Tag Archives: Richard Carleton

Record third quarter for CSE continues momentum through Q3 2016

CSE is proud to present its most recent quarterly update video and press release below highlighting the record third quarter of the year at the Canadian Securities Exchange:

Multiple Industry Sectors Push CSE Trading Volume, Financings to New Records in Third Quarter of 2016

CSE Posts Record Activity in Q3 of 2016

The Canadian Securities Exchange (CSE) today released performance metrics for the third quarter of 2016 highlighting continued strong growth, particularly in trading volume and capital raised by CSE listed companies. Both measures rose to the highest levels ever recorded by the exchange.

Key Statistics

  • Trading volume in CSE listed securities climbed 138% compared to the third quarter of 2015 to 1.27 billion shares;
  • Companies listed on the CSE conducted 85 financings for gross proceeds totaling $109 million, an increase of 222% over the same period a year earlier;
  • The CSE finished the July-September quarter with 315 listed securities, 13 more than at September-end 2015;
  • Trading on the CSE platform in securities listed on other exchanges totaled 811 million shares, higher year on year by 59%.

Metrics for January through September also set records, with the 3.27 billion shares traded in CSE listed securities outpacing the total for all of 2015 (2.48 billion shares). CSE listed companies raised $226 million in the first nine months of the year, compared to $195 million in full-year 2015.

Trading volume continues to gain momentum in the fourth quarter, with a record 99,704,073 shares trading in CSE listed securities on October 6. Over the past 30 days the CSE has set new records for both daily trading volume and number of trades on seven occasions.

Several CSE issuers ranked among the most actively traded public companies in all of Canada during the quarter as investor interest increased across most industry sectors, and particularly for life sciences companies. The CSE also welcomed one of the few Initial Public Offerings completed in Canada this year when Glance Technologies Inc. (GET) made its trading debut on September 7.

Toward the end of the quarter, the exchange announced several important executive level appointments, and the addition of a highly experienced financial industry executive to its Board of Directions (http://thecse.com/en/news/cse-announces-senior-appointments-to-board-of-directors-compliance-and-listings-teams). The appointments were made to expand business development coverage and deepen the pool of expertise in the listings review group.

The CSE team remained hard at work connecting with entrepreneurs, hosting events in Vancouver, Calgary, Montreal and Toronto during the quarter, as well as presenting and exhibiting at the first ever Mines and Money conference held in North America. Senior exchange staff also travelled to China and Mongolia to continue outreach efforts in growing overseas markets.

The exchange is pleased to report that it will soon implement a new trading system technology featuring execution services for all equities listed in Canada. Related to this, a commitment to heightening the visibility of companies listed on the CSE through continued investor events and publications (including the CSE Quarterly magazine), plus support for market-making and other activities, will assist with further advances in volume and liquidity.

“The CSE is firing on all cylinders, with an improved capital markets backdrop helping our issuers to meet, and in some cases exceed, their financing targets,”

said Richard Carleton, CSE Chief Executive Officer.

“Having added several talented executives to our team, the CSE is positioned even more strongly to facilitate access to growth capital for entrepreneurs at the lowest possible cost, while providing liquid and accessible trading services for investors anywhere in the world.”

Strong second quarter for CSE leads to record first half of 2016

CSE is proud to present its most recent quarterly update video and press release below highlighting the record first half of the year at the Canadian Securities Exchange:

Growth in Trading Volume and Financings Highlight Productive Q2

CSE Posts Record Activity in First Half of 2016

The Canadian Securities Exchange (CSE) is pleased to release an update on activity of the second quarter of 2016, resulting in a record first half of 2016 highlighted by record trading volume, changes to listing requirements, and initiatives to help CSE issuers build on recent positive momentum in financing and other aspects of corporate development.

Key Statistics

  • Trading volume in CSE listed securities grew 64% compared to the first half of 2015 to 2.01 billion shares;
  • The CSE finished the first six months of 2016 with 328 listed securities, up 12.3% compared to the same period the previous year;
  • CSE companies conducted 178 financings for total gross proceeds of $123 million, up 28.4% over the first half of 2015;
  • Trading on the CSE in securities listed on other exchanges totaled 1.82 billion shares, an increase of 19.1%.

Growth in trading volume and financing proceeds during the first half of the year reflected both the increased number of securities listed on the CSE and noticeable improvement in Canadian investor sentiment across all sectors. The 2.01 billion shares traded in CSE listed securities in the first six months of 2016 puts the exchange well ahead of its pace of 2015, when a record 2.47 billion shares traded for the full year.

The CSE is proud to highlight a busy first half supporting issuer outreach to the financial community with a variety of activities. These include CSE Days held in major cities where executives enjoy the opportunity to present to audiences of financial industry professionals, retail investors and issuer peers.

The exchange also published new issues of its CSE Quarterly magazine, the most recent leading with a profile of the CSE’s top performing companies as measured by growth in market capitalization (the CSE Quarterly magazine can be viewed at https://blog.thecse.com/2016/06/01/cse-quarterly-issue-9-now-live/).

In addition, the CSE launched a new website in April. The modern format makes it easier for investors to gather information on CSE companies, and for both existing and prospective issuers to access the resources they need to make interaction with the exchange as efficient and cost-effective as possible. The CSE’s new website can be accessed at http://www.thecse.com.

Other achievements in the first half of 2016 included a comprehensive update to initial listing requirements. Proposed changes were published for comment in February and following feedback the modified rules were submitted for regulatory approval. The new requirements will become effective in Q3 upon publication of a notice from the exchange.

In the second half of 2016, the exchange will work to finish a review of continued listing requirements for listed companies. A list of proposed amendments will be published for comment in the near future.

“The CSE team is constantly working on new and dynamic ways to drive our mandate, which is supporting entrepreneurs and lowering the cost of capital for early stage companies,”

said Richard Carleton, CEO of the Canadian Securities Exchange.

“The activities we undertook in the first half of 2016 made our offering as an exchange stronger, as evidenced by growth in both trading volume and financings closed by our issuers. We will continue to support CSE listed companies with a variety of public efforts, and by working with regulatory authorities to improve the operating environment for Canadian financial markets as a whole.”

For the full-length semi-annual interview with CSE CEO Richard Carleton please click here for the transcript.

Continuing to Deliver: An Interview with CEO Richard Carleton

CEO of the CSE, Richard Carleton at CSE Day Toronto, Spring 2015
CEO of the CSE, Richard Carleton at CSE Day Toronto, Spring 2015

Earlier this month, Canadian Securities Exchange CEO Richard Carleton sat down for an interview with Peter Murray of Kiyoi Communications to discuss the latest developments at the CSE.  Among the topics covered were the performance of the CSE in 2015, the expanding international profile of the CSE, the landscape for early-stage firms raising capital as well as the upcoming enhancements to the CSE.

Below is the full text of their interview. (Questions from Peter Murray have been placed in bold for clarity):

1. Let’s start with a review of 2015 in general. The Canadian Securities Exchange issued a press release recently highlighting continued growth in issuers listed, trading volume and other key metrics of performance. Can you comment on these and is your success a sign of companies finding that financing and other business activities became somewhat easier last year?

Actually, I think it is an article of faith in the industry that it is more difficult at the moment to raise public capital than it has likely been in a generation. And that is not just for companies that operate in the commodities space — given what we’ve heard from the entrepreneurial community it has been a challenge for companies in all sectors to raise capital over the past 12 months.

That is why I believe it is important that despite those difficult conditions we grew considerably last year over the record pace we set in 2014. We had the strongest year ever in terms of trading volume and grew the issuer base by 20%, among other achievements. I think the underlying message of the exchange, which is that we work with a broad number of industry participants to deliver the lowest cost of public capital, really is resonating with the entrepreneurial community. And frankly it is perhaps as a result of the difficult times that we have seen our business continue to grow.

2. It was encouraging to see several companies based in the United States make their public trading debuts on the Canadian Securities Exchange in 2015. Why did they choose the CSE over the alternatives and how is the listing process different for a company domiciled outside of Canada?

As with a Canadian company, an international company has to become a reporting issuer in one of the Canadian provinces before they qualify to list on the CSE. That is accomplished in one of a variety of ways, which can include an offering or non-offering prospectus. At some point in the not too distant future there will be the opportunity to do so via an offering memorandum. There are also the traditional techniques of reverse takeovers and asset purchases that have been used in Canada for years for private companies to become public.

For US companies in particular, I think it is fair to say that regulatory costs and civil liability burdens have put a significant hole in their early stage public capital markets. Much of the early stage capital is coming from venture capital and private equity sources. Companies look at the public market as an exit, not necessarily as a means of raising growth capital. So, when people who need to raise from $5 million to $50 million to build a company understand that you can do that in the public markets in Canada, it becomes a very attractive option.

Additionally, I would point out that entrepreneurs who take their companies public can often retain more control over the future direction of the enterprise than if they accept investment from a venture capital or private equity firm. You often see venture capital and private equity investors exert a very heavy hand on the future direction and management of businesses. From a cost perspective and that of the ability to control your destiny, people around the world find Canada a very compelling place to raise growth capital.

3. Can you give us some feedback on your interaction with issuers in 2015? And looking forward, what do you sense their goals and expectations are for 2016?

Let me start in more general terms by highlighting the results of a series of events we instituted in 2015 called CSE Days. These took place in Vancouver, Toronto, Montreal and New York. We invited issuers from each of the Canadian cities to spend a day with us talking in the morning about issues of specific interest to listed companies. We also focused on helping companies improve their presentation skills by having coaches work with their executives. We concluded the day with a mixer event where the corporate finance community was invited to meet the issuers and the keystone was the companies delivering two-minute pitches to the audience. Our issuers universally found these days to be helpful. They also found it worthwhile to meet not just their peers in the CSE issuer group, but to be introduced to a broader cross-section of the advisors and corporate finance professionals working in each city.

As far as what issuer goals and expectations are for 2016, I don’t think anybody is expecting conditions to change dramatically for the better in the commodities markets. The belief seems to be that it will continue to be a challenging environment for early stage companies of all kinds to raise capital. That being said, it is abundantly clear that there is more investor interest in technology, biotechnology and biopharma undertakings. Through the applications we are receiving we see what seems to be a general rotation of investor interest into those sectors.

4. Are there any other key developments from 2015 to highlight?

One of the first things the Canadian Securities Exchange decided it had to deliver was full electronic access to all of the discount brokerages operating in Canada, given that retail investors play such an important role in junior capital formation. It actually took until spring of last year to bring on board the last of the bank discount brokerage firms. And we saw as each of them came on over the last couple of years, significant enhancements in both the trading activity and market quality. That was a really important milestone, not just for the organization but for the issuers, and one I am pleased to say that we finally completed last year.

5. As we enter 2016, what are the trends you hear from the investment community, and how will these affect the CSE and its issuers? How can the CSE influence those trends?

As we start 2016 there is no shortage of concerning news. I recently heard Ian Russell, President and CEO of the Investment Industry Association of Canada, present the results of his organization’s CEO survey conducted in November, where they spoke to almost 200 of the chief executives of the registered investment dealers in Canada. The picture they painted was quite bleak. They anticipate that costs, chiefly driven by regulatory initiatives, will outstrip any revenue growth, and that there will continue to be a large number of independent dealers in financial distress as a result of difficulties in traditional strengths of the Canadian economy.

In working with that community we continue to look for ways to reduce their cost of operating wherever we can, to try to bring more business opportunities to the dealer community and ideally lower their cost of operations.

There are definitely things we can do as an exchange as well and international initiatives are a good example. When we attract companies from overseas to list in Canada, they are going to use Canadian dealers, lawyers, accounting firms and investor relations professionals to manage their go-public process. So we are bringing net new business opportunities to the local community.

In addition, we certainly are going to be part of the industry discussion about ways to try to improve the trading process in a manner that protects enterprise values for issuers and their investors.

6. Let’s discuss one of your international initiatives. The Canadian Securities Exchange signed a Memorandum of Understanding with the Taipei Exchange in November, and this comes on top of a close working relationship with the OTC Markets group in the United States. What benefits are there to the exchange itself from such international relationships? How about for issuers?

Really, the two questions are intertwined. We find that when companies list in jurisdictions in addition to Canada and have raised money in those jurisdictions, their liquidity profile improves overall. We see tighter spreads and deeper markets for domestically listed companies that are also quoted on the OTC market in the US or Frankfurt in Europe.

Many Canadians aren’t aware that Taiwan is a very dynamic economy heavily involved in precision manufacturing. Taiwan has a sophisticated material science community and in fact enjoys a large positive trade balance with the People’s Republic of China.

The issue that business people in Taiwan have, which is very familiar to Canadians, is that notwithstanding that expertise, it is a relatively small economy, with a population of some 22 million.

As a result, Taiwanese companies are looking for access to the global economy and over the years, for a variety of reasons, have looked to the United States for public capital and to establish that North American presence.

The CSE has always had a strong proposition for companies looking to access North America but at a significantly lower cost and regulatory footprint than they would see in the United States. We had an opportunity to meet with a variety of members of the Taiwanese financial community, including the Taipei Exchange, which is the medium and small enterprise exchange there. We have agreed to compare notes and look for opportunities to promote our issuers in the Taiwanese market, while also searching for opportunities for issuers on their market to potentially list in Canada and obtain access to North America.

For our issuers it is really the same thing. Taiwan has a sophisticated marketplace which is prepared to invest in early stage stories, especially in the technology space. We have a lot of companies that are looking to obtain an Asian presence, and just as we are a low-cost alternative to the United States, there are a lot of advantages for companies to use Taiwan as their stepping stone into the Asian market.

7. The regulatory landscape is constantly developing. Anything to comment on with regard to change at the CSE or ongoing collaboration with regulatory authorities?

We will be publishing proposed changes to our listings criteria in the next few weeks. Keep in mind that we have not amended the thresholds to qualify for listing since the material was originally filed with the Ontario Securities Commission in 2002. We will be raising the bar, but I don’t think the new standards would have had an impact on companies we have listed over the last couple of years had they been in place when those companies applied to us.

We will also likely introduce continued listing requirements that will entail certain enterprise value, size and business activity with the notion that the companies listed on the exchange must have a workable business plan and sufficient capital on hand to fund the programme for a reasonable length of time.

Another initiative is cooperation with the market-making community in Canada to see how we can incent their participation in our markets to a greater degree than happens currently. This will be with a view to ensuring there is a meaningful, two-sided market for every security listed on the Canadian Securities Exchange. It is a real challenge for junior markets – and this is true around the world – to provide for appropriate levels of liquidity for early stage companies, but we have a dealer community in Canada that is working with us to come up with solutions.

8. How do you continue to define the CSE in 2016? How does it differentiate itself from the other exchanges that small-cap and/or early stage companies might consider when they are thinking about going public?

It may sound like a cliché, but we always bring everything back to our overall mission, and that is to deliver the lowest cost of public capital to entrepreneurs looking to tap the Canadian equity markets. With that very clear mandate in mind we can measure all of the activities we are contemplating and if we are making progress in that direction then we know we are on the right track. We believe that not just given our fee structure but the overall cost structure for companies listing on our exchange, that they are in fact achieving the lowest cost of public capital as things stand currently.

We also need to continue to emphasize that the CSE serves entrepreneurs and that we have built an ecosystem that puts them in the middle. We are an independent exchange guided by the voice of the entrepreneur and that truly sets us apart.

CSE Semi-Annual Review: Full Text of Interview with Richard Carleton

The following is the full text of an interview conducted between CEO of the CSE Richard Carleton and Peter Murray of Kiyoi Communications. For ease of reference, subject headings have been added and can be navigated to using the list of links below.

Content By Topic – Interview with Richard Carleton

Performance in Early 2015

PM: In terms of listing activity, how good a start is the exchange off to in 2015?

RC: We are tracking to plan so far, and we had some aggressive forecasts for the full year on our listing side. We are grateful to be hitting those targets because while there has been some improvement, we know it continues to be a challenging funding environment for junior capital in Canada. We are working with regulators and other groups constantly to ensure we provide an attractive environment that lowers the cost of capital and enables strong management teams to move their companies forward.

Revisions to Plans of Arrangement

PM: In January, the exchange released new guidance regarding plans of arrangement. This is important, as many CSE issuers listed via plans of arrangement and there are surely more intending to go this route. The guidance essentially states that plans of arrangement remain acceptable but in significantly fewer cases than before. Can you discuss with us the motivation behind this change?

RC: We were concerned that as the plan of arrangement emerged as a popular means of taking companies public without having to go through a prospectus process, in a number of cases it was basically being used to create shell companies. They met our listing criteria, but it appeared to us that there was in fact no real business being vended into the company that was created through the plan of arrangement, nor any actual intention for it to be anything other than a shell that would immediately begin looking for a counterpart for a reverse takeover type of transaction. The number being created gave us concern that this was something that really wasn’t in the public interest, and that was what led us to issue the guidance in January. We have also worked very closely with the securities commissions, and particularly those in B.C., Alberta and Ontario, on the concerns we have.

PM: What influence do you think these tighter rules surrounding plans of arrangement will have on the pace of applications to list on the CSE?

RC: People who have businesses that need capital to grow are going to continue to come to us because of our service proposition. Certainly, for companies with genuine business prospects and for entrepreneurs looking to raise money it is going to have little if any influence on those companies. We will continue to see large numbers of these types of companies approach us and apply for listing.

PM: If a company does not qualify for a plan of arrangement then one obvious route to a public listing is to create a prospectus. Can you discuss some of the advantages and disadvantages of using a prospectus to list on the CSE?

RC: There are many benefits to taking this approach to the public capital markets, particularly where a company does not have any track record of disclosure. Here, I am thinking of a brand new start-up that has no history of filings, no history of audited financials, really no history of disclosure on any level. In many respects the prospectus model is probably the best way for such a company to turn to the public markets.

Another advantage is that once you have cleared the approval process with one of the commissions, the listing process with us becomes very simple. Basically, you can take the disclosure materials that were created for the prospectus and convert that into the listing statement, which is the main disclosure document the company relies upon when they list with us. So there is not really any duplication of effort. Much of the same information goes into putting together a prospectus for the commission to approve as goes into a listing statement.

In terms of approaching investors, it can only enhance the confidence an investor would have in a company if the company has been cleared by a securities commission. And another important point, of course, is that a company’s fund raising efforts are no longer limited to accredited investors. With a prospectus, you can market your offering to a much wider range of investors.

The disadvantages are the time and expense associated with putting the document together and getting it approved. Now, the corporate finance groups at the securities commissions in Canada are not as busy as they were when small-caps were in their heyday, and feedback from companies that have been through the prospectus process recently is that it is actually fairly quick. So the time component may not be as much of a concern as it once was. On the cost side, I believe the legal community is exceedingly aware of, and sensitive to, the cost concerns that clients have and it is fair to say that they have been helping to address the situation.

So-called Zombie Companies

PM: More than a few thought leaders in the Canadian financial community have spoken recently about so-called zombie companies — issuers that raise small amounts of capital to continue meeting listing requirements but with virtually no financial capacity to further a business and create value for shareholders. How did this situation come about and are zombie issuers a problem on the CSE?

RC: The problem came about as a result of the last great boom in mining finance. Probably 4 or 5 years ago, as the price of gold approached its all-time high of around $1,900 per ounce, we created hundreds of junior gold exploration companies in Canada. At the same time we had companies created to pursue opportunities in rare earths, base metals – really, across the board in terms of mineral exploration. All told, 800 to 900 companies were created in a relatively short period of time.

All of these companies raised money to go through the first or second phase of an exploration program, and a large percentage of them have spent virtually all of that money. There is a long tradition in Canada that when you have a struggling public company you do everything you can to raise the money to at least pay your lawyers and your auditors, and cover the filing fees. This is done to preserve the potential opportunity for the shareholders, but also to preserve the shell value of the company and in many cases to ensure the company retains title to its mining assets.

At the CSE, one of the reasons we don’t have a lot of those companies is because we missed that boom. As a result, our companies tend to be younger and the ones in the mining space are ones that are actively exploring now. And some of our companies that began in mining exploration have elected to find opportunities outside of the mining space.

But as far as having a large number of issuers who are in a negative working capital position and barely staying afloat, that is not something we see a lot of on the Canadian Securities Exchange.

Connecting Canadian Online Brokerages

PM: In February, TD Direct Investing became the latest discount broker to provide its customers with online access to the CSE trading platform. With the addition of TD Direct, virtually all of the leading discount brokers in Canada now provide seamless online access to trading in CSE shares. Which brokers have yet to provide this service to their customers, and are they close to doing so?

RC: We just added BMO InvestorLine and they were the last major Canadian bank platform to join the CSE community. At this point the only large discount brokerage that does not have connectivity is Disnat (Desjardins Online Brokerage). We are working with Disnat and one of the platform vendors supporting their service to see what we can do to expedite access for Disnat customers. Otherwise, we have all of the independent Canadian discount brokers and all of the major Canadian bank discount brokers connected to our system. For all intents and purposes, there are no impediments for Canadian investors to trade CSE-listed stocks online.

Launching the CSE Composite Index

PM: The CSE introduced its own stock price index toward the end of February: the CSE Composite Index. How many companies are in the index and what are the inclusion criteria? Why did the CSE decide that now was the right time to create its own index?

RC: We have quite a diverse population of issuers and a number of groups had been asking us to put together a capitalization-weighted index, to see what the performance would have looked like over the last few years and to compare performance with other small-cap indices in North America. There have even been suggestions that at some point, as our organization and the companies included in our index mature and grow, the index could serve as the underlying for financial products such as ETFs or structured products.

For a composite index, the general rule of thumb is that you would like to have about 80% of the market capitalization of the exchange represented. As of the most recent rebalancing, our index contains 65 companies that represent close to 80%. We will make sure that index levels and related information are available to investors not just through our website but also through data vendors such as Bloomberg and Thomson Reuters, as well as services such as Google and Yahoo. The index is an excellent measure of the development and growth of a broad cross-section of Canadian small-cap public companies.

Insights from PDAC 2015

PM: The CSE took part in the Prospectors and Developers Association of Canada (PDAC) convention at the beginning of March. Did you come away from this year’s event with any insights useful to issuers and investors?

RC: I was impressed with the amount of positive energy this year. Going into the show I think a lot of people felt the mood was going to be fairly depressed, but it actually was quite the opposite. There was a lot of very positive energy and deals were getting done. We had a tremendous amount of traffic to our booth at the show. I came away with the sense that the Canadian mining community continues to be aware of the short-term challenges, both of low commodities prices and difficulty in raising additional funding to pursue projects. But these are strong and resourceful people we are talking about here, and most are optimists at heart. As a group, they seemed quite upbeat.

Companies Raising Capital

PM: Large-cap stocks continue climbing to new all-time highs, and while things are improving for small caps, it can still be difficult for smaller companies to obtain financing under reasonable terms. That having been said, quite a few companies on the CSE have completed sizeable capital raises over the past 12 months. How are they accessing that capital? Who are the investors?

RC: We don’t necessarily note who the investors are when a company completes its financing, although in working with companies we do become aware as to who some of the large backers are. It is my impression, and I have to say that this is more anecdotal than scientific, that it remains a mix that includes institutional investors who devote a portion of their portfolios to small-cap stocks, accepting higher risk in pursuit of higher returns. These are the ones who do their homework and work with good management teams and tend to support the right stories. We also see lots of high-net-worth investors and sometimes smaller retail investors.

If you had asked me a year ago, the majority of the funding would have been raised with the assistance of the Exempt Market Dealer community. But this year we see more of the capital coming from the traditional dealer community. That is good because they are an important part of the ecosystem for small caps in Canada and the fact that we do seem to be running into these groups from the traditional dealer community more often is a positive indicator.

Companies Choosing to List on the CSE

PM: Some of the new listings on the CSE come from companies listed on a different exchange choosing to move to the CSE. Can you comment on this and do you see it continuing?

RC: I think you can boil it down to superior service and cost-efficiency. And based on some of the conversations we had at the PDAC I would expect to see this continue.

The other area that will increasingly become a focus for us is Canadian domiciled companies that did a public offering over the counter in the United States. Many companies in the life sciences and biotech sectors turned to the United States markets in the belief that there were not enough investors in Canada interested in that space for them to raise money. Well, now that the offering is complete you still wind up with a number of the officers and directors resident in Canada and they may not be satisfied with the levels of liquidity available to them over the counter in the United States. We would like to see some of those issuers join us and improve their secondary market liquidity. The other thing is to become part of a regulated market where there are continuous disclosure requirements and for these companies to build a disclosure record that can lower the cost of capital when they turn to capital markets in the future. We want to see some of the companies come back across the border, if you will.

Exchange Competition in Canada

PM: The exchange space in Canada is as competitive as ever. With high-level changes at the TMX (new CEO and vision) along with the launch of Aequitas NEO Exchange, where does this leave CSE in the competitive landscape?

RC: We are very comfortable with where we sit in the competitive landscape. The drive to deliver the lowest cost of public capital to Canadian reporting issuers is hard coded into the CSE’s DNA, and that advantage will always find an eager audience. Financing business growth via the public markets is one of Canada’s key strengths; the CSE’s growing market share of new listings is indicative of our importance in this space. The exchange will continue its efforts to improve the lot of issuers and dealers who service this market by delivering services designed to improve the liquidity profile of our issuers and address cost issues faced by our dealers.

Aequitas was founded by a number of large dealers and buy side firms to address their particular problems. On the trading side, they are attempting to improve the ability of dealers and institutions to buy and sell large volumes of stock without undue market impact. On the listing side, they’ve clearly set their sights on the TSX’s franchise in exchange traded funds and structured products.

The TMX Group has 4 equities trading facilities, an options and futures market, two clearing and settlement agencies, a transfer agent, an investor relations firm, an energy trading firm, a private company market, and, most recently, a live cattle trading facility. With our complete attention and focus devoted to the early stage community, we are confident that the CSE can continue to deliver a compelling service proposition.

Part 2: The Year in Review and a Look Ahead with CSE CEO Richard Carleton

CSE CEO Richard Carleton
CSE CEO Richard Carleton

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.

The Year in Review and a Look Ahead with the CSE CEO Richard Carleton – Part 1

CSE CEO Richard Carleton
CEO of the CSE Richard Carleton

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.

(interviewed conducted with Peter Murray)

CSE Enjoys Record Year in 2014, International Outreach and Trading Initiatives Help Shape Agenda for New Year

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.

Over 100 companies raised capital on the CSE during the year, averaging $1.4 million per issuer. Premier Diagnostic Health Services Inc. (CSE:PDH), Tier One Capital Limited Partnership (CSE:TLP.UN), Pivotal Therapeutics Inc. (CSE:PVO) and Helius Medical Technologies Inc. (CSE:HSM) each raised more than $7 million. Novo Resources Corp. (CSE:NVO) and Supreme Pharmaceuticals Inc. (CSE:SL) were among others that completed significant financings. Supreme was also an exchange volume leader in 2014, alongside other companies in the medical marijuana sector such as Abattis Bioceuticals Corp. (CSE:ATT) and Affinor Growers Inc. (CSE:AFI).

“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.”

Following the Money: Panel Discussion on Raising Capital in Canada

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.

Strength in Numbers: CSE Pushing Towards Another Record Performance

As Canada’s “Exchange for Entrepreneurs”, one of the key goals for the Canadian Securities Exchange (CSE) is to create a favourable capital formation environment for our listed companies.

The numbers to date this year demonstrate that we are making good progress towards this goal: 82 companies have completed 135 financings raising a total of $104 million. Leaving aside one monster deal done some years back by one of our companies, this is the first time that CSE-listed companies have collectively raised more than $100 million in a single calendar year. It’s particularly gratifying that we reached this milestone with more than a quarter to go.

Combined with record trading numbers, and over 50 new securities listed this year it is clear that the exchange’s message is resonating with businesses looking to the public capital markets for investment.

Here is the quarterly breakdown for funds raised for 2014 YTD as compared with 2013:


More than Just Numbers

According to James Black, VP of Listings Development “this is a great milestone for the exchange – further proving that our proposition for the Canadian capital markets is very much in-line with the needs of companies seeking to raise capital for exciting early-stage businesses.”

Among the names of companies that successfully raised additional financing this year were Pivotal Therapeutics (PVO), Helius Medical Technologies (HSM), Novo Resources Corp. (NVO), VoodooVox Inc (now UpSnap – UP) and RESAAS Services Inc (RSS).

The companies raising money on the CSE come from a broad cross-section of industries.

There are signs of life in the beaten down mining sector, with 31% of the funding for transactions having been completed in the space. In addition, the technology sector has accounted for almost half of the activity (see chart below).


Staying the Course

With trading activity and financings pushing record levels, the CSE is hitting its stride as an exchange that more and more public companies are turning to as the best option to access capital. Underpinning the shift is a combination of factors that include pricing, simplicity and service.

For many public companies, especially early stage ones, the prospect of being able to effectively allocate resources to fund company activity is appealing. As the CSE’s CEO Richard Carleton put it:

“This funding milestone is a clear indication that we are supporting companies’ capital raising needs by providing the most efficient public market in Canada for raising money. Companies raising capital on the CSE are subject to fixed, low-fees, ensuring every dollar raised flows back to their business and not to the exchange”

Going into the final stretch of 2014, the momentum for the CSE looks good in all corners of the business. Best of all, entrepreneurs are gaining access to capital and are now better able to put that capital to work driving innovation and building successful enterprises.

That is the kind of good news story that everyone enjoys hearing again and again.


The CSE is Exhibiting and Speaking at Upcoming Canvest 2014 in Toronto

The Canadian Securities Exchange (CSE) is pleased to announce that it will be exhibiting at the upcoming Canadian Investor Conference in Toronto (Canvest) on September 25-26. This show will be a slight shift from the usually scheduled Toronto Resource Investment Conference as it will be broadening the scope of the show across the resource and technology sectors.

The CSE is scheduled to be housed at exhibit booth #809. We applaud the organizers at Cambridge House International for organizing a show that presents investment opportunities across several sectors as this is certainly tailoring the show to the appetites of today’s investment community in Toronto.

Richard_Carleton_canvestAdditionally, CSE CEO Richard Carleton will be participating on the panel titled, “Alternative Financing Methods” along with OTC Markets Group CEO Cromwell Coulson – we are looking forward to hearing their insight regarding the evolution of North American capital markets.

Mark your calendars for this show and we will be sure to see you there. Pre-registration is now open by following the link here.

See you in September!