CSA reviewing rules for pre-planned securities trades

By James Langton | October 24, 2019 | Last updated on October 24, 2019
1 min read

Canadian securities regulators are reviewing the use of automatic securities disposition plans (ASDPs) to ensure they’re being used as intended and that there’s adequate oversight.

ASDPs allow corporate insiders to arrange pre-planned securities trades through an arms-length administrator.

“The CSA’s review aims to ensure that ASDPs remain a legitimate mechanism of trading by corporate insiders and do not undermine the fairness of our capital markets,” said Louis Morisset, chair of the Canadian Securities Administrators and president and CEO of the Autorité des marchés financiers (AMF), in a statement.

The CSA says its review will also look at whether the regulators’ approach to ASDPs should be enhanced, as there’s currently no national framework governing these plans.

“Specifically, the review will examine whether these plans provide appropriate constraints on trading activities of insiders and will be informed by relevant international developments in this area,” the CSA said.

The regulators will also look at whether they should continue to exclude trades done under ASDPs from insider reporting requirements.

Until the review is complete, the CSA says that “staff are unlikely to recommend new insider reporting relief for trades done under ASDPs.”

Last year the AMF launched an investigation into trades carried out under Bombardier Inc.’s ASDP and ultimately found no wrongdoing by the company’s executives.

However, the regulator also said that the company should reconsider using an ASDP, as the circumstances that prompted its investigation “led to a negative perception of the plan.”

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.