WHAT IS A FAIR FOR EMDS? OBSI CONSULTS ON CALCULATING LOSSES FOR UNSUITABLE EXEMPT MARKET SECURITIES

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The Ombudsman for Banking Services and Investments (OBSI) is inviting stakeholders to provide feedback on its methodology to calculating investor losses. The focus of this consultation is on situations where OBSI has determined that the sale of illiquid exempt market securities to an investor is unsuitable in response to an investor complaint.

Understanding the Complexities

Illiquid exempt market securities, often characterized by limited trading opportunities and opaque pricing, pose unique difficulties in loss calculation. Unlike publicly traded securities with readily available market data, valuing these illiquid assets requires careful consideration and often involves subjective judgment.

OBSI's Approach and the Call for Feedback

Currently, when a reliable market value cannot be determined, OBSI assigns an ending value of zero to the illiquid exempt market security for the purpose of calculating the loss. This approach has sparked debate, with some stakeholders questioning its fairness, while others acknowledge the inherent difficulties in valuing such securities.

Join the Conversation

This consultation is an opportunity to contribute to a fairer and more transparent process for resolving investment disputes. Whether you are an investor, a firm, or an industry expert, your insights are valuable. Share your perspectives and help shape the future of investor protection.

Provide your feedback through submitting a comment letter by November 21, 2024.

The Private Capital Markets Association of Canada will be preparing a response letter but encourages exempt market dealers to submit their own comments. This issue is very relevant to exempt market dealers since OBSI is currently seeking binding decision-making powers of up to $350,000.

Read OBSI’s consultation paper at: https://www.obsi.ca/media/kvalmhn0/obsi-public-consultation-document-loss-calculation-methodology-sept-2024_en.pdf