Draft prospectus and related registration exemptions for the Cooperative Capital Markets Regulatory System (CCMRS) don’t do enough to streamline markets, the Portfolio Management Association of Canada (PMAC) says.
In a submission to the CCMRS, the industry association said it’s concerned about “numerous jurisdictional exemptions” that “may represent a re-packaging of existing regulations with minimal additional benefit.”
Rules that aren’t nationally harmonized “may do little to streamline regulation and [could] lead to operational and financial efficiency,” PMAC said.
The draft regulations, published on May 8 by the CMR jurisdictions and the government, are a proposed single set of prospectus and related registration exemptions that would apply in participating provinces and territories on launch of the cooperative system.
The participating provinces and territories, or CMR jurisdictions, are British Columbia, New Brunswick, Ontario, Prince Edward Island, Saskatchewan and Yukon.
IIAC, in its submission, said it supports efforts to harmonize the different exemptions, where possible.
“In respect of specific prospectus and registration exemptions, we appreciate that the process of choosing between the approach of various jurisdictions involves trade-offs between interests of the various constituents,” IIAC said.
IIAC added that its members don’t have strong views on most of the exemptions, but the association suggested a few be reconsidered.
One is the offering memorandum exemption. IIAC wants the acquisition amount for eligible retail investors limited to $30,000 unless they received advice on the investment’s suitability from an IIROC member or portfolio manager. “We do not believe that exempt market dealers have appropriate proficiency or oversight to advise retail investors for amounts in excess of the $30,000 limit,” the submission said.
Another is the security holder exemption, which is based on Ontario’s approach. IIAC said the exemption could harm capital raising for small companies in British Columbia. “Although it is important to harmonize rules, it is also important to recognize differences in needs of various types of issuers and ensure harmonization does not come at the expense of capital raising,” the submission said.
A backgrounder document on the draft regulation says the cooperative system won’t be ready to launch this year, as the Supreme Court of Canada is considering the constitutionality of the system’s elements. The appeal was heard by the Supreme Court on March 22, 2018.