exchanges: The Role of Stock Exchanges in Facilitating Capital-Raising.” This panel will discuss the state of the mineral exploration industry and the role that stock exchanges can play in helping companies navigate the current capital environment. For more information on this session at 10:30AM please click here.

PDAC Investor Lunch & Networking Event, Tuesday March 4th

The CSE is co-sponsoring a lunch and networking event along with MNP LLP, and Chitiz Pathak LLP.  This event will feature presentations from CSE-listed companies as well as opportunities for PDAC attendees to network with one another.  Click the following link for more details on the PDAC Investor Lunch which is to be held on Tuesday March 4th from 11:30AM to 1PM.

Making the Switch to CSE, Tuesday March 4th

For those interested in learning more about how to make the transition to the CSE, be sure to register for and attend the Making the Switch session  on Tuesday, March 4th from 1:15PM-2PM.

In addition to events, the CSE will also be exhibiting at booths 2542 and 2544 where attendees can meet with members of our team as well as talk to representatives from several CSE listed companies.

MTCC_Toronto

PDAC 2014 runs from March 2nd to March 5th in Toronto at the Metro Toronto Convention Centre. For more information, including registration information and schedules, you can visit their website at http://www.pdac.ca/convention.

If you are attending, be sure to say hi to our team in person or via Twitter. We look forward to seeing you there!

A Chance to Do Better: Comments From Capital Ideas 2013

In October of 2013, the British Columbia Securities Commission (BCSC) held its annual Capital Ideas Conference with a particular focus on mining and venture capital markets.  A broad variety of topics were discussed such as raising capital, high frequency trading, retail investor participation.  The BCSC has put together a selection of videos of the panel discussion which is worthwhile to check out.

While it is intuitively simple, the impact of an entire economic sector losing altitude is jarring to the people and stakeholders within it.  In addition to the companies themselves, the broker dealers, financiers and even the exchanges have been impacted by the downturn in the sector.

This conference was an interesting forum for two key reasons. First, it allowed participants to confront the reality of adapting to new models of doing business. Second, and more importantly, it enabled stakeholders to think about the future of the marketplace and to challenge the existing ways of operating in the capital markets that don’t fit the current cycle for many junior mining and exploration companies.

A topic the CSE is particularly passionate about addressing is the current state of raising capital faced by many junior companies.  During a portion of the panel discussion that focused on the challenges facing public companies, CSE CEO Richard Carleton was invited to provide his thoughts on the subject.

According to Richard, despite the many challenges facing the industry, there are opportunities for positive change.

Some of the improvements to the marketplace he mentioned included:

  • Costs to be lowered for the dealers and companies that do business with exchanges
  • Promoting effective market making models
  • Levelling the playing field for access to market data

Check out the following video to hear Richards remarks on the possible opportunities to improve the marketplace for multiple participants.

Hitting their Stride: Two Growing Tech Firms Push Confidently into 2014

A great piece was published today by Peter Murray of Proactive Investors that discussed two emerging technology companies listed on the CSE.  The article discusses Gener8 Media Corp. (CSE:GNR) and RESAAS Services Inc. (CSE:RSS) and their respective performances in 2013 as well as what has been driving their recent successes.

Of particular interest is how both of these technology companies have approached the challenges of growing their businesses and how they’ve sought the additional capital to support that growth.

Highlights from the article include:

  • How Gener8 Media Corp has become a leading provider of 2D to 3D conversion for the entertainment industry;
  • Gener8’s capital raising strategy and how it has helped to transform their business;
  • The success of RESAAS’s online social platform designed around real estate agents;
  • How RESAAS has managed its resources to enable them to compete for additional revenues.

We’re happy to hear about the growth these companies have achieved and look forward to hearing about what transpires for 2014.

For more information, you can check out the full article here:
Gener8, RESAAS put West Coast on CSE’s tech map with big 2013 gains

And watch the video profiles below for each company:

Photo above: Gener8 CEO Rory Armes – photo/video credit Noravera Visuals – www.noravera.com