Industry association representing $4.5 trillion in assets calls on regulators to modernise Canada's take-over bid and derivative disclosure framework
Canada's securities industry association is pressing federal and provincial regulators to overhaul the country's take-over bid, issuer-bid, and derivatives disclosure rules, warning that overly broad requirements risk undermining the competitiveness of Canadian capital markets and discouraging legitimate investment activity.
The Securities and Investment Management Association (SIMA) submitted a formal comment letter to the Canadian Securities Administrators (CSA) on August 12, 2026, outlining a series of proposed amendments to the CSA's draft framework.
"The regulatory framework should focus on the purpose and effect of a transaction rather than the particular derivative structure used," said Andy Mitchell, President and CEO of SIMA, in a statement accompanying the submission.
Mitchell argued that the proposed rules must remain practical, proportionate, and flexible enough to support efficient markets without creating unnecessary compliance burdens.
Raising the bar on selective repurchase
Among SIMA's most pointed recommendations is a call to double the proposed aggregate limit under the selective repurchase exemption, from the CSA's proposed five per cent to ten per cent over a 12-month period.
The association contends that a five per cent threshold is too restrictive given the size and complexity of equity offerings and derivative transactions commonly used for risk management purposes, and notes that a higher threshold would better align Canada with U.S. market practices.
On transaction and seller limits, SIMA is also pushing back. The CSA proposed capping the exemption at five sellers and five transactions over a 12-month window. SIMA wants both limits raised to ten, citing the practical realities of syndicated over-the-counter derivative arrangements, which frequently involve multiple counterparties.
Leaving the current limits in place, the association argues, would create structural disadvantages for Canadian issuers.
SIMA is also urging that eligibility for the selective repurchase exemption be extended to all qualifying issuers, not just those with an operative normal-course issuer bid (NCIB) in place. Limiting the exemption in this way, it warns, would put Canadian companies at a competitive disadvantage relative to their US peers, particularly in areas such as equity risk management and convertible bond hedging.
Derivatives: economic exposure is not ownership
The association is particularly concerned about how the CSA proposes to treat cash-settled derivatives under the beneficial-ownership reporting framework. SIMA's position is clear: economic exposure alone should not be treated as equivalent to ownership or control.
Cash-settled derivatives create contractual rights, not voting rights. Treating them as equivalent to ownership, SIMA argues, "risks extending reporting obligations to positions that do not carry a meaningful ability to influence or control" a company.
The association is urging the CSA to limit derivative position disclosure requirements to transactions or positions that are genuinely connected to control-related objectives — and to avoid capturing routine financing, hedging, or market-making activity that poses no real threat to market transparency.
Financial intermediaries and swap providers should not automatically be classified as part of a bidder's group simply for providing standard market services, SIMA contends. Such a classification would create unnecessary market noise, discourage legitimate transactions, inflate compliance costs, and reduce liquidity.
Look-back periods and market efficiency
SIMA is also raising questions about the proposed mandatory six-month look-back period for related financial instrument disclosures, calling it a potential source of "significant administrative burden" without a corresponding regulatory benefit. The association is asking the CSA to consider either a shorter period or a materiality-based approach that would focus regulatory scrutiny where it actually matters.
On the pricing of repurchases, SIMA supports using the closing price following a public announcement — rather than the unaffected closing price — as the reference point for valuation. The association describes this approach as a practical balance between transparency and operational feasibility.
SIMA also confirmed that it agrees with the CSA's proposal that purchases made under the selective repurchase exemption should not count against an issuer's NCIB limits , though it is using the comment process to call for a broader review of whether the existing NCIB rules remain appropriately structured for today's market environment.
SIMA's comment letter, addressed to all provincial and territorial securities commissions, reflects the association's broader view that any updated framework must preserve the efficiency and global competitiveness of Canada's capital markets, while maintaining rigorous investor protection and market integrity standards.
