The Canadian Securities Administrators (CSA) recently launched a regulatory sandbox initiative as part of a push to foster greater innovation among industry participants. Under the initiative, qualifying businesses that have registered or received relief from certain requirements will be permitted to test novel products and services throughout the Canadian market.
The CSA provided the following examples of business models that may be eligible for the sandbox initiative:
- online platforms, including crowdfunding portals, online lenders, angel investor networks or other technological innovations for securities trading and advising;
- business models using artificial intelligence for trades or recommendations;
- cryptocurrency or distributed ledger technology based ventures; and
- technology service providers to the securities industry, such as non-client facing risk and compliance support services (also known as regulatory technology or regtech).
The CSA described the purpose of the initiative as being to “facilitate the ability of those businesses to use innovative products, services and applications all across Canada, while ensuring appropriate investor protection.” The Ontario Securities Commission has a similar new Fintech support initiative called Launchpad (see: https://www.osc.gov.on.ca/en/osclaunchpad.htm).
To apply to the CSA regulatory sandbox, business should contact their local securities regulator for consideration.
Edited by Linda Fuerst. The author would like to thank Brian Peebles, articling student, for his assistance in preparing this legal update.
