CSA proposes national framework for syndicated mortgages

CSA is proposing changes that would harmonize Canada’s regulatory framework for syndicated mortgages.

The proposed amendments, published for comment on Thursday, would remove the prospectus and registration exemptions that currently apply to syndicated mortgages in certain jurisdictions.

“The proposed amendments introduce a common regulatory approach for syndicated mortgages across Canada,” said Louis Morisset, CSA chair and president, and CEO of the Autorité des marchés financiers, in a statement. “The measures also enhance investors’ ability to make informed decisions when purchasing these investments.”

Read: Protect clients from risky syndicated mortgages

In a backgrounder explaining the changes, the regulatory body says certain jurisdictions have seen “a significant increase” in syndicated mortgages in connection with real estate developments, which can raise investor protection concerns, “particularly when sold to retail investors.”

CSA is proposing revisions to the offering memorandum exemption in order to provide heightened disclosure for investors. “Issuers would be required to deliver property appraisals prepared by an independent, qualified appraiser,” the release says.

Read: FSCO issues $1.1 million in penalties over syndicated mortgage investments

The amendment also looks to enhance monitoring of the market by excluding syndicated mortgages from the private issuer exemption. Syndicated mortgages would instead be offered under exemptions “that may be more appropriate for this type of security,” the release says, and which generally have reporting requirements.

The changes are reflected in proposed amendments to National Instrument 45-106 Prospectus Exemptions and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, as well as changes to Companion Policy 45-106CP Prospectus Exemptions. Read the proposed amendments here. Comments should be submitted in writing by June 6.

Staff

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