Richard Carleton, CEO of CSE – Canadian Securities Exchange recently spoke with Proactive Investors and discussed the recent rebranding from CNSX to CSE, the advantages of listing on the exchange, and touched on the specific reasons why Ned Goodman and Tom Caldwell are active investors in the company.
CSE Chairman Thomas Caldwell went One-on-One with Andrew McCreath on his weekly BNN program to discuss regulation and the markets and most pressingly addressed the question: Is too much regulation hurting the securities industry?
“I think we’ve reached a tipping point where the volume, the mass of regulation is so great – and a lot of it is not substantive in protecting investors – but the volume is representing a massive cost, not only to independent brokerage firms, but also to companies raising money – ergo it’s impacting the economy.”
Tom then touches on the spiralling growth of regulation as illustrated by this point:
“Take a look at the Ontario Securities Act – a year ago it was 2800 pages, this year it’s 3500 pages. it’s been expanding at 20% a year.”
One issue he is particularly concerned about is the upcoming Client Relationship Model, which could have dire consequences on transactional brokers that invest in junior companies:
“Brokers will no longer recommend junior or new companies to investors. The risk is too high for the broker – it’s going to hurt that industry big time.”
From a securities firm perspective, the increasing growth of regulation is making the business model of running a brokerage unsustainable:
“The costs of regulation are now the killer… typically one third to one half of all your administrative costs relate to regulation, that is an unsustainable business model.”
Ultimately, Tom offers his thesis on where the industry needs to look to improve, for the betterment of the economy:
“I think we should take a look at securities regulation and see how we can make it better – better being simpler… because in securities regulation less is more, simpler is better. Because it is easier to police and it is easier to focus on from the broker to comply.”
Not dismissing the importance of regulation (it is very important), Tom makes the telling statement about how growth in regulation can be misinterpreted as a positive by saying:
“Sarbanes-Oxley never saved one investor one dollar!”
The second portion of Tom’s interview focuses on his market outlook.
Some quick insights from the second portion of his interview with Andrew:
A self-identified “incurable optimist”, Tom is still positive on the markets – both in Canada and the US.
He still sees value in some stocks that others might not including Barrick Gold, bought as a turnaround last year (he’s a self-professed “garbage man”), and US Banks including Citibank, Morgan Stanley, and Bank of America – who have tremendous earning power when the economy improves. He believes they will become substantial dividend payers again as they gradually reacquire stock.
Likes Canadian banks as an investor but not as competitor.
Inflation will be back and it makes sense to own stuff rather then be a lender in this type of environment.
Tom discusses Urbana Corporation (CSE:URB) and thinks there is a great model with closed-end funds as they are cheaper to run than a mutual fund. He attests that a lot of fortunes were made in these vehicles 60 years ago.
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.
Proactive Investors recently profiled one of CSE’s newest listings – Urbana Corporation – a closed-end investment company (CSE:URB and CSE:URB.A). The company’s Chairman, Thomas Caldwell is also the Chairman of CSE – Canadian Securities Exchange. In the article much is discussed around the reasons for co-listing URB shares on CSE. Other highlights from the article include:
This initiative introduces efficiencies and cost savings for our clients and most importantly, for the dealers that connect to our marketplace.
To clarify – CSE now trades both CSE-listed securities (like Gener8, CSE:GNR) as well as other Canadian listed securities all on one platform. Please note that CSE-listed securities do have slightly different trading hours in comparison to other Canadian securities trading on CSE. Here is a breakdown:
CSE listed market (formerly CNSX): Hours are from 9:30-4pm. Pre-open is 7am. No after-hours trading.
CSE other listed market (formerly PURE): Hours are from 8-5pm. Pre-open is at 7am. No after-hours trading.
Consequently, the CSE is Canada’s busiest venue for trading after 8am and is the preferred destination for early morning trading activity.
In fact, CSE is the only Canadian exchange to offer real time data on Google Finance. Other exchanges that supply real time data to Google include Nasdaq, the NYSE, the London Stock Exchange and Euronext.
Visit Google Finance today and start researching your favourite CSE stocks using real time data!
This past weekend at the Vancouver Resource Investment Conference CSE CEO Richard Carleton got to spend some time with Mike Rodger of Investing News Network. Their discussion was captured on video and covered a range of topics around CSE, including the exchange’s rebranding, the involvement of Ned Goodman, and some of the regulatory issues that are affecting junior markets in Canada.
Also referenced in the video is the INN Venture Status Survey Report – a project that Mike’s group embarked on to get more insights into the root causes of the current state of junior markets. We highly recommend you review the report which we have linked here: Venture Status Survey Report