The Canadian Securities Administrators has launched a regulatory sandbox, an initiative that supports businesses seeking to offer innovative products, services and applications.
The CSA regulatory sandbox is open to business models that are truly innovative from a Canadian market perspective. The CSA will assess the merits of each business model on a case-by-case basis, and businesses that register or receive relief could be permitted to test their products and services throughout the Canadian market.
Examples of eligible business models are:
- online platforms, including crowdfunding portals, online lenders, angel investor networks or other technological innovations for securities trading and advising;
- business models using artificial intelligence for trades or recommendations;
- cryptocurrency or distributed ledger technology based ventures; and
- technology service providers to the securities industry, such as non-client facing risk and compliance support services (also known as regulatory technology or regtech).
To apply to the CSA regulatory sandbox, businesses can contact their local securities regulator, which will consider its eligibility and refer the business if it provides genuine technological innovation in the securities industry. As part of the application process, CSA staff may request live environment testing, a business plan and demonstration of potential investor benefits (as well as how investor risks are minimized).
Local securities regulators can also provide early stage guidance on the application of current securities regulatory obligations, as well as information and support.