I am a US-Resident Investor: How do I trade securities listed on the Canadian Securities Exchange?

There are two principal ways a US resident can trade securities listed on the Canadian Securities Exchange:

• Some US brokers will permit clients to open “international accounts” that permit their client to trade directly on a foreign stock exchange. These trades are typically charged a premium commission fee by the dealer.
• Most CSE-listed companies are also quoted on the marketplaces operated by the OTC Markets Group in the United States. These companies have a different stock symbol in the US than the CSE symbol: it will be 5 characters ending in the letter “F”, which denotes a “foreign security”. Most US retail-oriented brokerage firms provide access to the OTCQB and OTCQX markets in the US.

Where do CSE-listed securities trade in the US?

To simplify cross‐border trading, many CSE‐listed securities apply to be quoted on either the OTCQB (venture) market or OTCQX (best) market operated by OTC Markets Group. These are premium market tiers designed to provide the most efficient cross border trading mechanism for issuers and US investors. The companies also apply to the US clearing and settlement organization (DTCC) to have their securities eligible for electronic trade settlement in the US. Additionally, a small handful of CSE issuers are dually listed on an US exchange; this symbol may also be different from the CSE symbol.  The correct US symbol may be found on the Issuer's website or any retail investor web portal.  CSE Interlisted securities-US Exchanges list is available here.

What is the OTC Pink market and how does it differ from OTCQX and OTCQB?

Some CSE issuers, particularly companies who are not focused on building a shareholder base in the United States have opted not to be quoted on the OTC’s premium market tiers. The Pink (open market) is the lowest OTC market tier and does not require issuer engagement. As a result, investors need to proceed with caution as there is lower information distribution, and fewer brokers prepared to execute trades due to risk controls. The cost of trading can be much higher for the investor on the Pink market. If you are interested in trading the company’s security and cannot access the Pink Sheets from your brokerage account (or even the “grey market” described below), it is best to contact the company and urge them to improve their access to US investors by having a quote on one of the OTC market’s premium tiers.

What is the “grey” market?

Grey means there is no public quotation and no market maker currently quoting a bid/ask price which is essential to help US investors facilitate trades. Trading is extremely limited.

What disclosure is provided  to US investors for these companies?

SEC reform to rule 15c-211 (enabling continuous quotation of a security in the US) in December 2020 will go into effect in September 2021. This change will require a company to meet new disclosure standards or risk removal of their US quotation. As an investor in foreign securities, it is imperative that companies you invest in meet the new disclosure standard or the public market for that security may be lost. Companies quoted on the OTCQB or OTCQX markets already meet these mandated disclosure standards. As reporting issuers in Canada, CSE-listed companies are required to disclose material information to the marketplace, and file quarterly financial statements with the exchange. Annual audits are also required for these companies. This information is available to investors on the Canadian regulator’s company information site:  www.sedar.ca

What is the simplest method of determining if a CSE‐listed security is quoted in the US?

Check if the company has a US ticker by visiting www.otcmarkets.com and typing the company name into the “quote” box in the top left-hand corner. OTCQX and OTCQB companies will continue to be easily traded and exempt from the SEC reform mentioned above.

* Note that stock symbols for US quoted securities will differ from their exchange symbol in Canada **Note that securities quoted on the “pink” and “grey” market are not subject to minimum quotation requirements from OTC Markets and are not uniformly tradeable on discount brokerage platforms.

Can CSE‐listed stocks, quoted on OTCQB and OTCQX trade via online discount platforms?

Yes. OTCQB and OTCQX securities are available to trade on major discount brokerages including TD Ameritrade, E*TRADE, Fidelity Investments, Charles Schwab, Interactive Brokers (subject to availability), and more.

Additional platforms may be available to trade CSE-listed securities. Check with your broker for details.

Do US OTC‐quoted stocks trade in US or CDN dollars?

US OTC‐quoted securities will be quoted and trade in US dollars. Here’s an explanation from OTC Markets Group:

“While some U.S. investors can trade directly in a foreign company’s local market, many U.S. investors prefer to see quotes in U.S. dollars during their regular trading hours. To provide this access and to facilitate trade reporting, broker‐dealers create trading symbols, or tickers, of foreign securities in the U.S. These tickers are 5 letters long and end with the letter F. As such, they are traditionally called F shares.

U.S. broker‐dealers continuously price F shares in accordance with local market share price movements and available liquidity. While trades are executed in U.S. dollars by U.S. broker‐dealers, the shares are settled, cleared and custodied in the local market or, under certain conditions, in the U.S. (Canadian or DTC eligible F Shares).”

Further details at: FAQ-F-Shares.pdf (otcmarkets.com)

I subscribed to a private placement conducted by a CSE issuer. How do I trade my shares?

We have been advised that most US brokers (full service and discount) will not ordinarily permit the deposit of physical share certificates or shares represented on a Direct Registration System (“DRS”) Advice into a client’s account. This is especially the case for the shares of cannabis companies with active operations in the United States.If this is your situation, please contact the CSE ([email protected] or [email protected]) and ask for a list of US-registered broker dealers who will facilitate the deposit of these shares. With these broker dealers, you will be able to open an account with their US affiliate, which will take custody of the physical paper or transfer the shares represented on the DRS into the account. The “legend” on the share certificate is removed to allow for the free trading of the shares. This assumes that any “hold period” on the shares has elapsed. The broker will charge a fee, typically a percentage of the share value, for performing this service.