Canada¶s new investment landscape - Exempt Market Products sold by ExemptMarket Dealers
It has been a very interesting time for not only Stoneset but for all other companies thatsell products in the Exempt Market category. These products include, but are not limitedto: PPN¶s (Principle Protected Notes), Hedge Funds, REIT¶s (Real Estate InvestmentTrusts), Limited Partnerhips and Flow-through shares. Stoneset is a producer of ExemptMarket products and as such is bound by the rules and regulations as described in NI31-103.With a now passed deadline of September 28, 2010, sellers and manufacturers shouldnow be fully compliant. This new landscape affects the various involved parties indiffering ways.
Prior to the new regulations, those investors interested in purchasing Exempt MarketProducts dealt with organizations or individuals with varying levels of expertise andtraining. While it was possible to connect with a skilled advisor, it was also possible toconnect with someone with little to no training with respect to Exempt Market Products. As of the 28th of September, 2010 anyone selling an Exempt Market product must belicensed. The licensing process is onerous, difficult and embraced by companies likeStoneset who welcome any change that will improve the quality of the consumer experience. Ultimately we believe these changes will improve consumer confidence,increasing our sales volumes and overall market exposure.
For Stoneset specifically it allows us to partner with an Exempt Market Dealer (EMD)likeGlobal Exempt Market Solutions. As an Exempt Market Dealer, Global specializesin selling Exempt Market Products. Not only do they handle the sales of our investmentproducts, but they also ensure that those who represent our products are fully licensed,trained and qualified to provide timely and accurate investment information to currentand potential investors.
For the first time in the history of the Exempt Market in Canada, advisors now require alicense. Obviously this process is not easy and does put a significant amount of pressure on advisors - especially those who are new to the marketplace or who onlyoperate part-time. With that said consumers should take comfort that the ExemptMarket is a safe market place in which to engage, as all the professionals operatingwithin its borders are licensed individuals whose backgrounds have been through athorough vetting process.
Not only will sellers of Exempt Market Products be required to have a license but theywill have to operate under the umbrella of a licensed Exempt Market Dealer. Thesedealers have Branch Managers as well as Chief Compliance Officers that have specificduties they must perform in accordance with the new regulations. Both the Branch