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(August 13, 2008) Corporate compliance with continuous disclosure requirements has been, for the most part, satisfactory over the latest fiscal year, according to the Canadian Securities Administrators (CSA). The report summarized the review program of reporting issuers other than investment funds.

The CSA conducted 854 continuous disclosure reviews in the fiscal year ending March 1, 2008, including 442 full reviews and 412 issue-oriented reviews. In 39% of cases, no action was required whatsoever, while there were only “prospective changes” required in 36% of reviews, and 19% needed to be re-filed.

Only 5% were referred to enforcement, with 1% of the total resulting in a cease-trade order.

Among common deficiencies in management discussion and analysis were inadequate disclosure of liquidity and capital resources; a lack of quantitative analysis in the results of operations discussion; limited disclosure of the adoption of new accounting policies; inadequate related party disclosure; and insufficient discussion about the risks and uncertainties expected to affect the issuer’s future performance.

Drawing specific attention were companies that held a significant amount of non-bank-issued asset-backed commercial paper (ABCP), with CSA reviews focusing on how these assets were valued by the reporting issuer. Some were asked to recalculate their financial statements, with more realistic valuations placed on ABCP.

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One quarter oppose mortgage rules

(August 13, 2008) Almost a quarter of Canadians oppose the federal government’s move to tighten mortgage lending requirements, according to a survey conducted for a mortgage lender.

Passed in June, the new rules are largely a return to the old standards for mortgage lending: first-time buyers must pony up at least 5% of the purchase price, and amortization was limited to a 35-year maximum, down from 40 years. (Read: New homebuyers hit hardest by mortgage changes)

According to a survey for ResMor Trust Company, “only” 45% of respondents support the new requirements, with the strongest support coming from current homeowners (54%). Only 26% of non-homeowners supported the measures.

“This survey clearly demonstrates a need for industry professionals to educate Canadians about the new measures — specifically those entering the market for the first time,” says Darren Thompson, vice-president of lending for ResMor Trust. “As a lender who originates all of our mortgages through the brokerage community, we are committed to working with our broker partners to educate our clients about the new lending guidelines and to define strategies to help them to achieve their home ownership goals.”

Support for the new rules was strongest in provinces where housing prices have risen the most dramatically, with 64% of British Columbians on board, along with 56% of Albertans and 47% support in Manitoba/Saskatchewan.

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European hedge fund selects Canadian software

(August 13, 2008) European hedge fund giant BlueCrest Capital Management has announced that it has adopted Toronto-based Algorithmics’ Algo Risk Service for its risk management practice.

“We are delighted to be working with BlueCrest in providing a customized risk service to meet their specific multi-strategy requirements,” said Dr. Andrew Aziz, Algorithmics’ executive vice-president of risk solutions. “We are providing them with a flexible and dedicated risk management service without the overheads normally associated with such coverage, processing power and support.”

Algo Risk Service allows investment managers to analyze and quantify the risks across portfolios. The service can assimilate the risk profiles of new instruments that can be incorporated into portfolios for stress testing against a customized set of risks.

(08/13/08)