CPE Analytics unveils the first full summary of Ontario's exempt market, with significant local and international investments
In 2023, the Ontario exempt market achieved a significant milestone, amassing a total of $295.6bn, as revealed in the first ever exempt summary report by CPE Analytics.
This market consists of two key components: investors and issuers, with both playing pivotal roles in the financial ecosystem.
Investors in Ontario have actively participated, investing a substantial $223.8bn across various sectors, including Ontario issuers, as well as other Canadian, US, and international issuers. Notably, most of these investments—66 percent, amounting to $148.416bn—were directed towards Ontario issuers.
Investments also extended internationally, with contributions of $35.289bn to the US, $14.197bn to Europe, and smaller amounts to other regions such as Asia and Africa.
On the other side, Ontario issuers raised a remarkable $220.2bn in 2023. Funds were primarily sourced from Ontario investors, who contributed 67 percent of the capital, highlighting a strong local support base.
However, significant amounts were also raised from investors in other regions, including the Prairies, Quebec, and the USA, underscoring the broad appeal of Ontario's market.
The data, sourced from Form 45-106F1 Report of Exempt Distributions, SEDAR, BCSC, OSC, AMF, and other regulatory filings, underscores the robust activity in Ontario’s exempt market.
This sector of Canada's capital markets allows securities to be sold without the usual protections associated with a prospectus, under what are known as prospectus exemptions. These exemptions facilitate quicker capital formation for companies and funds, both Canadian and foreign.
Despite the vigorous activity, Ontario experienced a net outflow of $3.6bn in exemption financings in 2023. Ted Liu, president, and CEO of CPE Media & Data Company, commented, “We are pleased to release Ontario's first ever complete exempt market summary report.”
“Ontario issuers generally do not raise capital from Ontario investors alone. Investments by non-Ontario investors are a very important component in the capital formation of Ontario issuers and companies. In 2023, non-Ontario investors contributed 33 percent of the total capital raised by Ontario issuers. Any capital formation strategy without consideration of this important piece of information is incomplete and would eventually lead to questionable or fundamentally wrong policies.”
The Ontario Securities Commission (OSC) and other regulatory bodies continue to oversee these activities, ensuring that while the market operates under exemptions, it maintains a balance of flexibility and oversight to protect investor interests and support healthy capital formation.
The regulatory framework, including Ontario’s Securities Act and National Instrument 45-106 Prospectus Exemptions (NI 45-106), provides the foundational structure for these market operations.
