Message from the Chair
June 2024Alberta has one of the most important capital markets in Canada, and the Alberta Securities Commission (ASC) strives to be a practical, innovative and intelligent securities regulator that fosters a fair and efficient capital market, and protects investors.
We operate within a world that is challenged by global political and social turmoil, which impacts our collective economic well-being. Our markets have been influenced by significant developments in emerging technologies; data security issues; environmental, social and governance (ESG) considerations; investor behaviours, expectations and needs; and the proliferation of online fraud and market manipulation. The ASC monitors all of these local and global trends, and considers possible implications for our market as we implement our strategic plan and look ahead to the future.
The recently completed fiscal year, F2024, is the first year of our new ASC three-year strategic plan. Our F2024-2026 plan is rooted in our experience and was developed following extensive engagement with market participants, an environmental scan and analysis, and valuable internal feedback from ASC staff. At its foundation is a commitment to protecting investors, delivering practical and innovative regulation and fostering a market that facilitates economic growth for Albertans.
In the last year we have implemented and advanced a number of pivotal initiatives and I believe our progress is a testament to our plan’s flexibility and guiding principles.
One of the guiding principles is the importance of collaboration. We work closely with other securities regulators across Canada as a member of the Canadian Securities Administrators (CSA). We live in a large country with diverse regions, and the CSA provides a regulatory structure that enables us to consider all Canadian perspectives and views. It is through meaningful discussion and collaboration that we are able to achieve harmonized regulation that serves the interests of all the unique capital markets within Canada. I continue to serve as Chair of the CSA and I appreciate the opportunity to play a role in encouraging collaboration and a cohesive regulatory regime.
The CSA continues to advance a coordinated regulatory regime for crypto assets and crypto asset trading platforms (CTPs). This year, we proposed regulatory requirements for public investment funds that seek to invest in crypto assets, and we provided more clarity on our interim approach to value-referenced crypto assets (or stablecoins). Canadians continue to invest in crypto assets, and we encourage all investors to exercise caution and use only registered crypto trading platforms if they are considering investing in these high-risk assets.
Industry and investors alike are keenly interested in how the CSA will move forward with two significant ESG-related initiatives the ASC co-leads. Over the last fiscal year we saw major developments in the CSA’s climate-related disclosure and diversity projects.
The International Sustainability Standards Board (ISSB) adopted its first two sustainability disclosure standards this year. This was followed by the establishment of the Canadian Sustainability Standards Board (CSSB), which works to advance the adoption of voluntary sustainability disclosure standards in Canada. The CSSB also published its Canadian Sustainability Disclosure Standards 1 and 2.
Our project team continues to monitor and assess international developments in this area, including the United States Securities and Exchange Commission (SEC)’s climate-related disclosures rule approved on March 6, 2024. We remain committed to working towards appropriate Canadian disclosure requirements, and when we publish our revised rule we will seek public comments on a number of matters.
Enhanced diversity disclosure for boards and executive officer positions is another key CSA project. We’re considering how broader aspects of diversity that go beyond the representation of women can be incorporated into our corporate governance disclosure requirements. This year we published proposed amendments to our corporate governance instrument and sought comments from the market on possible approaches. We received thoughtful feedback and anticipate publishing final amendments in F2025.
Ensuring investors have the information necessary to make informed investment decisions is an important part of our mandate and early this year we were happy to publish, in collaboration with the Canadian Council of Insurance Regulators, enhanced total cost reporting requirements for investment funds and individual segregated fund contracts. These new requirements will help investors understand the costs they pay to invest and the value they receive in return.
Additionally, we were pleased to participate in the CSA’s announcement of a proposed regulatory framework for an affordable and fair independent dispute resolution service whose decisions would be binding. We proposed that the Ombudsman for Banking Services and Investments (OBSI) would be recognized as the independent dispute resolution service for the investment industry, allowing investors to secure redress.
This year, we continued to prioritize reducing regulatory burden in order to foster innovation and promote market efficiency for the benefit of our capital markets. We published guidance on the listed issuer financing exemption to allow smaller issuers listed on a Canadian stock exchange to raise capital from the public more efficiently and we collaborated with Saskatchewan’s securities regulator to continue to grant smaller businesses and investors an exemption that allows self-certified investors to be treated in a similar manner to accredited investors. The CSA also proposed rule amendments that would allow for more efficient capital raising for well-known seasoned issuers (WKSIs) and published in final form amendments concerning the implementation of an access model for prospectuses of non-investment fund reporting issuers, which are intended to modernize the way prospectuses are made accessible to investors.
In 2023, the CSA also launched SEDAR+, which is the secure, web-based system used by market participants to file, disclose and search for information in Canada’s capital markets. The launch was the first step in the CSA’s efforts to modernize our national IT systems. As with many technology projects, there were unexpected challenges, yet the team has demonstrated flexibility and commitment to listening to concerns shared by market participants and making enhancements where possible.
Complementing our regulatory work is our continued effort to protect investors through education and enforcement. Of particular note, in Alberta one individual received a record seven-year prison sentence for defrauding victims of $2.4 million, the longest sentence rendered resulting from a securities investigation in our province. We also concluded settlement agreements for two insider trading cases, issued decisions on two fraud-related cases, and disciplined numerous individuals and entities whose misconduct threatens the integrity of our capital markets and impacts investors’ financial and personal well-being.
We educate investors on a number of topics, including the risks of investing in crypto assets. Unfortunately, there continues to be growth in a variety of crypto-related scams. As a result, in F2024, we continued our efforts to raise Albertans’ awareness of these scams and the steps they can take to protect themselves and others. We interacted with investors face-to-face, through classes and by providing resources on CheckFirst.ca.
In October 2023, we were delighted to host the seventh annual ASC Connect conference in person for the first time since 2019. The conference was just one of many efforts undertaken over the course of the last year to engage and provide enhanced information for market participants, entrepreneurs and small business leaders.
As we move forward with our F2024–2026 Strategic Plan, I have confidence that we will continue to be recognized as a practical, focused and innovative regulator. More information on each of the strategic pillars, including a graphical representation of the key elements of our Strategic Plan, is included in the adjacent tabs.
Each year we track and summarize our progress through our Annual Report, which contains additional information on the initiatives included above and much more. Stay tuned for our next Annual Report, coming in June 2025.
With kind regards,
Stan Magidson, KC
Chair and Chief Executive Officer
Pillar One: Intelligent regulation aimed at fostering a thriving capital market
Intelligently regulating the Alberta capital market is what we do. We strive to ensure that our regulatory regime is appropriate to the needs of our market, facilitates capital growth and promotes strong investor protection while not unduly burdening issuers and other market participants.
Themes:
Reduce regulatory burden
All new laws, rules, policies and projects will be assessed to determine whether they add value, and to ensure there is due consideration of the costs of the regulation, compared to the benefits for Alberta’s unique capital market. We will also embrace opportunities to revise regulatory instruments to achieve greater clarity for the intended audience, and develop meaningful guidance and case studies to support enhanced understanding for market participants. In support of Alberta capital market innovation and development, we will monitor the use of exemptions and use a multi-divisional team to test automation and the use of technology for regulatory, supervisory and oversight purposes.
Address emerging and evolving regulatory frontiers
To keep pace with the rapidly changing Alberta marketplace and constantly evolving securities industry, we are continuing our work in a number of areas, including:
- Systemic risk: The ASC plays an important role in the CSA Standing Committee on Systemic Risk, as well as the Heads of Agencies (HoA) and its Systemic Risk Surveillance Committee. The ASC also engages with the Financial Stability Board and the International Organization of Securities Commissions (IOSCO) to actively monitor, analyze and consider how best to address risks that could impact markets nationally and internationally.
- Derivatives markets: We will continue to implement a practical derivatives framework including the necessary compliance and surveillance tools required to ensure a practical and effective regime. We will also be a leader in the CSA respecting oversight of energy commodity derivatives and monitor carbon offset markets, providing appropriate regulation.
- Environment, social and governance: The ASC will continue to play a leadership role in relevant environmental, social and governance related policy discussions, in addition to seeking appropriate regulation for our capital market.
- All things energy: We will leverage our existing oil & gas expertise and continue to build out our abilities in “all things energy” (e.g. cleantech, carbon capture, utilization and storage technology, lithium, helium and hydrogen production, and renewable energy).
- Financial technology: We will continue to monitor technological innovation in the financial marketplace and its intersection with securities laws, and develop an appropriate regulatory response. This includes conducting research to better understand “do-it-yourself” investing, gamification and the impact of social media and advancing regulatory initiatives as necessary, and addressing crypto and digital asset regulation.
- Market structure: We will continue to participate in CSA projects related to market structure.
Leverage technology
Technology plays an important role across industries, including financial services. The ASC has a digital plan to improve our use of existing technologies and incorporate new technologies to increase efficiency, expand the use of analytics and support opportunities to use evidence-based decision making.
Question the regulatory status quo
As regulators we must adapt to changing market conditions while providing a level of stability upon which market participants can depend. We will continue to work with the Canadian Securities Administrators (CSA) to be harmonized to the greatest extent possible, while still remaining a strong advocate for the unique needs of market participants in Alberta. We will also continually monitor and research alternatives, scanning both the domestic and international regulatory environments to inform our position and policies on a variety of securities matters. Projects include completing the the establishment of the new Canadian Investment Regulatory Organization and considering and revising some existing regulatory regimes.
Engage with other regulators
While our primary responsibility is to oversee the Alberta capital market, we must do so cooperatively and mindfully of regulations that govern other jurisdictions both nationally and internationally. With so many new developments, including new financial instruments such as crypto assets, securities regulation is increasingly complex and much of it occurs in an international arena. As such, we will continue to actively engage with the CSA, the HoA, the North American Securities Administrators Association (NASAA), IOSCO, and other national and international bodies, to stay informed, add value to the broader development of regulatory standards through our participation, and engage in areas that are critical to our being an effective, practical and intelligent regulator.
Support diversification of Alberta’s economy
In an effort to support the resiliency and integrity of our capital market, the ASC will continue to explore ways to support the province’s efforts to expand the financial sector in Alberta, and continue to advance the work of our multi-divisional ASC Innovation in Finance team.
Pillar Two: Protect investors and market integrity through effective compliance oversight, enforcement and education
The ASC monitors current market activity, anticipates future challenges, collaborates with other organizations and acts decisively in order to promote confidence, inform and protect investors and support market integrity.
Themes:
Detect and disrupt misconduct, and hold offenders accountable
As securities fraud and misconduct becomes ever more complex, crosses borders and incorporates new technologies to mislead investors and escape detection, it is imperative that we work collaboratively and have access to the right information, expertise, processes and technology to detect ‘bad actors’, analyze data and evidence, remove financial incentives for misconduct, disrupt securities misconduct in response to trends and minimize the threat posed by recidivists. As part of this we will also continue outreach with partner agencies to share information and collaborate, work collaboratively with other regulators and seek support of market participants to detect securities misconduct.
Ensure effective compliance oversight
Delivering effective compliance oversight is central to the ASC’s regulatory responsibilities. We will continue to make any necessary changes to ensure that we are optimally positioned to respond to the needs of our market. That includes proactively identifying emerging issues, trends, and risks in securities and derivatives market structures, as well as associated trading, dealing and advising.
Priority initiatives will include the continued operationalization of the client focused reforms and playing a meaningful role in the oversight of OBSI, including implementing binding decision making. We will also continue to refine our review process to increase personal interaction with registrants, pursue technology to assist with effective compliance oversight, monitor and analyze electronic media used in stock promotions and participate in a number of CSA working groups and projects designed to protect investors.
Enhance investor education efforts to reach a broader audience
Investment literacy is a life skill that helps investors grow and protect their hard-earned money. With longer life spans and fewer companies offering defined-benefit pensions, it is increasingly important that Canadians become knowledgeable about how to safely invest for their future.
The ASC will continue its efforts to broaden investment literacy and enhance investor protection in Alberta. We plan to continue to enhance our consumer website, CheckFirst.ca, and our social media channels, expanding tools and resources and empowering all Albertans to learn about investing. We will also actively expand our investor education outreach through partnerships and continue to conduct timely and frequent campaigns, leveraging data collected from our compliance and enforcement activities whenever possible. As part of an equity, diversity and inclusion strategy, we will plan to build and implement a plan to engage and inform Indigenous communities within Alberta.
Increase direct interaction with market constituents to more effectively communicate regulatory objectives
The ASC will continue to work with market participants to advance their understanding of the regulatory regime, including developing and providing plain language web content and sharing regular, timely and meaningful information. We will position the ASC as the regulator of choice for new market participants seeking to enter the Canadian market.
Pillar Three: Foster a culture of engagement
The collective knowledge and experience of staff at the ASC is the foundation of our success. Their efforts to build strong relationships with their colleagues and with individuals and organizations that participate in Alberta’s capital market are a critical part of the administration of provincial securities laws. We must continue to foster a strong sense of collaboration, including seeking input from market participants and encouraging a two-way flow of information.
Themes:
Engage stakeholders
Regular, timely and relevant engagement with all of our stakeholders is critical to effective administration of Alberta’s securities laws. Our priority is to enhance communications and increase two-way dialogue with stakeholders, addressing their needs and incorporating valuable feedback into future endeavours, as appropriate.
Enhance relationships with government and media
To promote efficient decision-making, alignment and timely implementation of broad policy objectives we will strive to have regular and meaningful communication between appropriate Government of Alberta officials and senior management.
In an effort to ensure our messages effectively reach and inform audiences, we continue to build relationships with media, and continually work to enhance our digital communications properties.
Staff engagement, retention, development and empowerment
We strive to ensure that employees have the right information, tools and resources to carry out their duties with proficiency, efficiency and consistency, and that projects and tasks that are pursued reflect strategic priorities. Additionally, we continue to provide a challenging and rewarding workplace that engages employees, promotes employee recognition and invests in employee growth and development.
Organizational development
By engaging with employees, we will investigate opportunities for ongoing enhancements to the organization and workplace to maximize our ability to meet strategic objectives and to achieve our vision to be a best-in-class regulator.
We are working to identify and assess technology that can improve the efficiency and effectiveness of regulatory and operational functions, while supporting hybrid collaboration and continuing to be vigilant about maintaining a high level of security for the ASC’s IT network and systems.