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.