The CSA have announced that they are extending the time for public comment on their consultation paper regarding the effects of recent credit market turmoil on ABCP markets in Canada to February 16, 2009. For more information on the consultation paper, see our post of October 6, 2008. The comment period was originally set to expire on December 20, 2008.
Daniella Laise | 
PDF Version | Version française
On August 12, 2008, the Minister of Finance approved amendments to National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106), that came into force September 8, 2008 (the NI 81-106 Amendments). The NI 81-106 Amendments respond to the potential impact on investment funds following the introduction of Section 3855 Financial Instruments -- Recognition and Measurement of the Canadian Institute of Chartered Accountants (CICA) Handbook (section 3855).
Background
In 2005, the Accounting Standards Board of the Canadian Institute of Chartered Accountants introduced section 3855, which applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2006. Section 3855 provides more specific guidance on how to measure financial instruments at fair value for financial statement purposes when fair value measurement is required. To comply with the guidance in section 3855, investment funds would have needed to change how they value a large portion of the securities in their portfolios, particularly those that are traded on a recognized exchange. For example, those securities traded on a recognized exchange would need to be valued at the bid or ask price on each valuation day, as opposed to valued at the closing price, which is predominantly the current valuation practice.
Continue Reading...Earlier this week, the risk management and financial research company RiskMetrics Group (formerly Institutional Shareholder Services or "ISS"), published its voting policies for the 2009 proxy season. According to RiskMetrics Group, the policies are based on a broad consultative process, which included analysing corporate governance issues and soliciting investor input on identified issues through international surveys. The three main areas of focus of the published policies are executive compensation, board structure and audit practices. Of particular interest, RiskMetric’s Canadian policy update states that while it has previously taken a case-by-case approach to shareholder “say-on-pay” proposals, it will now generally recommend an advisory vote for shareholders on pay. The new policies will be effective for shareholder meetings held on or after February 1, 2009.
The TSX Venture Exchange recently announced that given current market conditions, it will consider granting issuers temporary relief from certain policies on a case-by-case basis until March 31, 2009. Specifically, the Exchange may refrain from downgrading an issuer if it fails to meet continued listing requirements; capital pool companies may apply for an extension to complete a Qualifying Transaction; and issuers may be able to issue shares at a price of less than $0.05 per share under certain circumstances. The Exchange also announced that it would be making changes to a number of its policies in order to streamline them and to remove certain differences between Tier 1 and Tier 2 issuers. The latter changes are effective December 15, 2008.
On November 24, 2008, the TSX published a staff notice to provide guidance on (i) the adoption by listed issuers of securityholder rights plans with triggering thresholds of less than 20% and (ii) special year-end distributions by trusts.
Following its annual review of its Listing Fee Schedule, the TSX has made certain adjustments to its listing fees effective January 1, 2009. The fee review included a consideration of the difficult market environment currently facing many TSX-listed issuers and the need to be competitive with other major exchanges.
The amendments to the Listing Fee Schedule include changes to:
Original listing and additional listing fees (other than for security-based compensation arrangements) remain unchanged.
As the revised Listing Fee Schedule will be effective as of January 1, 2009, the new listing fees will apply to applications, transactions and notices filed on or after January 1, 2009.
On November 14, 2008, the President’s Working Group on Financial Markets (PWG) announced a number of initiatives intended to provide regulatory oversight and prudent management of the over-the-counter derivatives market in the U.S. These initiatives include the implementation of central counterparty services for credit default swaps and the signing of a Memorandum of Understanding between the Federal Reserve, SEC and the Commodity Futures Trading Commission with respect to information sharing and consultation regarding CDS central counterparties issues. The PWG also announced a set of policy objectives to “guide efforts to address challenges associated with OTC derivatives.”
On November 14, 2008, the Canadian Securities Administrators (CSA) published CSA Staff Notice 31-309 to provide an update on the status of proposed National Instrument 31-103 Registration Requirements. NI 31-103 represents the CSA's proposal to reform the registration regime across the country by harmonizing and streamlining registration and related requirements. An earlier version of proposed NI 31-103 was published by the CSA in February 2007 and after industry comments were considered, the CSA introduced an amended version in early 2008. Both proposals were subject to a great deal of interest by various market participants, as demonstrated by the 300 comment letters generated from the most recent version of proposed NI 31-103.
As such, the CSA has stated that they will need more time to develop their final proposal as they are still in the process of reviewing the many comments submitted. The target date for implementation of NI 31-103 has, therefore, been delayed and will no longer occur on March 30, 2009. The CSA expect their work to be completed by April 2009, at which time they plan to provide a timetable for the implementation of the new regime.
For more information on registration reform, see our Registration Reform information page.
The Department of Finance has now released the terms of the Canadian Lenders Assurance Facility. For more information on the Facility, see our post of October 23, 2008.
Lewis Smith and Justin Parappally | PDF Version
The Government of Canada has introduced new measures to provide liquidity to Canadian financial institutions. Earlier measures are described in this post of October 23.
Today, the Ministry of Finance advised that the mortgage-backed securities purchase program announced previously will be increased from $25 billion to $75 billion. $12 billion in purchases have already been made from the first tranche of the purchase program, with an additional $7 billion expected to be purchased in an auction taking place today. The final purchases from the first tranche are expected to take place on November 21.
Continue Reading...This morning, the Department of Finance announced a plan to add up to $50 billion to its Insured Mortgage Purchase Program. The additional investment brings the maximum value of securities purchased through the CMHC to $75 billion. Meanwhile, the base commercial pricing of the recently-announced Canadian Lenders Assurance Facility will drop by 25 basis points and the 25 basis point surcharge for insurance will also be waived until further notice. The latter changes are intended to make the Facility “more competitive with similar programs offered in other countries.”
Following the completion of its recent testing phase, Alpha Trading Systems (Alpha), a Canadian alternative trading system (ATS) has announced that it will formally launch on November 7, 2008. Owned by nine major Canadian financial institutions, Alpha will operate as a visible continuous auction market and initially support trading of ten TSX-listed securities. Its stated objective, however, is to have all TSX and TSXV-listed securities available for trading on its platform by the end of the first quarter of 2009.
Alpha is the latest new marketplace to join the Canadian landscape, which also includes Pure Trading, Omega ATS, Chi-X Canada and Blockbook.
PDF Version | Version française
On November 3, 2008, the TSX issued Staff Notice 2008-0005 relating to the following provisions of the TSX Company Manual: Section 628, relating to normal course issuer bids (NCIBs), Section 707, relating to the Remedial Review Process, Part 1, relating to the definition of “market price” and Section 604, respecting securityholder approval requirements for issuers experiencing a financial hardship.
With respect to NCIBs, the Staff Notice grants temporary relief from the daily purchase restrictions to increase the amount that an issuer can purchase under an NCIB from 25% of the average daily trading volume to 50% of the average daily trading volume. Similar relief has also been granted to participating organizations from corresponding provisions of the TSX Trading Rules. The Staff Notice also provides temporary relief to issuers subject to a remedial review by extending the time period that an issuer has to remedy deficiencies that triggered a delisting review from 120 to 210 days. The temporary relief relating to NCIBs and remedial reviews will be effective from November 3, 2008 through to March 31, 2009.
The Staff Notice also clarifies that while the TSX Manual defines “market price” as the 5 day volume weighted average trading price of listed securities, it also provides that this 5 day period may be adjusted based on relevant factors if such price does not accurately reflect the current market price of securities. Given current market conditions, the Staff Notice clarifies that the TSX may be willing to use a shorter time period for making this calculation on a case-by-case basis for the purposes of pricing securities for private placements, including warrants.
Finally, the Staff Notice also reminds issuers that Section 604(e) of the TSX Manual provides an exemption from securityholder approval requirements for issuers experiencing serious financial hardship, which exemption may be more relevant to issuers under current market conditions.
Enter keywords:
