The Canadian Securities Exchange (CSE) is implementing stricter disclosure and governance rules as it allows exchange-traded funds (ETFs) and special purpose acquisition companies (SPACs) to list on it for the first time.
Since its creation in 2004, the CSE has grown to offer an alternative to the much-larger Toronto Stock Exchange (TSX) and earned a reputation as a market that caters to entrepreneurs and companies seeking less stringent listing requirements.
CSE-listed companies must publicly issue a minimum of 10% of their outstanding shares compared to the TSX that requires a minimum of 20%. CSE-listed companies also have lower asset value requirements and fee payments compared to the TSX.
The CSE now plans to create a new "senior tier" that includes 60 to 80 companies following final approval by Canadian securities regulators.
To qualify under the CSE's new senior tier, companies will have a smaller window of time to report quarterly financial information and audited statements and will face stricter oversight of disclosed materials and enhanced governance procedures. Other criteria the companies will need to meet include reaching a certain level of market capitalization and revenue, says the CSE.
The changes come as the CSE prepares to allow ETFs and SPACs to trade on the exchange for the first time. Currently, those securities are not eligible to trade on a junior exchange such as the CSE.
