The week of June 26, the Canadian Securities Administrators (CSA) published some additional information on its CSA Regulatory Sandbox. The CSA Regulatory Sandbox, which was first launched on February 23, 2017, is an initiative of the CSA, designed to support Fintech businesses seeking to offer innovative products, services and applications in Canada.
Generally speaking, businesses must register under Canadian securities laws if they are in the business of trading in, or advising on, securities. In addition, there are a number securities law requirements that may be triggered by or in the context of operating certain business models. The CSA Regulatory Sandbox is intended to allow Fintechs that meet the CSA’s criteria to register and/or obtain exemptive relief from Canadian securities law requirements, under a faster and more flexible process than through the standard channels.
The additional information published by the CSA last week outlines the following five step process involved when making use of the CSA Regulatory Sandbox:
- An interested Fintech would first present its business model to its local securities regulator’s staff. For Fintechs with a head office in Ontario, this would involve going through the Ontario Securities Commission’s OSC LaunchPad. Contact information for the other Canadian provinces and territories can be found here. At the discussion stage, securities regulator’s staff work with the Fintech to identify the regulatory requirements for which registration and/or exemptive relief may be needed. Staff and the Fintech may also discuss the Fintech’s eligibility to participate in the CSA Regulatory Sandbox, including limits and conditions that could be imposed.
- The Fintech would file an application with its local securities regulatory to register and/or obtain exemptive relief from regulatory requirements.
- CSA staff would review the application on an expedited basis.
- CSA staff would determine the limits and conditions that should apply to the Fintech in the CSA Regulatory Sandbox.
- If the Fintech agrees to the tailored program, it will receive authorization to operate for a given period in the CSA Regulatory Sandbox, subject to the limits and conditions imposed on its registration and/or exemptive relief.
The CSA Regulatory Sandbox is open to all Fintechs with innovative business models, whether start-ups or incumbents (e.g. a large financial institution subject to securities law requirements that has developed an innovative business model would be eligible to apply).
By Ana Badour and Heidi Gordon, McCarthy Tétrault LLP
- A Canadian perspective on regulating dark patterns - September 26, 2022
- CRTC issues call for comments on enforcement practices - August 29, 2022
- More than you bargained for: Seniority of assumed employees still relevant even where purchaser is granted broad release - July 25, 2022