First Reference company logo

Inside Internal Controls

News and discussion on implementing risk management

machine cogs image

Update from the Canadian Securities Administrators on its Regulatory Sandbox for Fintechs

Regulatory SandboxThe 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:

  1. 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.
  2. The Fintech would file an application with its local securities regulatory to register and/or obtain exemptive relief from regulatory requirements.
  3. CSA staff would review the application on an expedited basis.
  4. CSA staff would determine the limits and conditions that should apply to the Fintech in the CSA Regulatory Sandbox.
  5. 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

Follow us

McCarthy Tétrault LLP

McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally.McCarthy publishes a series of blogs to share information with companies to help them comply and manage their businesses. On the Inside Internal Controls blog we will share some of those blog posts sharing their expertise among others, in the areas of Competition/Anti-trust, Corporate and Commercial Law, Intellectual Property, Privacy, Environmental Law, Technology and Litigation. Read more here
Follow us

, ,

Comments are currently closed.