We are living in an age of big data and analytics.  It has never been easier to collect and analyze information to optimize your organization’s business processes.  Recruiting is no exception.  Doing this will not only offer you fresh insights into how successful your existing recruitment efforts are but also provide clarity on how to make them more efficient to achieve better results.

Establishing and using analytics is a great way to figure out how to make your recruitment efforts as effective as possible. You can uncover that you’re spending hundreds or even thousands on resources that are not leading to the desired candidate pools where you wind up hiring from. Smart organizations leverage HR technology to gather the proper data points required for c-suite decisions for funds allocation and business process effectiveness.

There are lots of ways to capture data about your recruiting process. One of the easiest is to use an applicant tracking system that will automatically collect that data for you and display it back in an easy-to-understand dashboard. But, no matter how you collect your recruiting data, make sure that you focus in on a few key metrics:

Time to hire – is the amount of time to it takes from when a job is posted until a candidate accepts your job offer.  While time to hire can vary dramatically depending on the industry you are in and the role you’re recruiting for, the longer the procedure takes, the more expensive it becomes.

Cost to hire – is how much it costs to fill a position, to calculate this you factor in advertising the position on paid job boards, paying for various other tools, and time spent on recruiting, vetting, and onboarding candidates.

Source quality – is the cost-effectiveness of the different sources you’re using to attract candidates. An easy way to calculate this is to divide the cost of each source (job boards, ads, etc.) by the number of successful hires for the desired time frame in question (quarterly, annually).

Together, these metrics will give you a fantastic initial understanding of how efficient and cost-effective your recruiting is.  Once you’ve established some benchmarks for yourself or your recruiting partner like TPD, (i.e., how long it typically takes you to fulfill a job, how much doing so typically costs on average, and how cost-effective your distinct sources are), you can then get to work to optimize your recruiting efforts to get better results.  When you have clarity through attribution analytics on your top candidate sources by job type, you can effectively build a case to increase ad budget for that job board platform and reduce spending on underperforming job boards.

There are many ways to leverage applicant tracking systems during the recruiting and onboarding. When done right this pivotal step in candidate experience becomes the stepping stone for your employer brand and the start of your new hire’s journey with you. TPD provides end to end solutions for organizations looking to improve their recruiting process internally or take over the entire function with total transparency into all of the analytics mentioned.

Anytime that you have data-driven analytics and metrics, you can use them to gain insights into everything you’re doing.  If your time to employ is long and your cost per hire is low, then you should make some tweaks to your procedure, such as spending a bit more on advertising.  A small investment can easily pay for itself if you are getting to better candidates faster, but you need to know your numbers to justify the action.

It may not be easy, but using analytics is a great way to figure out how to make your recruiting efforts as efficient as possible. For that reason alone, it’s worth taking a closer look at them.

About TPD

TPD® is an international Workforce and HR Solutions company that partners with our clients and talent pool to help people succeed and help organizations perform. Founded in 1980, TPD works with people, for people, and about people; providing scalable HR solutions that are backed by the best-proven practices in the industry.

No one thinks it’s going to be them. Until it is.

According to the movies, cybercriminals operate out of abandoned warehouses, target carefully selected conglomerates and use things like “worms” and “keys” to gain access. The reality, however, is that cybercriminals, using scattergun techniques like phishing, are not out for world domination but rather a more familiar motive: money.

In 2016, 24% of breaches targeted financial organizations, 15% healthcare, 12% public sector entities and 15% targeted retail and accommodations*. Whether it’s design plans, medical records or good, old-fashioned payment card details—someone, somewhere will see it as their meal ticket.

Organizations need to build a strong security posture by implementing strategies that address internal and external threats across the entire chain. It is critical to start from the premise that systems will be breached. This perspective enhances the effectiveness of decision making related to preventing, mitigating and recovering from a breach.

Another recent development makes this a pressing imperative. Canada’s new Digital Privacy Act has introduced mandatory breach notification.  In 2017 organizations will be required to notify the Office of the Privacy Commissioner, as well as the individuals affected, if the organization experiences the loss or theft of personal identifiable information that puts these people at “real risk of significant harm.” Failing to do so could result in fines of up to $100,000 per offence. This comes as part The Digital Privacy Act (formerly referred to as Bill S-4) that was put into effect in June 2015.

On January 19, 2017, the Canadian Securities Administrators (CSA) published Multilateral Staff Notice 11-332, stating that they expect issuers to provide risk disclosure that is as detailed and entity specific as possible, should they determine that a cyber security risk is a material risk. In order to determine materiality, the cyber security incident requires analyzing and the probability of a breach occurring and the anticipated magnitude of its effect needs to be determined. The CSA expects issuers to disclose specific risks, rather than generic risks common to all issuers, and they expect issuers to tailor their disclosure of cyber security risks to the particular circumstance. Underestimating risks leaves enterprises highly vulnerable. Poor security can lead to painful, even catastrophic, financial and reputational losses. Moreover, data breaches and other security incidents put not just individual companies, but entire supply chains, at risk. The following are three steps to build a robust security posture that will support the goals and resilience of your organization, and assist you in determining your cyber security risk.

1. Conduct a health check of your organization’s cyber security maturity.

A health check is an assessment of an organization’s controls, security risks and threats, to define its current security posture and highlight gaps.

The health check assesses current risks to your industry and business and evaluates the strengths and weaknesses of your organization’s existing security controls.

The health check determines the impact a breach could have on your organization: operations, productivity, information assets, infrastructure, reputation, materiality of the cyber security risks and brand.

2. Develop a clear security roadmap.

The health check will guide an organization by providing a clear map of priority risks and practical direction regarding where to most effectively focus cyber security budget and resources.

3. Test your organization’s vulnerability to cyber-attack.

It’s essential to supplement planning with robust testing to determine your organization’s vulnerability to cyber breaches. Intellectual property, personal information, plant systems, computer servers, and mobile devices, could all be targets for attacks.

Seek objective, trusted third party cyber security expertise to assess potential weaknesses through vulnerability assessments and penetration testing of your internal and external networks and applications.

Without adequate protection, cyber security threats can put your organizations’ operations, reputation – even its existence – at risk. Vigilant assessment, planning and testing are critical to protect the bottom line.

For more information on how you can better protect your business from cyber-attacks, contact: Danny Timmins, CISSP, National Cyber Security Leader T: 905.607.9777 E: [email protected]

About MNP

MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-for-profit sectors. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world.

*Sources:

• 2017 Verizon Data Breach Investigations Report
• Canadian Securities Administrators Multilateral Staff Notice 51-347 – Disclosure of cyber security risks and incidents
• Canadian Parliament: Digital Privacy Act (Bill S-4)
• Government of Canada: For Discussion — Data Breach Notification and Reporting Regulations

The Canadian Securities Exchange (“CSE”) is transforming its trading services.  First, with the implementation of a new trading technology platform completed in December last year, the CSE has addressed previously noted latency and performance issues.  The new system has exceeded CSE’s expectations for the project and has been favourably received by clients.  Second, the CSE is introducing new trading features and functionality designed to address issues facing the dealer community in Canada.

Challenges faced by participant dealers

In our view, the biggest challenge facing participant dealers is cost effective execution of agency orders.

The advent of multiple market trading and the rise of the “maker/taker” pricing model have attracted numerous liquidity providers to the Canadian markets.  With liquidity incentives that were several times more generous (on a value traded basis) than US market centres, competing trading firms (often supported with sophisticated computer technology) reduced quoted spreads for actively traded instruments to the minimum increment.

Although the narrower spreads served to benefit clients trading in high turnover stocks, the cost to access the liquidity for their executing firms began to approach prohibitive levels.  These costs include, but are not limited to, exorbitant take fees, multiple ticket charges resulting from smaller average execution size, implementation and maintenance costs for order routers (for compliance and best execution purposes), access fees and market data charges for a burgeoning number of new venues, gaming strategies employed by the liquidity providers, a rising percentage of odd lot orders, and significantly increased compliance risk.  All of these factors have combined to increase dramatically the costs of execution for agency dealers.

CSE addressing the challenges

The CSE has introduced a series of measures designed to address the aforementioned challenges and is adding further functionality and features:

• a market making programme for all stocks trading on the CSE (CSE, TSX and TSX-V-listed) was introduced in November, 2014. The key feature of the programme is that it provides automated execution for eligible agency orders up to the “guaranteed minimum fill” commitment from the market maker.  We currently have a number of firms providing odd lot and full market making services for both CSE and other market listed stocks.
• The CSE filed for an enhancement to the GMF programme on February 17, 2017. The proposal, which may be published in the OSC Bulletin for public comment as early as March 2, is intended to increase the opportunity for GMF-eligible orders to be automatically executed at the prevailing national best bid or offer in a single trade ticket.
• The CSE is also revising its fee schedule. The changes are intended to reduce overall execution costs for agency dealers.
• The CSE received approval from the Ontario Securities Commission for the introduction of two new features on February 16, 2017. A copy of the OSC notice may be found at:  http://osc.gov.on.ca/en/Marketplaces_cnsx_20170216_market-maker.htm . The first component of the filing, the introduction of standard peg order types, did not attract any comments.  The second component of the filing, the introduction of market maker participation, was somewhat more controversial.  We will spend some time describing how we believe the feature should be eventually implemented, and how it is currently approved.

It is an unfortunate fact of the public comment process in Canada that the conversation with respect to securities regulation, at least from a practitioner viewpoint, is dominated by the institutional trading desks.

In the United States, there are a number of powerful and independent advocates for the interests of retail oriented investors: large mutual fund firms, independent discount brokers and regional brokers servicing a retail investor population.  All intervene on behalf of the interests of their clients.  These entities either do not exist in Canada (the independent discount brokers are all relatively small compared to their bank-owned competitors), or have elected for one reason or another not to take an active role in the policy formation processes.  Consequently, it has been a challenge for the CSE to rally broader public support for enhancements to its offerings for agency clients.

It is also a difficult process to appropriately balance, in a way that satisfies all of the stakeholders in the market, the privileges afforded a market maker with the obligations that they are providing to the marketplace. In our experience, any offering from a marketplace that increases the likelihood of execution of an agency order against the market maker’s book, is more likely than not to be opposed by parties looking to increase their ability to trade against these orders in the open market.

Under the CSE’s original proposal, market makers would have been entitled to participate against up to 40% of the volume of eligible marketable orders.  The current guaranteed fill requirements would remain in effect, such that if the booked volume at the bid or the offer was insufficient to satisfy an in-bound order, there is no elective participation. The market maker is obligated to fill the remaining volume. This restriction to trading with only eligible orders was the most problematic for commenters and the regulators.  Since the market maker was not “obligated” to participate with “all order flow”, the feature was characterized as a “benefit” to the market maker.  The fact that the feature would result in reduced costs and superior execution quality for agency clients and their executing dealer, was not, in our opinion, given sufficient consideration.  As a result, the CSE’s original proposal would not have been approved.

In order to avoid undue delays in delivering the other features that have already been approved, the CSE has determined to deliver a modified version of the participation programme. As set out in the OSC Notice, the CSE participation programme will now allow the market maker to interact with all orders less than the GMF and would limit market maker participation to a maximum of 40% of the GMF commitment.  These features are consistent with market maker participation available on other exchanges in Canada.

Although this is an imperfect result, we will be working to overcome the objections of a subset of the trading community as well as engaging with OSC Staff in the coming weeks.  Our objective is to provide Canadian dealers with a cost effective means of executing large volumes of client orders, while providing appropriate guarantees of both best price and best execution for their clients.  These goals are clearly in the best interest of the public and the market as a whole.

Respectfully,

Richard Carleton

Chief Executive Officer

As part of a number of initiatives undertaken this year  to enhance the stability and integrity of Canadian capital markets, the Investment Industry Regulatory Organization of Canada (IIROC) sought comments from capital markets stakeholders on factors impacting micro and small-cap issuers.

With well over 300 publicly listed small-cap securities, the Canadian Securities Exchange (CSE) serves as an important bellwether for forces impacting this vital segment of the securities ecosystem. As such, the CSE provided its perspectives on a number of regulatory as well as operational items that could provide direction on improving capital formation for stakeholders in the micro and small-cap space.

Below is the full text of the letter submitted to IIROC detailing the CSE’s comments. All submissions, when published, will be available on IIROC’s website.

Introduction

The Canadian Securities Exchange (the “CSE”) is pleased to submit its observations and recommendations in response to the Investment Industry Regulatory Organization of Canada’s (“IIROC”) request for proposals on “Market Structure Issues Affecting Small‐Cap Issuers”.

The CSE’s view is that many of the market structure concerns voiced by small‐cap market participants over the last number of years are symptoms of a fundamental problem: an absence of buyer interest and participation in these markets. Some of the reasons for this challenge are beyond the control of industry participants. The collapse in the price of many commodities during the current business cycle, and unfavourable demographic trends in the retail investment population who have historically participated in these markets are a big part of the challenges faced by issuers, advisors and marketplace operators in the small‐cap space. The CSE believes, however, that there are a number of measures that can be adopted by the industry to address issues under our control. These measures fall into two broad categories:

• Address the capital formation challenges faced by issuers and their advisors, and reduced participation rates from retail investors in initial finance transactions. The exempt market in Canada should be enhanced with measures similar to those now in force in the United States as a result of the implementation of Regulation A+ of the JOBS Act. Doing so would provide a bridge between the attempts to create a crowdfunding regime for very early stage capital raises and the traditional prospectus‐backed IPO market. The current exempt market, which provides the majority of small‐cap finance, is by its nature limited in scope in both the dollars that can be invested and the number of potential participants. The CSE believes that many of the market structure mechanisms proposed will not provide any long term relief to the problems identified, unless the buyer problem is addressed. Unless new classes of market participants are able to enter the small‐cap finance and trading space, we are concerned that technical changes to the trading rules will not bring about the anticipated benefits.
• In the second part of our submission, the CSE will provide its views on many of the issues raised by industry participants and cited by IIROC in the Request for Proposal.

Importance of Canada’s Small‐Cap Finance Community

It bears repeating that Canada’s early stage public capital market is an important component of the country’s economic success. Entrepreneurs from every industry group have benefited from their ability to finance business development from the public markets at a lower capital cost than would be available from private sources. Where businesses in other countries have to rely on expensive and restrictive private sources of finance (e.g. bank debt, private equity, venture capital funds), Canadian companies have been able to raise billions of dollars at reasonable cost from public market investors. Canada’s investment dealers and marketplace operators have supported this primary capital formation process with fair, efficient and accessible secondary market trading services. Investors from all income brackets have historically been able to share in the growth of the country’s capital markets through their ability to buy and sell small‐cap stocks. The liquidity, and resulting price discovery efficiencies, that these investors contribute to the market has further supported the ability of companies to raise needed capital from the public markets. Unfortunately, the traditional primary and secondary market model for small‐cap finance in Canada has broken down. The days of an IIROC member investment dealer advising a company and assisting on the placement of its initial distribution of securities under an offering document, while supporting secondary market interest through the provision of research coverage and investment advice via a network of advisers are irretrievably past. The vast majority of funding raised by companies listed on the CSE and the TSX‐V now comes from the exempt market. Advisors at IIROC member investment dealers are increasingly less likely to recommend client participation in both primary and secondary market small-cap investment. Secondary market trading activity comes principally from retail investors through the discount brokerage networks. Dealers are committing less and less capital to market making and other proprietary secondary market trading activities. While we will leave it to the practitioners from the sell side to enumerate the reasons for the shift, we do not believe that any of these trends are positive for the Canadian capital markets.

In current small‐cap finance, the principal source of exempt market funds is the accredited investor exemption. Covering a minute percentage of Canadian households (approximately 1 – 2%), accredited investors account for a major percentage of funds raised by CSE issuers. The CSE believes that to address the capital formation challenges faced by small‐cap issuers, access to the exempt market should be expanded. At the same time, the industry needs to collectively come to an agreement as to the role that new forms of investor engagement can and should play in the capital formation process. Many registrant firms, citing compliance concerns, will not permit their advisors to use social media to communicate with clients and a broader investor audience. Small‐cap issuer firms and their advisors are also reluctant to employ social media for similar reasons. Given that an entire generation of potential market participants consume news and information via social media sources, the industry is cutting itself off from the future. Accredited investors skew older than the population as a whole (which is itself aging rapidly), and ultimately represent a declining pool of market participants. Unless we can collectively engage a younger, less affluent, group of market participants, the public capital formation process is doomed to irrelevancy.

There is also an important public policy reason for broadening participation rates in the small‐cap finance and trading markets. A report published by the McKinsey Global Institute on May 2, 2016, (Diminishing Returns: Why Investors May Need to Lower Their Expectations) suggests that investment returns in developed markets in North America and Europe are likely to be significantly lower in the coming 20 years than they have been in the preceding 30 years. The two principal reasons cited in the study are the prospects for lower overall growth in these economies and the lack of population increase. If this forecast is accurate, investors seeking higher than developed market returns will have look to investments in the small‐cap markets. If we continue to, effectively, limit participation in the small‐cap capital formation process to the accredited investors, we are denying the opportunity to access these investment opportunities to the vast majority of potential investors. This harms not just the investors themselves, but the companies looking to raise growth capital from the public markets.

To build a new constituency of younger and engaged small‐cap market participants, the CSE recommends the following steps be taken across the industry:

1. Harmonize the crowdfunding rules across Canada. The current crowdfunding regime in Canada is too complicated: the steps required to ensure a compliant national offering are extensive, and eat into the modest potential proceeds of the process. The likelihood of a company unintentionally breaching the guidelines in a particular province or territory is high. The fragmented rules also raise compliance costs for portal operators hoping to conduct business across multiple jurisdictions. Economies of scale are more difficult to achieve, raising capital costs for their clients. The United States, in contrast, has a set of rules in place under Regulation A of the JOBS Act that provides for a clear set of guidelines across all 50 states.
2. Implement a new means of prospectus‐exempt financing modelled after Regulation A+ of the United States JOBS Act. Unless we extend participation in the exempt market beyond the accredited investor exemption, the small‐cap finance industry will fail to gain the engagement of a new generation of potential investors. The success of television shows like “Dragon’s Den” in Canada and “Shark Tank” in the United States suggests that there is an appetite for entrepreneurial stories that extends far beyond the small segment of population represented by the accredited investor class.
3. Regulation A+ permits issuers to promote participation in their fundraising initiatives through a variety of non‐traditional means. Canadian regulators, investment dealers and advisors, and small‐cap issuers have to come to grips with appropriate uses of social media and other communications media to engage with the broader investor population. As an exchange, the CSE can provide guidance and specific training to its issuers in these opportunities, if the rules are well understood.

If we are unable to engage a new generation of investors, whose numbers and potential investment resources are significantly larger than the few accredited investors relied on by the industry currently, then all of the technical measures designed to improve the operation of the small‐cap markets will prove irrelevant. While IIROC cannot alone implement any of these changes, the organization can be an important focal point for reform in assisting the industry in developing new means of engaging with the broader investing public.

Marketplace Operation Issues

As indicated in the introduction, the CSE has a number of views and comments on the marketplace operation issues cited in the Request for Proposal.

Short sale proposal

The CSE is sympathetic with issuers and their shareholders who believe that the current short sale rules, combined with the absence of buyer interest in many small‐cap stocks, provide a low risk opportunity for short sellers to profit. Allowing the short sale to create a new downtick, particularly in the case of sub‐10 cent stocks, results in a material decline in the market cap of the company. When the short position is covered, ideally (from the short’s perspective) at a still lower level, an even larger slice of the market cap of the company has disappeared. This is particularly frustrating for companies that are attempting to conduct a financing. The ability of companies to raise funds at greater than 5 cents per share (the minimum threshold for TSX‐V and CSE‐listing companies absent an exchange exemption) can be compromised by short selling pressure in the secondary market.

The CSE is prepared to support rule changes that will place restraints on the ability of short sellers to create a downtick on the initial trade. We do not support, however, a re‐institution of the former rules that were enforced at the trading system level of the exchanges. Bringing back the former rule, which involved a significant amount of programming and testing, would take a lengthy period of time to institute. In our view, the rule should be that a declared short sale may only be entered when accompanied by the “passive only re‐price” tag. The tag will enforce the requirement that a short sale has to be booked; it may not cross the spread to execute. If an order crosses the spread to trade against the short sale order, the likelihood is that the new sale price will represent an uptick from the last traded price. All of the Canadian markets currently support the passive only re‐price tag; instituting the new rule would not be held up by a lengthy technical implementation process. We would also support the standard exemptions (for example, exchange appointed market makers should be able to sell short without restriction), as were present in the former short sale rules. At first blush, we do not believe that firms using the “short mark exempt” tag (“SME”) should be exempt from this requirement. In general, these firms are computer aided, proprietary, high frequency trading firms that are not generally active in the small‐cap markets.

Settlement discipline

IIROC should examine whether firms are properly enforcing the short sale covering requirements. As a general rule, small‐cap stocks are not available for loans, nor are they margin eligible. For many stocks, there may be no assurance that a short position may be covered within the time limits required under UMIR. If firms are not enforcing the requirements properly, the economics of predatory short selling activity would improve to the detriment of the issuers, their shareholders and the broader market.

Tick size

We do not believe that modifying tick size for low priced stocks would have a material impact on liquidity or price continuity. The experience of the broader market when decimals were introduced suggests that overall liquidity would not change, but order size at each increment would decrease. Because more price levels would have to be accessed to fill orders, volatility would increase by reducing price continuity. Our experience for CSE‐listed stocks is that, in any event, the typical spread for the majority of small‐cap stocks is not at the minimum half‐cent or penny increment. Proponents of smaller tick size suggest that the measure would reduce the impact of short selling activity. In the CSE’s view, instituting the “passive only” requirement for short sales would have a more powerful impact on the identified problem. Proponents of larger tick size suggest that their plan would increase potential profits for market makers and other firms committing capital to trade a particular stock. The CSE suggests that IIROC and industry members study the results of the “Tick Pilot” in the process of being implemented in the United States before considering amendments to UMIR’s tick size provisions.

Board Lot size

Increasing board lot size is cited by a number of parties as a means of restricting short sale activity in small‐cap stocks. As described above, the CSE believes that the better measure is to prevent a short sale order from crossing the spread to execute the trade. Increasing the board lot size would have a significant negative consequence: many retail shareholders might find themselves holding an odd lot position in the stock. Odd lots receive no price protection in the secondary market, and, as a result, may trade at any price without violating UMIR or the national instruments. Execution quality for odd lots is a regular customer service issue for dealers: the CSE often deals with complaints from clients on the price that they received when trading an odd lot. The CSE has appointed odd lot market makers to address this concern, as odd lots orders are now automatically executed against the market makers book at the bid or the offer price. The fact remains, however, that handling customer odd lot orders effectively is a challenge for retail oriented investment dealers. Expanding the number of client odd lot orders would be harmful to the goal of increasing investor confidence in the fair and efficient operation of the small-cap markets.

Electronic trading

A number of industry participants have cited the advent of electronic trading as a major disruptor to the fair and efficient operation of the Canadian small‐cap markets. The CSE has supported research efforts by IIROC and other entities over the years aimed at identifying the impact of market participants who use computer driven strategies on the markets. From a CSE perspective, we have not been able to identify significant participation by these traders in the small‐cap names. We know these accounts from their activity in the highly liquid Canadian large‐cap stocks that the CSE posts alongside its listed companies. The CSE is in a position to say that these firms are not active in the CSE‐listed market. In general, the small‐cap market is simply not liquid enough to support strategies which effectively require the trading account to be flat at the end of the day.

Day trading activity

An area that has not been carefully studied to date is the impact of so‐called “day trader” activity on the operation of the small cap markets. Distinct from the high frequency trading firms, the day traders are generally individuals trading from their own account through a small number of firms established specifically for the purposes of supporting this kind of trading activity. Although these individuals may use computers to aid their trading, they do not rely on low latency strategies to achieve their trading goals. They also, unlike the high frequency traders, appear to be prepared to hold significant positions in a particular stock over a period of days. The CSE would welcome further study of the activities of these day traders, and encourages IIROC and the securities commissions to encourage this effort.

Conclusion

The CSE thanks IIROC for the opportunity to discuss these vitally important issues in an industry forum. As we have stated throughout this paper, our basic concern is that modest reform to the trading rules will not address many of the issues cited by market participants in the current state of the small‐cap markets. Unless the industry, which includes IIROC, the provincial securities commissions and (shortly) the CCMR, regulated dealers of all types, advisors, and issuer companies, is able to develop a model capable of engaging a new generation of potential investors, all of our mechanical changes to the markets will not produce the intended results. The CSE supports the development of a new, significantly broader, exempt market with two key components:

• harmonized crowdfunding regulations across Canada, and
• a new category of offering modeled after Regulation A+ of the United States JOBS Act, enabling companies to raise larger amounts of capital from a broad group of potential investors

Without question, Canadian junior and small-cap companies looking to raise public capital are facing what many consider to be a ‘funding crisis’.

Many of the headwinds facing these companies are driven by macro-economic factors, such as slowing global growth or pressures on commodity prices however that is only part of the picture. There are also a number of policy-related and structural realities of the Canadian capital ecosystem that are adding to the growing list of challenges that junior firms must try and overcome in order to raise investment capital at a reasonable cost.

Earlier this month Richard Carleton, CEO of the Canadian Securities Exchange, sat down with Jim Goddard of HoweStreet.com to discuss the nature of the funding crisis facing entrepreneurs seeking to raise investment capital, with a specific focus on the role that the CSE is playing to help provide a desperately needed solution.

Over the course of the interview, a variety of topics were covered including how regulatory decisions and recent economic conditions are impacting the Canadian independent broker dealer community; the emergence of crowdfunding; the current debate on the uptick rule and whether or not short selling should be allowed on junior/small-cap stocks and how the CSE is working to fulfill its mandate of providing cost-effective access to capital for publicly listed companies.

While the interview covers a lot of ground, one of the most compelling points is the possible landscape that could confront Canadian companies looking to raise capital should current conditions persist.

Citing the example of challenges faced by smaller investors not being able to widely participate in deals in the US, Carleton stated that by enabling individual investor participation in early-stage capital investments here in Canada, investors have the opportunity to  “profit in the growth of the Canadian economy and to help support the entrepreneurial spirit of individuals who create wealth for the country.” At the moment, however, more clarity is required on the exact mechanism that best serves this goal.

To listen to the full interview, click the video below and if you have any viewpoints on the current climate for raising capital, leave a comment or tweet your thoughts to @CSE_News.