Determining where a CTO has effect

  1. The jurisdictions that have issued the order, as identified in the column titled “Issuing Jurisdictions” on the CTO Database (see section 1 below);

  2. Alberta, Québec, Nova Scotia and New Brunswick, under their respective statutory reciprocal order provisions and where the CTO meets the test to be automatically reciprocated (see section 2.1 below), whether the issuer is reporting there or not; and

  3. All other CSA jurisdictions, except for Ontario*, under MI 11-103 Failure-to-File Cease Trade Orders in Multiple Jurisdictions (MI 11-103) (see section 2.2 below), if:

i.  the CTO is a “failure-to-file cease trade order” (FFCTO) as identified by “Yes” in the column titled “FFCTO” on the CTO Database; and

ii. the issuer is reporting there (see section 5 below).

* A CTO is only effective in Ontario when Ontario is the Issuing Jurisdiction.

1. Issuing jurisdiction(s)

All CTOs will have effect in the jurisdictions that issue the order. The jurisdictions that have issued the order are identified in the column titled “Issuing Jurisdictions” on the CTO Database and include the principal regulator and, when the order is a “dual failure-to-file cease trade order”, the principal regulator and the Ontario Securities Commission (OSC).

A “dual failure-to-file cease trade order” is a failure-to-file cease trade order as defined in MI 11-103 issued in respect of an issuer by its principal regulator (where the principal regulator is a CSA regulator other than the OSC) when the issuer is a reporting issuer in Ontario and the OSC has confirmed that it is opting into the failure-to-file cease trade order.

2. Non-issuing jurisdictions

The CTO will also have effect in a CSA jurisdiction that has not issued the CTO if the jurisdiction has adopted a statutory reciprocal order provision (and the CTO meets the test to be automatically reciprocated) or if MI 11-103 applies.

2.1 Statutory Reciprocal Order Provisions

Alberta, Québec, Nova Scotia and New Brunswick are the only jurisdictions to date that have adopted statutory reciprocal order provisions. Effective July 1, 2015, the Government of Alberta has proclaimed into force amendments to the Securities Act (Alberta), which included the creation of section 198.1, Alberta’s statutory reciprocal order provision.  Effective June 23, 2016, the Government of Québec has proclaimed into force amendments to the Securities Act (Québec), which included the creation of sections 308.2.1.1 to 308.2.1.6, Québec’s statutory reciprocal order provisions. Effective May 20, 2016, the Government of Nova Scotia has adopted amendments to the Securities Act (Nova Scotia), including the creation of section 134B, Nova Scotia’s statutory reciprocal order provision. Effective June 28, 2016, the Government of New Brunswick has proclaimed into force amendments to the Securities Act (New Brunswick), which included the creation of section 184.1, New Brunswick’s statutory reciprocal order provisions.

A statutory reciprocal order provision means a provision in the securities statute of a jurisdiction that provides for the automatic reciprocation of any order imposing sanctions, conditions, restrictions or requirements issued by another CSA regulator based on a finding or admission of a contravention of securities legislation or conduct contrary to the public interest. If that order is varied, amended or revoked by a securities regulatory authority in Canada, the variation, amendment or revocation will also apply in the jurisdiction with the statutory reciprocal order provision. The jurisdiction with the statutory reciprocal order provision will not issue a separate CTO or variation, amendment or revocation of the CTO in these circumstances. As a result, the absence of an order against an issuer or person on the CTO Database in the jurisdiction with the statutory reciprocal order provision, does not mean that trading for that issuer or person is not prohibited or restricted in that jurisdiction. Please note that the automatic reciprocation of orders occurs whether or not an issuer is a reporting issuer in the jurisdiction with the statutory reciprocal order provision and applies to more than just failure-to-file cease trade orders, as defined in MI 11-103.

2.2 MI 11-103

As of June 23, 2016 MI 11-103 is effective in all CSA jurisdictions, except for Alberta, Québec, Nova Scotia and Ontario. Alberta, Québec and Nova Scotia are not adopting MI 11-103 because they are relying on their statutory reciprocal order provisions as described in section 2.1. A CTO is only effective in Ontario when Ontario is the Issuing Jurisdiction (see section 1 above for more information).

Under MI 11-103, if a securities regulatory authority issues a CTO against the securities of a reporting issuer, and such order meets the definition of a failure-to-file cease trade order, trading in or purchasing of those securities is automatically prohibited or restricted under the same terms and conditions set out in the failure-to-file cease trade order in every jurisdiction that has adopted MI 11-103 and where the issuer is reporting.  If that order is varied, amended or revoked by the securities regulatory authority, the variation, amendment or revocation will also apply in every jurisdiction that has adopted MI 11-103 and where the issuer is reporting. As a result, the absence of an order against a particular issuer or person on the CTO Database, does not mean that trading for that particular issuer or person is not restricted in a given jurisdiction.

As of June 23, 2016, the CTO Database identifies the orders that meet the definition of a failure-to-file cease trade order by indicating “Yes” in the column titled “FFCTO”.

In order to determine where an issuer is reporting, you should consult the reporting issuer lists included in section 5 below.

3. Effect of a failure-to-file cease trade order in a jurisdiction where an issuer is not a reporting issuer or where there is no statutory reciprocal order provision

Although a trade in a jurisdiction where an issuer is not a reporting issuer may not violate a CTO in another jurisdiction, the trading activity may still be contrary to the public interest and therefore subject to enforcement or other administrative proceedings. Market participants in a jurisdiction in which an issuer is not a reporting issuer should be cautious about trading in a security if a CSA regulator in another jurisdiction has issued a CTO. The issuance of a failure-to-file cease trade order by a CSA regulator will generally mean that an issuer has not met the required standards of disclosure and that there is significant risk of harm to investors if trading is allowed to continue. Accordingly, market participants should carefully consider the existence of the continuous disclosure default, and the determination of the principal regulator, before carrying out a trade in a jurisdiction where the issuer is not reporting or where there is no statutory reciprocal order provision. In this last case, we reiterate that the CTO has effect in the jurisdiction that has a statutory reciprocal order provision even if the issuer is not reporting there.

4. Effect of a CTO on market participants subject to Investment Industry Regulatory Organization of Canada regulation

Presently, all marketplaces (including exchanges, alternative trading systems and quotation and trade reporting systems) in Canada have retained Investment Industry Regulatory Organization of Canada (IIROC) as their regulation services provider. Under the Universal Market Integrity Rules (UMIR), which have been adopted by IIROC, if a CSA regulator issues a CTO with respect to an issuer whose securities are traded on a marketplace, IIROC imposes a regulatory halt on trading of those securities on all marketplaces for which IIROC acts as the regulation services provider. Once the halt is imposed by IIROC, no person subject to the UMIR may trade those securities on any marketplace in Canada, over-the-counter or on a foreign organized regulated market, subject to any conditions set out in the CTO.

5. Reporting Issuer Lists

In order to determine whether a failure-to-file cease trade order has effect in a jurisdiction, you should consider whether the issuer is a reporting issuer in the jurisdiction. The following is a list of jurisdictions and their corresponding reporting issuer lists. Please remember that if a jurisdiction has a statutory reciprocal order provision, a failure-to-file cease trade order will have effect in that jurisdiction even if an issuer is not reporting there. As a result, the reporting issuer lists of the CSA jurisdictions that have a statutory reciprocal order provision are not listed below. This is because an issuer’s reporting status is not relevant in determining whether the CTO has effect in that CSA jurisdiction (see section 2.2 above for more information). The reporting issuer list for the OSC has also been excluded since a CTO is only effective in Ontario when Ontario is the Issuing Jurisdiction.  For more information please also review National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.

British Columbia Securities Commission – Reporting Issuers List  

Financial and Consumer Affairs Authority of  Saskatchewan – Reporting Issuer Search

Government of Northwest Territories – Reporting Issuers List

Government of Yukon – Reporting Issuers List

Manitoba Securities Commission – Reporting Issuers List

Newfoundland and Labrador Securities Commission – Reporting Issuers

Prince Edward Island Securities Office – Reporting Issuers List

Securities Office of Nunavut – Reporting Issuers