As public companies know, having access to a wide investor base is an important component to the health of a public listing. For Canadian listed firms, however, knowing how, where and when to take the next step to leverage greater access to the US capital markets is often difficult and time consuming process to navigate.
Fortunately, an upcoming information session sponsored by the Canadian Securities Exchange (CSE) can help shed light on the matter.
The CSE in partnership with OTC Markets Group, MNP LLP, BCF, Dentons, Canaccord Genuity, and Torys will be holding an information session on listing in the US via one of the OTC Markets Group venues.
The session itself will take place in Montreal on February 24th and includes speakers and representatives from the CSE as well as OTC Markets Group. Attendees will have the opportunity to ask the experts specific questions related to the process of operating within the OTC group of marketplaces via a listing on the CSE.
Attendees can expect to learn about a number of valuable topics, including:
CSE listing standards and the process of listing a company on a Canadian stock exchange
OTC Markets overview, quotation standards, and process to get a stock quoted in the US
Legal and accounting considerations of companies seeking a public presence in Canadian and US capital markets
Insight into trading dynamics of stocks that are quoted in Canada and the US
Trends in financing early-stage ventures, both in Canada, and the US
Space is limited for this event so be sure to register early to claim your spot. For more information or to register, click this link or contact Scott Pritchard at (514) 594-6848 or [email protected]
Thank you to everyone who attended yet another CEO Cocktail event at Coast Restaurant in Vancouver on January 28th. The event turned out to be a great success! Thank you to Bacchus Law for lead sponsoring the soiree and organizing all of the food, invites, and drinks. Please see if you made the photo gallery below and we look forward to seeing you at the next event! Photos from the CEO Cocktail Event in Vancouver are below:
As part of the ongoing series of events focusing on entrepreneurship in Canada, the Canadian Securities Exchange (CSE) and the University of Calgary’s Faculty of Law co-sponsored an event in Calgary on January 15th, 2015 on promoting innovation in Canada.
The sold out event, entitled “Frugal Fare, Intellectual Feast”, featured University of Toronto Law Professor Jeffrey MacIntosh, B.Sc. LL.B. LL.M., a leading voice in the evolving Canadian innovation policy landscape. As part of his presentation, MacIntosh offered his perspectives on the current state of funding for the Scientific Research and Experimental Development (SR&ED) tax credit and the impact to small firms of recent cuts to the SR&ED program.
MacIntosh’s presentation focused on the findings of a Review of Federal Support to Research and Development, and the importance of relying on market decisions rather than bureaucrats in deciding how to allocate funds to technology companies.
At its core, he believes the Federal Government’s decision to pursue a “direct assistance” model rather than “indirect” funding from the SR&ED tax credit program unfairly burdens typically cash-starved smaller firms and start-ups. Further, the kinds of ventures favoured by the direct assistance model are typically ‘lower-risk’ whereas the path towards innovation often requires companies prepared to take on greater risk. Thus, according to MacIntosh, the direct assistance model can actually slow down the pace of innovation.
The Value of Indirect Assistance
MacIntosh insists indirect assistance through deductions, tax credits and flow-through shares, remains a viable funding framework for small cap firms. This structure, he argues, removes the issues of political bias and regional preferences. It also reduces government’s overall administrative costs, while providing cost certainty for young, cash-starved business.
The reduction of paperwork and quicker access to liquidity are vital efficiencies for any small firm. The SR&ED tax credit program offers structured assistance and calendar certainty for cash strapped start-ups.
Accessing Capital Key to Innovation
Presentations such as these are crucial to the dialogue on the role of public policy in shaping innovation in public markets. According to Western Canada Advisor for the CSE, Mark Francis:
“The CSE believes that being an exchange is also about creating a meeting place for ideas and discussion about the capital markets. Different and potentially controversial points of view are critical to testing worthiness not just of investment theses but also of policies and structures that affect access to capital.”
Given the interest in the event, it is clear that funding for small and medium sized firms remains an important component to supporting innovation.
As the Exchange for Entrepreneurs, the CSE is actively working to improve access to capital for innovative firms as well as reduce the administrative burden associated with operating as a public entity. Ultimately, the CSE believes, this enables entrepreneurs more opportunities to focus time and resources on growing their business.
For additional reading on Jeffrey MacIntosh’s perspectives on innovation in Canada and other related readings on the subject, the following links may interest you:
We are happy to share photos from the CSE Pavilion at VRIC 2015 in the gallery below.
Thank you to American Potash Corp. (CSE:AMP), MGX Minerals Inc. (CSE:XMG), Pasinex Resources Limited (CSE:PSE), and Newlox Gold Ventures Corp. (CSE:LUX) for co-hosting the CSE Pavilion at the Vancouver Resource Investment Conference! Also a big thank you to Davidson & Company LLP for co-hosting this year’s Championship Sunday Reception.
Finally, congrats to Cambridge House International for hosting their 20th VRIC – we are looking forward to many more ahead.
In part one of the Q&A session with CSE CEO Richard Carleton, he spoke about some of the milestone achievements of the CSE in 2014. Part two of this interview (conducted by Peter Murray)looks at the direction the CSE is poised to head towards for 2015.
Part 2: The Right Direction
Question: Are there any personal interactions you had with issuers in 2014 that stand out (i.e. any stories to share)?
Carleton: One of the best parts of my job is meeting with companies at the pre-public stage, and then seeing them again a year or two later in serious growth mode. In particular, it is great to see the number of jobs, many of them highly skilled, that these companies are creating.
I also had the opportunity to travel to Europe with three of our listed companies (four including a conditionally approved company), Pasinex Resources, BioMark Diagnostics, and SecureCom Mobile. We joined a road show organized by Vancouver-based Zimtu Capital, where we met with institutional and individual investors in Frankfurt, Munich, Zurich and Geneva.
It was a very positive experience seeing the interest and support from international investors for early stage Canadian stories. I also had the opportunity to meet with a number of European finance people who are interested in bringing companies to Canada. There is no viable means of access to public capital for companies in Europe. This is a huge advantage for the Canadian economy!
Question: What feedback did the CSE receive from funds and other institutional investors in 2014? Are there plans in 2015 to further enhance the CSE’s presence and relationships with the institutional investment community?
Carleton: People are surprised to learn how many institutions invest in CSE-listed companies. We had a great opportunity to interact with many of these players in 2013 when we joined to successfully resisted attempts by the Canadian regulators to reduce the “Early Warning” requirements for investors from 10% to 5%. Continuing to identify institutions interested in early stage public equity, and educating them about the benefits of the CSE model is a focus this year.
Question: The Canadian Securities Exchange being “The Exchange for Entrepreneurs,” individual investors necessarily play an important role in trading liquidity. What can the Exchange do to attract greater participation by individual investors, or is that more so up to issuers?
Carleton: We can support investment in CSE-listed companies by retail investors in a number of important ways:
Ensuring that the platform of choice (most often a discount broker) has access to our quotations, company information and electronic trading access.
Making sure that retail investors know that real-time quote information is available on an increasing number of popular web channels (Google Finance being one).
Encouraging investors to use our web site (www.thecse.com) to obtain company fundamental information and a link to the issuer’s SEDAR filings. Investors should also take advantage of the monthly updates posted by management of our listed companies, a disclosure feature unique to our market.
Continuing to work with various media outlets to improve the coverage of CSE-listed companies.
Question: Are there are any important regulatory trends the Canadian Securities Exchange and/or its issuers should be aware of heading into 2015?
Carleton: We are very concerned that the costs of various well intentioned regulatory initiatives (CRM2 for example) are being unduly borne by the independent dealer community. These dealers have played a very important role in supporting capital formation and trading for early stage companies. These dealers are clearly in distress: a number of well-known names have disappeared in the last year or so. This is not a supportive trend.
We are also concerned about the increasing complexity of Canadian equity market trading structure. Again, the banks and international dealers are able to bear the costs of responding to all of these new trading platforms, order types and modalities.
Dealing with all of this new complexity will be an increasing compliance and cost challenge for many of the independents.
Question: Please comment on financing trends in Canadian securities markets, and as they relate to the Canadian Securities Exchange in particular.
Carleton: As mentioned, 2014 was a record year for financing on the CSE: more than $150 mm was raised by issuers over the course of the year. This represents, however, a small fraction of the money raised on the Canadian public markets.
We continue to hear, from issuers and corporate finance professionals, that raising money for early stage companies across the business spectrum is increasingly difficult. What we hope to see, are more investment success stories that validate the public finance model.
In simple terms, if people see that other people are making money by investing in the space, we will draw more investment dollars in as a consequence.
Question: Aside from Canada, what are the major jurisdictions of importance for the Canadian Securities Exchange and why?
Carleton: We had a material success in the United States in 2014. We were recognized by the operator of the US OTC markets as a “designated exchange” early in the year, meaning that CSE-listed companies could apply to move from the unregulated “Pink Sheets” market, to the regulated QX or QB boards.
Almost 100 of our issuers made the move, meaning that they had a two-sided quote in US dollars on OTCQX, accessible by US residents through their domestic discount broker platforms. Market makers providing the liquidity in the US also participated in the CSE book, causing tighter spreads and greater trading volume. A true win-win for all concerned.
We look forward to replicating this model with exchange operators in the European Union and the United Kingdom in the coming year. In addition, we are expanding our direct sales and marketing efforts into the United States, South America, China and South Asia in the coming year.
Our sense is that we can leverage Canada’s ability to finance early stage companies into a destination for qualified international issuers on the CSE. 2015 promises to be a very exciting year for the exchange.
For many at the Canadian Securities Exchange, 2014 was a year to remember with records shattered and the Exchange gaining traction and momentum heading into 2015.
In this exclusive two-part series, CSE Chief Executive Officer Richard Carleton discusses the record breaking year that was for the Exchange and looks ahead at what he believes will be a strong 2015.
Engaging, thought provoking and insightful; this question and answer series with Carleton touches on several leadership aspects of the industry, including strategy, growth, forecasts and analysis; along with the CEO’s perspectives on trends and regulatory issues.
In part one of the series, Carleton reflects on some of the key factors which contributed to a year of great accomplishments at the CSE and he also reveals some of the CSE’s goals for 2015 and why he is predicting strong growth for the first quarter of the New Year. Carleton also shares insight from the marketplace and what is top of mind for issuers.
Be sure to check out part two of the interview where Carleton shares an intimate story about why he loves his job and delves deep into industry related issues; on how the CSE can support investment in CSE-listed companies by retail investors and how the industry is reacting to a surging Exchange.
Part 1: A Good Year and Forward with Confidence
Question: What did the Canadian Securities Exchange accomplish in 2014? Did these accomplishments meet the expectations that the exchange had at the beginning of the year?
Carleton: The goal of the exchange is to reduce the costs of Canadian public capital for growing businesses. As we tell people, we do this in two principal ways: through the provision of a streamlined listings process, and by providing a liquid and efficient secondary market trading services. We received powerful feedback from the industry in 2014 that our message is resonating: new listings, financings and trading all exceeded previous records by significant margins during the year. Approximately half of our new listings came from other exchanges in Canada, suggesting that our service offering is competitive with alternatives for public companies.
Question: What are the Canadian Securities Exchange’s goals for 2015? What are the plans for achieving them? Is there anything new or different compared to the thinking that prevailed at the beginning of 2014?
Carleton: We put a lot of effort into raising our profile with key segments of the public finance community in Canada and internationally in 2014. We will build on these efforts in the coming year with more resources available for our sales and marketing team. In addition, we will be launching key initiatives on the trading side to improve the liquidity picture for our listed companies: we are launching a formal market making program designed to provide our issuers with a trader responsible for posting a continuous two-sided market, automated execution at the bid/offer for eligible orders and automated odd lot execution; new order routing, compliance and risk management tools to assist dealers in directing trading traffic our way, and an expectation that within a short period of time we will have all of the Canadian discount brokers with electronic access to our markets.
Question: The year 2014 saw record growth in listings. How is the first quarter of 2015 shaping up, and how would you characterize listings expectations for the full year? Does the Canadian Securities Exchange anticipate that certain industry sectors will contribute more or less than they did in 2014?
Carleton: The application pipeline is very strong, so our outlook for early 2015 is strong. Continued finance challenges for early stage companies, in particular, seems to make our operating model more attractive for these issuers. There appears to be no immediate relief on the horizon for these companies, meaning that our cost and time effective listing model will continue to be an important incentive for companies to work with us. As for sectors, as I tell people often, we don’t focus on particular sectors, instead we reflect the choices made by investors in agreeing to finance companies. We didn’t go into 2014, for example, believing that medical marijuana was going to generate a substantial amount of interest; that came about as a result of investors supporting the launch of a great many new companies in the space. I wish I could tell you what the next break out sector will be.
Question: In general, what did issuers tell the Canadian Securities Exchange that it did well in 2014? How did they say they would like to see the exchange improve?
Carleton: Issuers were almost unanimous in crediting our listings team with an excellent service attitude: identified problems were resolved in a timely and constructive manner, with companies able to take advantage of the deep experience represented by our team. On the other side of the coin, issuers were almost unanimous in looking for us to address the remaining access (Canadian and international discount brokers in particular) and visibility (where do I go to find a quote?) issues. We have made great strides on both points, but much work remains to be done.
Stay tuned for part two of this interview to be released soon.
Professor Jeffrey MacIntosh, Toronto Stock Exchange Chair in Capital Markets Law at the University of Toronto
Innovation is a key component of a competitive economy. Often, however, that innovation also requires taking risks. Many small cap firms take on the challenge and risk of finding innovative solutions to problems facing the world today and in the process help raise the wealth and well-being of their host country. What then, is the appropriate role for Government to play in facilitating innovation from entrepreneurs, especially against the current challenging environment for public small cap firms?
This and other fascinating issues related to innovation in Canada will be discussed at an event (now sold out) co-sponsored by the Canadian Securities Exchange and the University of Calgary’s Faculty of Law. Entitled “Frugal Fare, Intellectual Feast” the session will certainly provide both. The keynote speaker, Professor Jeffrey MacIntosh, is the Toronto Stock Exchange Chair in Capital Markets Law at the University of Toronto and is a thought leader in the conversation on innovation policy within Canada.
In particular, MacIntosh’s talk will highlight the Federal Government’s 2011 report Innovation Canada: A Call to Action and the impact to small cap firms of Government policy shifts regarding the Scientific Research & Experimental Design (SR&ED) tax credit program.
The event will take place at the Metropolitan Centre in Calgary on January 15th from 11:45am to 1:15pm.
For additional reading on MacIntosh’s perspectives on innovation in Canada and SR&EDs, the following links may be of interest.
The Canadian Securities Exchange (“CSE”) is pleased to announce record results in all key performance categories for the year ended December 31, 2014, reflecting success in achieving the exchange’s goal of reducing the cost of capital for Canadian public companies. For 2015, the CSE expects growth to remain strong as it maintains existing activities and introduces several new initiatives to further strengthen competitiveness.
CSE Enjoys Record Year in 2014 – Key Stats
The CSE finished 2014 with a total of 244 listed companies, a 35% increase compared to the previous year;
CSE companies conducted 211 financings, raising a total of $155 million, or $76 million more than in 2013;
Aggregate trading volume for the year was 2.3 billion shares, up 165%;
Aggregate trading value was $498 million, up 315%.
Companies from a wide range of business sectors sought listing status on the CSE in 2014, including pharmaceutical, health care, technology, mining, clean tech, oil and gas and financial services. Approximately half of new listings came in the form of public companies transitioning to the CSE from other exchanges.
The CSE enters 2015 with a strong applications pipeline and a fresh set of objectives to further enhance trading and market access.
“Technology was a standout on the financing front, with issuers in the sector accounting for around half of all capital raised on the CSE in 2014,” said CSE Chief Executive Officer Richard Carleton. “But fundraising challenges remain and this makes our operating model attractive for companies at the early to mid stages of development. With no immediate relief on the horizon, our low-cost, highly efficient listing model will remain an important incentive for fast growing companies to work with us.”
The CSE enters 2015 with a strong applications pipeline and a fresh set of objectives to further enhance trading and market access. These include a new market making program designed to enhance issuer liquidity; new order routing, compliance and risk management tools to assist dealers; and more resources for the exchange’s marketing team to support existing issuers and attract new ones.
Plans also call for a broader foreign markets strategy, particularly in light of the benefits many issuers realized after the CSE became a designated exchange with the leading operator of over-the-counter markets in the United States early in 2014. Tighter bid/offer spreads and greater trading liquidity resulted for many companies as US investors gained access to CSE stocks through domestic broker platforms newly able to provide quotes denominated in US dollars. The CSE will explore this model with exchanges in the European Union and United Kingdom in the current year.
“We put a lot of effort into raising our profile with key segments of the public finance community in Canada and internationally in 2014,” said Carleton. “Our goal is to build on those achievements throughout the current year, ensuring easier market access to enhance liquidity, reaching out to institutional investors to explain the merits of the CSE and show them examples of highly successful companies on our exchange, and continuing to address the micro and macro needs of our growing issuer base.”
If there’s one thing common to companies of all sizes and structures, it’s that they all need capital to grow and thrive. The ecosystem of how and where raising capital takes place, however, has recently been undergoing rapid evolution.
Whether or not this ecosystem and its stakeholders are moving in the right direction was the central theme of a panel discussion at the 2014 Canadian Investor Conference entitled: “Financing Methods: Where is the Money?”
Organized by Cambridge House International in Toronto, the panel included distinguished members from across the investment industry landscape and was moderated by BNN anchor and reporter Andrew Bell.
The panelists included the CEO of the CSE, Richard Carleton; President of the TSX Venture Exchange, John McCoach; President, and CEO, OTC Markets Group, Cromwell Coulson; President and CEO of BoardSuite, Oscar Jofre; and Co-Founder and Managing Director of WoodsWater Capital LP, David Franklin.
The discussion was a lively one offering a number of perspectives related to the availability and accessibility of capital for early-stage companies in Canada. Among the topics that the panel covered were why retail investors have been reluctant to participate in resource investment markets, the viability of equity-based crowdfunding and the challenges facing early-stage companies in raising capital.
For ease of reference, the following is a list of topics that Richard Carleton spoke to as part of the panel. To view his sections of the talk, simply click on the urls below:
As was shown in the panel discussion, there are many different options now available to firms interested in raising capital. In spite of their differing positions on which direction or platform would be the most viable, what all the participants agreed upon was the high degree of change the capital raising landscape is experiencing.
From the CSE’s perspective, the positive growth and continued interest by companies to list on the Exchange are an important signal from the market. This interest is a validation that the CSE plays an important role in helping entrepreneurial firms attract and obtain the kinds of capital required to grow their business.
While this panel highlighted the uncertainty as to where the money is, it also hinted that a marketplace that efficiently connects capital to innovators is likely to be the place where that money will be going.
Click below to watch the video of the full panel discussion.
Way back in November 2014 the Canadian Securities Exchange (CSE), along with Zimtu Capital and several CSE-listed companies embarked on a 7-day, 4-city investment roadshow spanning two countries, 900+ kms and copious amounts of schnitzel. “Eurotour 2014” (as it was dubbed) was a collaboration between the CSE and Zimtu for the first time.
By all accounts (some better recollected than others) the trip was a great success. New contacts were made, business opportunities furthered, and the CSE opened new doors for the exchange abroad. Most importantly (thanks to Zimtu) much of this work was documented in photos that we have shared and linked below:
Much credit goes to Zimtu Capital Corp. who organized and documented the investment roadshow in a series of photos posted to their Flickr page, you can see them all in the following links, organized by city:
As public companies know, having access to a wide investor base is an important component to the health of a public listing. For Canadian listed firms, however, knowing how, where and when to take the next step to leverage greater access to the US capital markets is often difficult and time consuming process to navigate.
