Thank you to Jordan Capital Markets, Muskrat Minerals (CSE:YYR), MicroCoal Technologies (CSE:MTI), Winrock Resources (CSE:WR), and Pasinex Resources (CSE:PSE) for making the CSE Pavilion the place to be(!) at the Vancouver Resource Investment Conference! Also a big thank you to Cambridge House for hosting an amazing show!
CSE had the pleasure of attending and exhibiting at the 2014 Cantech Conference in Toronto on January 16th. This is the first such show from Cambridge House International who have traditionally organized mining conferences including the Vancouver and World Resource Investment Conferences.
Some highlights from our day at Cantech:
Discussions centred around how to fund, nurture tech
We had the opportunity to attend several talks including a panel titled “Do the Public Markets Still Matter to Canadian Tech?” (ed. yes they do!), a wonderful speech by Sir Terry Matthews, a rousing presentation by Difference Capital’s Mike Wekerle and Neil Johnson (Why Tech is Back), and the day’s highlight – a keynote address from former Canadian astronaut Chris Hadfield.
Many great ideas and observations were presented, including some lively debate over the viability of crowdfunding for tech companies during one of the panels. LX Ventures CEO Mike Edwards offered a lot of support for the model as a means to introduce risk capital into tech startups as there is still a funding void for series A financings in Canada. Accredited investor rules are also making it hard for risk seeking investors to get into the ground floor of tech investment opportunities and crowdfunding could help participation here according to Mr. Edwards.
On the same panel, it was acknowledged that the “sweet spot” for tech financings in Canada is settling between five to 25 million dollars with companies of a certain size still needing to list on a US exchange when they hit $100 million in revenue – a stat provide by John Ruffolo (OMERS Ventures).
Tech is back with lessons learned
There were many indications that the street has tuned onto tech after successful IPOs last year, with Halogen Softwares, Inc. being one of the examples presented as an indication of what to expect in 2014.
There was discussion around lessons learned from the late nineties tech bubble. Most VCs and bankers are looking to avoid the mistakes of the past by applying more diligence toward their capital investments. Many of the investors echoed each other when describing their “must-haves” from prospective investee companies including: credible, experienced management that are addressing real market demands with products that have established traction (customers, sales – not interested in funding R&D). No “paper napkin” deals this time around!
Regarding companies in the R&D stage the time has never been better to leverage government programs as espoused by Sir Terry Matthews who himself uses these programs aggressively. In his own words he said that the country is undergoing the biggest tech refresh in the history of Canada.
Leading Canadian thinkers lend credibility, gravity to event
Based on attendance, quality of participants, and thoughts shared on stage (and in the exhibit hall) there was an obvious sentiment that technology plays are going to be a greater focus for Bay Street investment firms, and in some cases, like Difference Capital, it is the sole focus of their investment business.
Both sir Terry Matthews and Chris Hadfield reminded the audience to not discredit or undersell Canadian ingenuity and technical talent – one point made in the public markets panel reminded us that there are a lot of homegrown companies that need to be nurtured and supported by our institutions if we are to have greater ambitions globally!
It was a wonderful day and CSE would like to extend its congratulations to Cambridge House and to our prize draw winner Carly Bennie (from Difference Capital) who walked away with a Samsung Galaxy Tab 3! We are excited at the prospects of another show of this caliber in Vancouver and next year in Toronto.
Originally submitted to the OSC, ASC, and BCSC on January 17th, 2014:
Re: Multilateral CSA Notice 45-312 – Proposed Prospectus Exemption for Distributions to Existing Security Holders (the “Notice”)
The Canadian Securities Exchange appreciates the opportunity to comment on these significant issues. We offer some general comments and observations in addition to our responses to the specific questions in the Notice.
Background – Canadian Securities Exchange
CNSX Markets Inc. is a recognized stock exchange in Ontario, and authorized or exempt in Quebec, British Columbia, Alberta and Manitoba. On January 6, 2014 we began carrying on business as the Canadian Securities Exchange, or CSE. In addition to over 200 listed securities all of the securities listed on other Canadian exchanges are also posted on the CSE for trading, making the Canadian Securities Exchange the only exchange in Canada where participants can trade all Canadian-listed securities.
We strongly support introduction of an exemption that relies primarily on the existing continuous disclosure record of issuers and previous investment decisions of investors. Our only concern is with a proposal that distinguishes among listing exchanges, rather than listed or unlisted issuers. While the Ontario Securities Commission has stated general support for the proposal and will likely introduce a similar exemption in Ontario, we strongly encourage the CSA to revise the proposal to apply to issuers listed on a recognized exchange in Canada, rather than specify any particular exchange.
Responses to Specific Questions
1. If you are a TSXV issuer, will you use the proposed exemption?
2. Should the proposed exemption be available to issuers listed on other Canadian markets?
The rationale for the exemption applies to issuers on any marketplace, and the investor protection considerations are addressed for any issuer listed on a recognized exchange. The exemption should be available to all issuers listed in Canada.
3. Investors will only be able to invest $15,000 in a 12-month period unless they obtain advice from a registered investment dealer. Is $15,000 the right investment limit?
The implication of any fixed value is that all investors share similar individual risk profiles, and in that respect it may not be appropriate. Waiving the restriction under certain circumstances, however, may address that concern. Obtaining professional advice is an appropriate reason, and presumably the accredited investor exemption will remain available in some form to those that qualify. If one of the reasons behind the proposed exemption is to afford all current shareholders an opportunity to avoid the dilutive effects of further financings from the company, then it is likely that the $15,000 limit is sufficient to extend the ability to participate to otherwise non-accredited investors.
4. In what circumstances would it be suitable for an investor that is a retail security holder to invest more than $15,000 in a TSXV issuer?
The proposal to permit a greater investment with advice from a registered investment dealer is sound. It may also be appropriate to allow investment by shareholders that have already invested greater amounts over a longer period, or already hold an investment the issuer with a current value significantly greater than $15,000.
5. Do you agree that there should be no investment limit if an investor receives suitability advice from a registered investment dealer?
Yes. An appropriate individual limit is an integral part of the advice that is included with the advice on suitability. This should be addressed by the dealer’s existing responsibilities rather than added as an additional requirement for the purpose of this exemption.
6. Do you agree that being a current security holder of an issuer enables an investor to make a more informed investment decision in that issuer?
We do not believe that simple ownership enables an investor to make a more informed decision, as any potential investor has access to all of the same information. A current security holder however, with or without research or advice, has already assumed the risk of ownership of that security and may have a greater incentive to conduct research or seek professional advice.
7. What is the appropriate record date for the exemption? Should it be one day before the announcement of the offering or should it be a more extended period? If you think it should be a more extended period, what would be the appropriate period of time?
Companies may make frequent use of the exemption, which could cause administrative difficulties if the period is too long. One day, however, is likely not sufficient. Five to ten days may be a more appropriate range.
8. We are currently proposing that the exemption be subject to the same resale restrictions as most other capital raising exemptions (i.e., a four month restricted period). However, there are some similarities between the proposed exemption and the rights offering exemption, which is only subject to a seasoning period.
- a. Do you agree that a four month hold period is appropriate for this exemption?
We believe the four month hold meets the objectives of allowing retail investors to get the discounted price, avoid commissions, and acquire sweeteners, but does not provide advantages over other simple exemptions like “friends and family” or accredited investors.
- b. Should we require issuers to provide additional continuous disclosure, such as an annual information form?
No. As stated in our general comments, we support an exemption that is based primarily on the existing continuous disclosure record of a listed company. The existing record is sufficient, supplemented by requirements of the exchanges.
- c. If we were to consider a seasoning period for this exemption, should we consider some of the restrictions that apply under a prospectus-exempt rights offering, such as “claw-backs” limiting insider participation?
Yes. This should be consistent with (a) – make it similar to the rights offering, or similar to a private placement.
- d. If securities offered under the exemption were only subject to a seasoning period, would there be a greater need to ensure investors are made aware of and have an opportunity to participate in the offering?
No. The proposed exemption will provide more flexibility for issuers to raise capital from an additional source, the retail investor. In turn, it will provide a new opportunity for retail investors. We do not believe the intention of the proposed exemption is to create an obligation by requiring issuers to offer all shareholders the opportunity to participate in any financing.
9. We have not proposed any conditions regarding the structure of the financing, i.e., minimum or maximum price, maximum dilution, or period in which an offering must be completed. We contemplate that the proposed financing would be conducted under the standard private placement rules of the TSXV which, among other things, allow pricing at a discount to market price. Is this appropriate or are there structural requirements that we should make a condition of the exemption?
The CSE, as all Canadian exchanges, defines the prices at which exempt financings may be conducted. If the proposed exemption were to be extended to include all listed companies, the financings would still be subject to the standard private placement rules of the listing exchange. Just as current exemptions allow the financing and the listing exchange sets the pricing parameters, so it should be with the proposed exemption.
We thank the participating CSA members for the comprehensive review of the issues and the resulting proposal. In addition, we thank the OSC for clarifying its position on the proposal and intentions to consider comments in developing a similar proposal.
Vice President, Listings & Regulation
cc: Richard W. Carleton, CEO
Rob Cook, Senior Vice President, Market Development
CSE – Canadian Securities Exchange is thrilled to be exhibiting at the upcoming Vancouver Resource Investment Conference (VRIC) in Vancouver this Sunday, January 19th through Monday, January 20th at the Vancouver Convention Centre West. The “CSE Pavilion” will be located at booth #818.
Jordan Capital – one of Western Canada’s leading independent brokerages, is the lead sponsor of our pavilion and will be co-exhibiting at the booth as well. Additionally, four CSE issuers will also call the CSE Pavilion their home during the conference including:
- Pasinex Resources (CSE:PSE)
- Muskrat Minerals (CSE:YYR)
- Winrock Resources (CSE:WR)
- MicroCoal Technologies (CSE:MTI)
As described by Cambridge House (the conference organizers):
“The Vancouver Resource Investment Conference is the world’s largest investment conference dedicated on resource exploration and the largest of all annual trade shows held in Vancouver, Canada. Hear from investment thought leaders and wealth influencers. Speak one-on-one with executive members from companies covering every corner of the mineral exploration sector along with metals dealers, oil & gas, renewable energy, media and financial services companies. This is a must-see for investors and stakeholders in the global mining industry. ”
For more information about the event, including registration details and agenda please visit the event website at: http://cambridgehouse.com/event/13931
We look forward to seeing you there!
This is a video that Benjamin Cox, Managing Director of Oreninc, produced last September espousing the virtues of a then-CNSX listing for junior mining companies – everything still applies under the new name of CSE.
The following views and opinions presented in this video are solely those of the author and do not necessarily represent those of CSE – Canadian Securities Exchange:
CSE – Canadian Securities Exchange is proud to be exhibiting at the upcoming Cantech Conference in Toronto this Thursday, January 16th at the Metro Toronto Convention Centre. CSE will be located at booth #113.
Recent CSE issuer SponsorsOne will also be exhibiting at the show alongside CSE (booth #113). They are an exciting new issuer that is “defining and driving the emergence of social sponsorship as the next evolution of engagement for brands and online enthusiasts.”
For more information on SponsorsOne, visit their website at http://sponsorsone.com/ and for stock quotes and market depth visit http://thecse.com/CNSX/Securities/Technology/SponsorsOne-Inc.aspx
As described by Cambridge House (the conference organizers),
“The Cantech Investment Conference will bring together the top thought leaders, fastest growing companies and most influential investors in the country for a full day exposition at the Metro Toronto Convention Centre. This is the ultimate showcase for Canadian technology development and investor opportunities. ”
For more information about the event, including registration details and agenda please visit the event website at: http://cambridgehouse.com/event/15402
There will be a special speaking appearance from former astronaut Chris Hadfield as well as the 4th Annual Cantech Awards Dinner in the evening.
We look forward to this event and congratulate Cambridge House and all of the event sponsors for hosting this event and placing a much needed focus on the growing importance of public technology stocks in Canada.
Proactive Investors (http://www.proactiveinvestors.com/) was kind enough to interview CSE CEO Richard Carleton regarding the company’s transition from CNSX to CSE – Canadian Securities Exchange.
The article covers a wide array of topics including why the name was changed, the difference that this will make for customers, and some of the initiatives that are planned for the upcoming year and beyond.
Some quick points from the article:
- CSE estimates that it accounted for 17% of the new issuers entering the Canadian public markets last year;
- CSE has combined Pure and CNSX into a single technical platform in an effort to simplify the brand and introduce efficiencies for customers;
- The exchange was recently backed by Dundee Corp. Chief Executive Ned Goodman and Tom Caldwell, Chairman of Caldwell Securities.
This is a great overview of where the CSE is at with respect to its leadership, product, and prospects moving forward – for the full article by Deborah Bacal please click the following link: http://www.proactiveinvestors.com/companies/news/51203/simplified-cse-offers-faster-and-cheaper-approach-to-listing-in-canada-51203.html
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.
Originally published January 8, 2014 in Financial Post Comment: http://opinion.financialpost.com/2014/01/08/nanny-state-regulators-and-lobby-groups-are-sidelining-investment-experts/
The current regulatory assault is based on the premise that investment advice is worthless. This is an abuse of power
Over my long career in the investment industry, I have observed two key components behind successful investing. The first is the correct interpretation of information. Investment success is not dependent upon information but rather on how one looks at or behind that information. What is it really telling you against the backdrop of a wider picture, experience, intuition and often contrary thinking?
The attack on the independent investment industry is reinforced by lobby groups who, in many cases, have been sponsored by regulators.
Information itself usually just reinforces existing trends or facts which are often already priced into the market. Gains come from changes in events, perceptions and possibilities, which are rarely anticipated in the public forum. That is where experience and professionalism come into play.
The second successful investing ingredient is that of quelling one’s emotions. Throughout my experience, I have seen more money lost, or simply left on the table, because of emotions than any other single cause. The inability to pause and take a broader or longer view in duress situations is common to many investors. It is a costly failing.
It is also part of human nature to “buy high” and “sell low” because of the comfort of being in tune with the prevailing “wisdom.” The typical investor rarely invests during dark or crisis periods but that is where the bargains live.
Many years ago I purchased a seat on the New York Stock Exchange for $2-million for our company. Within a month, and as a result of a scandal, they were trading at $1-million. That quick sharp drop certainly gave me a pause, but upon discussing it with our company’s partners (a key part in quelling one’s emotions) we resolved the upside possibilities still existed and proceeded to purchase another 48 seats, whose value eventually reached $9-million per seat. What I am pointing to is the critical role of advice in helping the investor to clarify what is really going on in markets and assisting to quell the emotions of greed, fear and anger.
These critical success factors point directly to the important role of the “Investment Advisor” or broker and yes, they are not all the same and yes, we do not win with every investment and yes, we too have bad periods. This also holds for other professions. But as Red Adair, the famous oil well firefighter, put it: “If there is anything more expensive than hiring a professional, it is hiring an amateur.” Any success I have had in investing has come from bouncing my ideas off our team or my “Investment Advisors” and they are worth every penny I pay them.
Throughout 2013, the critical role of advising investors has come under constant and withering attack by regulators, their sponsored lobby groups and some elements in the media. Their rationale is certainly not borne out by the facts if anyone looks at overall investment results and the most recent survey of investor satisfaction with their Investment Advisors.
One can only conclude that self interest, empire building and revenues could be factors – at the expense of a critical component in Canada’s economic growth.
Provincial securities commissions and their sub-regulators have expanded their reach geometrically over the years, far beyond investor protection into procedural audits, in order to make sure the correct paper work is in place to validate the obvious.
For example, the expansion of the Ontario Securities Act is proceeding at such a rate that even securities lawyers are complaining about not being able to keep up.
The costs of compliance of this regulatory onslaught are now decimating the last of the independent brokerage firms and thus depriving investors of choices, beyond bank controlled mutual funds. Corporations are also avoiding accessing public securities markets and staying within the realm of “private equity” investment, thus depriving the average retail investor of opportunities and yes, risk as well.
The bottom line is the current unprecedented regulatory assault is based on the premise that investment advice is worthless
The regulatory “nanny state” view of the world is now moving to effectively prohibit all but wealthy investors over 65 from holding an equity (stock) portfolio. Instead, it is mandated that they must hold bonds (currently yielding 3% or under) versus a portfolio with higher dividend or growth companies. Let me help regulators by pointing out that a major portion of many of us over 65 are not stupid. In fact, we tend to become a little smarter and wiser with time. Further, we now have a life expectancy which will require growth and inflation protection (yes, inflation will be back). In short, bonds are high risk at current interest rates.
Another of the current assaults on Investment Advisors is the war on “trailer fees” paid to brokers who have clients in mutual funds. The biggest error in buying mutual funds is not owning them long enough. The role of keeping investors in place is a valid one. Most mutual fund managers get it right after a year or so of poor results. Switching mutual funds at times like these is like changing lines at the airport – takes you longer to get where you want to go.
The bottom line is the current unprecedented regulatory assault is based on the premise that investment advice is worthless (part of an earlier media campaign) and fees would be better spent on yet more regulations. The attack on the independent investment industry is reinforced by lobby groups who, in many cases, have been sponsored by regulators. This is clearly an abuse of power and smacks of conflict of interest. It is like the fire department hiring people to yell fire in order to get bigger budgets.
Complicit in all of this are some media personalities who seek to craft themselves as unlicensed investment authorities.
The role of the media is to disseminate information. The task of savvy investors and their investment advisors is to look behind the headlines and the obvious and to anticipate possibilities. Investment advisors have historically been key players in Canada’s prosperity. It is far too dangerous to allow their function to be further diminished or destroyed.
As far as provincial governments are concerned, they have given their regulators a free, unchecked hand to do as they will with our economic and capital market potential. I would remind governments at all levels that fiscal, monetary and grant efforts will have little lasting economic impact if capital markets are inefficient, inaccessible and unnecessarily costly or cumbersome.
Thomas S. Caldwell, C.M.,
Chairman & CEO, Caldwell Securities Ltd.,
Chairman, Canadian Securities Exchange
TORONTO – January 6, 2014 – CNSX Markets Inc. announced that, effective today, the exchange will carry on business under the name “Canadian Securities Exchange”, abbreviated for convenience to the “CSE”. All of the CSE’s web services are now available at www.thecse.com
The choice of the name Canadian Securities Exchange reinforces three of the central characteristics of the organization:
“Canadian”: Headquartered in Toronto, with an office in Vancouver and with representation in Calgary and Montreal, the CSE serves the needs of entrepreneurs with efficient access to the Canadian public capital markets. The Canadian market is recognized internationally for its ability to facilitate the creation and financing of public companies – a significant source of employment and economic growth in the country.
“Securities”: The CSE provides listings and trading services for more than just common equities. Convertible debentures, debt instruments, provincial government bonds, structured products and income trusts are also currently listed on the exchange. As issuers and the corporate finance community develop investment products designed to appeal to various segments of the investor population, the CSE will look to enhance both primary and secondary market liquidity for these new instruments.
“Exchange”: Issuers on the CSE are subject to a number of requirements designed to promote investor protection: prospectuses or other disclosure documents reviewed and approved by a securities commission; continuous disclosure requirements for material information; monthly updates from each issuer available on the CSE’s web site; and periodic regulatory filings available to investors on www.sedar.com
The CSE also provides a single, continuous auction market service, where bids and offers are displayed, and incoming marketable orders are traded on a price, broker, and time algorithm. Trading services are transparent, with real-time market information available from all major data vendors and at www.google.com/finance
Richard Carleton, CEO, commented:
“we are looking to reduce complexity and cost in the delivery of exchange services wherever possible. Our recent trading system consolidation where all Canadian listed instruments are offered on a single trading system is a great example of this approach. We are also well known for our responsive and cost effective services for companies looking to raise capital from the public equity markets.
By presenting all of our services under a strong, unified, brand, we are reinforcing our position as the exchange for entrepreneurs in Canada.”
The Canadian Securities Exchange will be hosting a number of events across the country to introduce the new brand to the investment community in the coming weeks. Check for details of upcoming events at blog.thecse.com/category/events/
FOR FURTHER INFORMATION PLEASE CONTACT:
CEO, CNSX Markets Inc.