As a Canadian investor, you may have heard the term “Exempt Market Dealer (EMD)” thrown around in financial circles. But what exactly is an EMD, and how do they fit into the world of investing? This article will delve into the role of EMDs in the Canadian financial market and provide some important information for investors.
What is an Exempt Market Dealer (EMD)?
An Exempt Market Dealer (EMD) is a firm or individual that is registered with securities regulatory authorities in Canada to trade securities that are not listed on a stock exchange. These securities, also known as “exempt securities,” include private company shares, limited partnership units, and other investments that are not readily available to the general public.
EMDs play an important role in connecting investors with opportunities in the exempt market, which can include early-stage companies, real estate projects, and other alternative investments. They are responsible for ensuring that investors are fully informed about the risks and potential rewards of the exempt securities they are offering and for ensuring compliance with all applicable laws and regulations.
Why Invest in the Exempt Market?
The exempt market can offer investors access to a wide range of investment opportunities that may not be available through traditional stock exchanges. These can include investments in small and emerging businesses, real estate projects, and other alternative assets.
However, it’s important to note that the exempt market carries additional risks compared to more traditional investment options. Exempt securities are not subject to the same level of regulatory scrutiny as publicly traded securities, and there may be less information available about the companies or projects in which you are investing. As such, it’s important to carefully consider the risks and conduct thorough due diligence before making any investment decisions.
Choosing an Exempt Market Dealer (EMD)
If you are interested in exploring investment opportunities in the exempt market, it’s important to work with a reputable and experienced EMD. Look for firms or individuals that are registered with securities regulatory authorities and have a track record of success in the exempt market. It’s also a good idea to seek out an EMD that is a member of a self-regulatory organization, such as the Exempt Market Dealers Association of Canada, which sets standards for the industry and provides a dispute resolution process for investors.
Due Diligence
Due DiligenceAs with any investment, it’s crucial to conduct thorough due diligence before making a decision. This includes researching the company or project in which you are considering investing, as well as the EMD itself. Some key questions to consider include:
What is the EMD’s track record in the exempt market?
How long have they been in business?
Are they registered with securities regulatory authorities and a member of a self-regulatory organization?
What is the EMD’s fee structure?
What type of investments do they specialize in?
Risks of Investing in the Exempt Market
As mentioned previously, the exempt market carries additional risks compared to more traditional investment options. Some of the key risks to consider include:
- Limited information: There may be less information available about the companies or projects in which you are investing compared to publicly traded securities. This can make it harder to make informed investment decisions.
- Lack of liquidity: Exempt securities may not be as easily tradable as publicly traded securities, which can make it difficult to sell your investment if you need to.
- Lack of regulatory oversight: Exempt securities are not subject to the same level of regulatory scrutiny as publicly traded securities, which can increase the risk of fraud or other misconduct.
- It’s important to carefully consider these risks and conduct thorough due diligence before making any investment decisions in the exempt market.
How to Invest in the Exempt Market
If you are interested in exploring investment opportunities in the exempt market, there are a few steps you can take:
- Research EMDs: As mentioned above, it’s important to work with a reputable and experienced EMD. Look for firms or individuals that are registered with securities regulatory authorities and have a track record of success in the exempt market.
- Conduct due diligence: Thoroughly research the company or project in which you are considering investing, as well as the EMD itself. This will help you make informed investment decisions and minimize risk.
- Consider your financial goals: Think about your investment goals and risk tolerance, and choose an investment that aligns with these.
- Review the offering memorandum: An offering memorandum is a document that outlines the terms of the exempt security being offered. Be sure to carefully review this document to fully understand the risks and potential rewards of the investment.
Canguard: Your Trusted Exempt Market Dealer
At Canguard, we are proud to be a leading Exempt Market Dealer (EMD) in Canada, providing investors with access to a wide range of investment opportunities in the exempt market. Our team of experienced professionals is dedicated to ensuring that our clients are fully informed about the risks and potential rewards of each investment and to conducting all necessary due diligence. If you are interested in using Canguard services, please click on this link.
If you are interested in learning more about the services we offer, we encourage you to visit our website and explore our various investment options here.
FAQ
1. What are exempt securities?
Exempt securities are securities that are not listed on a stock exchange and are instead traded through the exempt market. These can include private company shares, limited partnership units, and other investments.
2. Why invest in the exempt market?
The exempt market can offer investors access to a wide range of investment opportunities that may not be available through traditional stock exchanges. These can include investments in small and emerging businesses, real estate projects, and other alternative assets.
3. How do I choose an EMD?
Look for firms or individuals that are registered with securities regulatory authorities and have a track record of success in the exempt market. It’s also a good idea to seek out an EMD that is a member of a self-regulatory organization, such as the Exempt Market Dealers Association of Canada.
4. What are the risks of investing in the exempt market?
Some key risks to consider include limited information, lack of liquidity, and lack of regulatory oversight. It’s important to carefully consider these risks and conduct thorough due diligence before making any investment decisions in the exempt market.
References
Exempt Market Dealers Association of Canada: https://www.emdac.ca
Canadian Securities Administrators: https://www.securities-administrators.ca
Disclaimer:
This website is provided for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. No securities regulatory authority has assessed the merits of these securities or the information contained in this website. Potential Investors should conduct their own due diligence before investing. All statements in this website, other than statements of historical fact, that address events or developments that Canguard expects to occur are forward looking statement. These forward-looking statements generally can be identified by the use of words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe” or “continue”, or the negative thereof, or similar variations. Please see the Offering Memorandum for a complete description of the risks associated with investing in Canguard Mortgage Investment Corporation. Purchase of Canguard Shares may be made through Kite Financial Solutions Ltd or a Dealer/Advisor.