The Ontario Securities Commission, the Autorité des marchés financiers, and the Canadian Investment Regulatory Organization have approved an experimental research project to review a novel financial services platform.
“Project Samara” will be conducted by a consortium consisting of RBC Dominion Securities Inc., a member of RBC Capital Markets, RBC Investor Services Trust, the TD Securities division of the Toronto Dominion Bank, TD Securities Inc., the Bank of Canada, and Export Development Canada. The project will assess an RBC-run platform that uses distributed ledger technology to support end-to-end transactions throughout the bond lifecycle.
These transactions include “tokenized” bond issuance by EDC, bidding, coupon payment, redemption, secondary trading, and the settlement of bond trades using digital representations of wholesale Canadian dollars created and managed by the BoC on the distributed ledger. The consortium will publish a report with its findings on whether the distributed ledger technology is beneficial to bond issuance and trading.
“Canadian securities regulators are supporting responsible innovation in the capital markets by granting novel exemptive relief for tokenization pilots where investor protection and market integrity are appropriately addressed,” said Leslie Byberg, OSC’s executive vice president for strategic regulation, in a statement. “We welcome industry proposals on tokenization initiatives that leverage these regulatory testing environments to enhance the competitiveness of Canadian markets.”
Financial institutions and asset managers have rolled out tokenized products; central banks and regulators are also considering innovation support methods that protect investors and financial stability. The Canadian Securities Administrators recently debuted Project Tokenization, which involves working with stakeholders to investigate issues resulting from tokenized products use and their intersection with Canadian securities laws.
“The regulatory platforms we provide will support the testing of novel market structures, business models and products by providing appropriate and tailored regulatory pathways to bring new platforms and products to market in Canada,” said Hugo Lacroix, AMF’s superintendent of securities markets and distribution.
The OSC, AMF, and CIRO have established the OSC LaunchPad, AMF Laboratory, and InnovateSafe (CIRO) as regulatory testing environments.
The OSC defined tokenization as the creation, issuance, or representation of assets using distributed ledger technologies.