The “exempt market” describes a section of Canada’s capital markets where securities can be sold without the protections associated with a prospectus.
The exempt market explained
What to know: what is a prospectus?
A prospectus is a document that provides detailed information about the security and the company offering it.
The exempt market explained
What to know: what types of investments?
Investments like debt, equity, asset-backed securities, investment funds and derivatives can be sold in the exempt market.
The exempt market explained
What to know: why are there exemptions?
Prospectus exemptions can help businesses because they let them raise money in less time and with less cost than preparing a prospectus.
The exempt market explained
What to know: what are the exemptions?
There are many different types of prospectus exemptions, each with its own rules about who can sell securities and who can buy securities under the prospectus exemption.
The exempt market explained
What to know: who needs to register?
Individuals, firms or online portals that are in the business of trading or advising in securities are required to register as a dealer or portfolio manager.
The exempt market explained
What to know: watch out for fraud
Some scammers pitch fraudulent investments as “exempt” securities. Learn more about investment scams.
The exempt market explained
Exemption risks: risk of loss
Investing in the exempt market is risky. You could lose your entire investment.
The exempt market explained
Exemption risks: lack of information
Companies raising money through prospectus exemptions may not be required to provide the same amount of information to their investors as a public company would be required to do.
The exempt market explained
Exemption risks: locked-in investment
There is a risk that you can’t sell your securities when you need or want to. Exempt securities often aren’t publicly traded, so you might not be able to sell your investment quickly or at all when you need or want to. This is also known as liquidity risk.
The exempt market explained
Learn more
Read more about the exempt market and different types of prospectus exemptions at GetSmarterAboutMoney.ca.
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