The Canadian Securities Administrators (CSA) has urged stakeholders to provide their input on its recently released notice and request for comment in connection with a proposed amendment to part nine of National Instrument 55-104 (NI 55-104) on insider reporting requirements and exemptions.
In its news release, the CSA noted that the 60-day comment period for this proposal ends on June 8.
The CSA explained that the insider reporting exemption in paragraph 9.7(f) of NI 55-104 applies to reporting insiders who acquire or dispose of securities of an investment fund that may hold securities of the reporting insider’s reporting issuer.
As a condition in the exemption, the securities of the reporting issuer should not form a material component of the market value of the investment fund.
Noting that it did not intend for the exemption in paragraph 9.7(g) of NI 55-104 to apply to investment funds, the CSA said the exemption in paragraph 9.7(f) would govern reporting insiders’ acquisitions or dispositions of securities of investment funds, given the exclusion of investment funds from the paragraph 9.7(g) exemption.
NI 55-104, which is available on the securities regulators’ respective websites, explains how stakeholders can submit their comments to the CSA.
Goals of proposed change
The CSA noted that the suggested amendment aims to clarify the insider reporting regime applicable to:
- transactions involving investment funds
- structured notes, American depositary receipts, Canadian depositary receipts, and other structured products with product values or market prices derived from, referenced to, or based on an underlying security, interest, benchmark, or formula that constituted or included as a material component a security of the reporting issuer or a related financial instrument involving a security of the reporting issuer
Specifically, the CSA explained that the proposed change seeks to clarify that reporting insiders cannot rely on the exemption in paragraph 9.7(g) of NI 55104 for transactions in investment funds or certain structured products.
The CSA said the planned amendment would align with the policy intent underlying the exemption.
As the council of securities regulators of the country’s provinces and territories, the CSA aims to coordinate and harmonize regulation for Canada’s capital markets.