The Investment Industry Association of Canada (IIAC) is calling on securities regulators to facilitate issuer bids by harmonizing the exemption requirements in this area.
In a letter to the Canadian Securities Administrators (CSA), the industry trade group proposed that the current rules for so-called “normal course” issuer bids (NCIBs) be revised to adopt a single set of exemption requirements that would apply to these kinds of transactions across all securities exchanges.
As it stands, the criteria for qualifying for an exemption varies depending on whether securities are listed on a designated exchange or not, and, if so, which exchange they’re listed on.
“This has contributed to a fragmented NCIB regime that creates avoidable obstacles for issuers,” the IIAC said in its submission to the CSA.
In particular, the IIAC said “there is a notable disparity” between the detailed rules adopted by the Toronto Stock Exchange (TSX) and the “less comprehensive rules that have been adopted by other exchanges.”
Additionally, there are different buyback rules that apply to U.S. exchanges than those adopted by exchanges in Canada.
The group argued that streamlining the exemption’s requirements would ease the regulatory burden on issuers, without compromising investor protection.
“The aim of our proposal is to create a consistent and comprehensive set of NCIB rules for all exchanges in Canada to eliminate inefficiencies and improve the competitiveness of Canadian exchanges,” the IIAC said in a release.
Specifically, the industry group called on the CSA to amend its rules to create a common set of NCIB requirements across all exchanges in Canada, based on the TSX’s current requirements, with certain revisions — such as changes to harmonize with U.S. requirements and to reflect the realities of the smaller Canadian market.
“This will simplify the existing NCIB regime and allow for more flexibility among issuers in planning for the repurchase of securities,” it said.
The IIAC said it will be seeking a meeting with the CSA to advocate for the proposal.