Last Updated: December 21, 2021
CoinSmart
COINSMART PLATFORM
MARKET CONDUCT REQUIREMENTS AND RISK DISCLOSURE
Simply Digital Technology Inc. (SDT)’s commitment to fostering an environment of transparency, trust and fairness is fundamental to our success. In support of this commitment, SDT has developed these rules for all clients that want to trade crypto assets (Crypto) on our online platform (the CoinSmart Platform). These rules are incorporated by reference into the CoinSmart Terms of Service (the CoinSmart TOS) which govern all accounts of clients (Client Accounts) on the CoinSmart Platform. Capitalized terms used and not defined in these rules have the meanings given to them in the CoinSmart TOS.
1. MARKETPLACE HOURS
Trading hours are 24 hours a day, seven days a week.
At times, the CoinSmart Platform is down for scheduled maintenance and Participants are notified well in advance.
2. ACCESS
2.1 Access Criteria
The CoinSmart Platform may be accessed by the following participants (Participants):
2.1.1 Clients who have an active account with SDT; and
2.1.2 SDT, in its capacity as a passive liquidity provider (SDT LP).
2.2 Termination and/or Suspension of Access
Access to the CoinSmart Platform may be terminated or suspended for a client whose account is terminated or suspended by SDT in accordance with the CoinSmart TOS.
3. ORDERS, MATCHING AND TRADES
3.1 Entry of Orders
3.1.1 No order to purchase or sell a Crypto shall be entered at a fiat price that includes a fraction or a part of a cent other than an increment of one-half of one cent. Orders for Crypto may be entered at an amount that includes up to eight decimal places.
3.1.2 Limit buy orders
Buy orders must specify the maximum purchase price the buyer is willing to pay for the Crypto.
3.1.3 Limit sell orders
Sell orders must specify the minimum price at which the seller is willing to sell the Crypto.
3.1.4 Stop Limit orders
Stop Limit orders must specify a trigger price at which time the order becomes a Limit order.
3.1.5 Stop Market orders
Stop Market orders must specify a trigger price at which time the order becomes a Market order.
3.1.6 Market Orders
Market orders are executed at the best available price at the time the order is placed.
3.1.7 Rejection of Orders
Any order entered by a client, or any unfilled portion of a client’s order, which would upon entry, interacting with a resting order from the same client account, will be automatically rejected by the CoinSmart Platform.
3.2 Unfilled and Partial Filled Orders
3.2.1 A market order that is unfilled upon entry will be cancelled. The unfilled portion of a market order that is partially filled upon entry will be cancelled.
3.2.2 The unfilled portion of the limit order that is partially filled upon entry will remain open and filled once the limit price is met or cancelled by the client.
3.3 Liability for Bids, Offers and Trades
All bids and offers for Crypto made and accepted on the CoinSmart Platform shall be binding on the buyer and the seller.
3.4 Matching
3.4.1 Subject to Section 3.3.2, orders of buyers and sellers will be matched based on strict price-time priority in the CoinSmart Platform’s centralized limit order book.
3.4.2 Until SDT becomes regulated as a marketplace under Canadian securities laws, all orders entered by clients will only match with orders of SDT LP.
3.5 Variation and Cancellation of Orders
SDT reserves the right at all times to refuse to process or to cancel any order for a Crypto transaction entered by a client prior to execution, for the following reasons:
3.5.1 to prevent reputational risks associated with the transaction or with the client;
3.5.2 to enforce any limits associated with the client’s account[1];
3.5.3 in connection with SDT’s obligations under AML Regulation (defined below); and
3.5.4 for safety, security and fraud prevention purposes;
SDT may refuse to process or cancel an order for a Crypto transaction entered by SDT LP in the following circumstances:
3.5.5 to correct an error caused by a system or technological malfunction of the CoinSmart Platform’s systems or equipment or caused by an individual acting on behalf of the CoinSmart Platform;
3.5.6 In instances where SDT halting all trading on the CoinSmart Platform, as discussed in Section 5; or
3.5.7 if required by applicable law, including compliance with AML Regulation, any court order, or the request of any governmental authority.
SDT does not permit for the variation of an order for a Crypto transaction on the CoinSmart Platform. Rather, instances where a Participant would like to vary an order will result in the existing order being cancelled and replaced with a new order. This new order will not have the prior order’s priority in the CoinSmart Platform’s central limit order book.
3.6 Order and Trading Limits
SDT sets daily, monthly and annual limits on trading by each client for each Crypto on the CoinSmart Platform. Limits apply to all Crypto pairs available for trading on the CoinSmart Platform and are applied at the time of order entry. Additional limits are set in respect of price slippage and index variance[2]. Price slippage and index variance controls apply to both market orders and marketable limit orders. In the event that a limit is hit, the remainder or any unfilled order (limit order or market order) will not be filled and an error message will be displayed. Details of the limits for each Crypto can be viewed at the following link.
When trading limits are applied, affected clients continue to be permitted to enter sell orders for the purpose of liquidating positions. Limits are re-set on a rolling daily, monthly or annual period.
Order limits do not apply to SDT LP.
3.7 Variation and Correction of Trades
No trade executed on the CoinSmart Platform shall, subsequent to the execution of the trade, be cancelled, varied, or corrected with respect to the price of the trade, the volume of the trade, or the date for settlement of the trade, except if the variation, cancellation or correction would be necessary to:
(a) correct an error caused by a system or technological malfunction of the CoinSmart Platform’s systems or equipment or caused by an individual acting on behalf of the CoinSmart Platform; or
(b) if required by applicable law, including compliance with AML Regulation, any court order, or the request of any governmental authority.
4. ABUSIVE TRADING
4.1 Artificial Pricing
Participants are prohibited from engaging in activities that create artificial pricing. A bid price or sale price will be considered artificial if it is not justified by real demand or supply in a Crypto. Whether or not a particular price is “artificial” depends on the particular circumstances. Some of the relevant considerations in determining whether a price is artificial are:
4.1.1 the prices of the preceding trades and succeeding trades;
4.1.2 the change in the last sale price, best ask price or best bid price that results from the entry of the order;
4.1.3 the recent liquidity of the Crypto;
4.1.4 the time the order is entered and any instructions relevant to the time of entry of the order; and
4.1.5 whether any Participant involved in the order: (i) has any motivation to establish an artificial price, or (ii) represents substantially all of the orders entered or executed for the purchase or sale of that Crypto (other than SDT LP, in cases where there are very few client orders for the Crypto).
The absence of any one or more of these considerations is not determinative that a price is or is not artificial.
4.2 Manipulative and Deceptive Activities
4.2.1 A Participant shall not, directly or indirectly, engage in or participate in the use of any manipulative or deceptive method, act or practice in connection with any order or trade.
4.2.2 A Participant shall not, directly or indirectly, enter an order or execute a trade if the Participant knows, or ought reasonably to know, that the entry of the order or the execution of the trade will create or could reasonably be expected to create:
(a) a false or misleading appearance of trading activity in or interest in the purchase or sale of the Crypto; or
(b) an artificial ask price, bid price or sale price for the Crypto or a related Crypto.
There are a number of activities which, by their very nature, will be considered to be a manipulative or deceptive method, act or practice. This includes, without limitation:
(a) making a fictitious trade;
(b) effecting a trade in a Crypto which involves no change in the beneficial or economic ownership (e.g., wash trading);
(c) entering an order for the purchase or sale of a Crypto with the knowledge that an of substantially the same size, at substantially the same time and at substantially the same price for the sale or purchase of that Crypto, has been or will be entered by or for the same or different persons;
(d) making purchases of, or offers to purchase, a Crypto at successively higher prices or in a pattern generally of successively higher prices;
(e) making sales of or offers to sell a Crypto at successively lower prices or in a pattern generally of successively lower prices; and
(f) entering an order or a series of orders for a Crypto that are not intended to be executed.
4.3 Improper Orders and Trades
A Participant shall not enter an order on the CoinSmart Platform or execute a trade if the knows or ought reasonably to know that that the entry of the order or the execution of the trade would not comply with or would result in the violation of applicable securities legislation, including trading that mimics securities law prohibitions against illegal insider trading, tipping, recommending, or frontrunning. If a Participant uses a nominee to trade for the benefit of a Participant that otherwise would not be able to trade on the CoinSmart Platform, that Participant is in breach of its agreement with SDT and may be a breach of securities laws.
4.4 Consequences of Breach
Potential consequences for trading by a Participant that breaches securities laws or these Market Conduct Requirements include:
a) disabling the Participant’s access to the CoinSmart Platform by reprogramming the Participant’s account so that it can be closed in an orderly fashion;
b) restricting the Participant’s trading privileges to “sell only”; and
c) reporting the Participant’s activity to relevant law enforcement authorities and securities regulators.
5.1 Maintenance
From time to time, SDT performs maintenance on the CoinSmart Platform’s order matching engine to ensure that it is functioning properly and providing for an orderly market. As a result of this maintenance, SDT may halt all trading on the CoinSmart Platform. This halt in trading will result in the immediate cancellation of all open orders by Participants.
5.2 System Failures
As a result of unexpected system failures, including the failure of key services or systems that have been outsourced to a third party, SDT may halt all trading on the CoinSmart Platform. This halt in trading will result in the immediate cancellation of all open orders by Participants.
6. RISKS RELATED TO TRADING ON THE COINSMART PLATFORM
6.1 Short History Risk
SDT has successfully navigated a considerable number of technical and regulatory challenges to enable the CoinSmart Platform and believes this is a strong indicator that it will continue to navigate future challenges. That said, the continuation of a vibrant CoinSmart Platform community is not guaranteed and any unforeseen challenges that SDT is not able to navigate could have an adverse impact on the price of Crypto on the CoinSmart Platform.
6.2 Volatility in the Price of Crypto and Liquidity
The CoinSmart Platform may be sensitive to new developments, and since volumes are still maturing, any significant changes in market sentiment (by way of sensationalism in the media or otherwise) can induce large swings in volume and subsequent price changes. Crypto prices may be volatile and subject to influence by many factors, including the levels of liquidity, public speculation on future appreciation in value, swings in investor confidence and the future growth of alternative assets. In certain circumstances, it may become difficult to assess the value of your Crypto. The trading of Crypto on the CoinSmart Platform has a limited history. The prices available on the CoinSmart Platform, in some cases, may be more volatile and subject to influence by additional factors not specific to the value of the Crypto, including liquidity levels and operational interruptions. Operational interruptions can limit the liquidity of Crypto on the CoinSmart Platform, which could result in volatile prices and reduced confidence in the Crypto traded on the CoinSmart Platform. You may not be able to sell the Crypto when you want to, at a competitive market price, or at all.
Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular Crypto suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the Crypto markets more generally. The greater the volatility of the market price of a particular Crypto, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to one or more of the following: system failures, hardware failures, software failures, network connectivity disruptions, and data corruption.
6.3 Electronic Trading and Dependence on the Internet
There are risks associated with using an internet-based trade execution software application including, but not limited to, the failure of hardware and software. SDT maintains an independent and secure ledger of all transactions to minimize loss, and maintains contingency plans to minimize the possibility of system failure. However, SDT does not control signal power, reception, routing via the internet, configuration of your equipment or the reliability of your connection to the internet. The result of any failure of the foregoing may be that you are unable to place an order, your order is not executed according to your instructions, or your order is not executed at all.
The CoinSmart Platform is operated by SDT pursuant to discretionary exemptive relief granted by the Canadian securities regulatory authorities and expiring on ● 2023 (the Order). SDT expects that the CoinSmart Platform will mature and become subject to the securities regulatory regime generally applicable to marketplaces in Canada, but there is no assurance that this will happen. If SDT’s authorization to operate the CoinSmart Platform is suspended or terminated by the securities regulatory authorities, SDT would seek to ensure that there is an orderly wind-down of the CoinSmart Platform which would allow for all client orders to be filled or otherwise handled in accordance with these Market Conduct Requirements.
6.5 Business Disruption
There is a risk that a transaction will be delayed because of business disruption, whether caused by external events or internally generated systems failure. To mitigate that risk, the firm has robust business recovery policies and procedures as well as related systems risk management, data protection, and cyber-security policies and procedures. SDT tests the effectiveness of these policies and procedures regularly.
6.6 Risk Your Trade Must Be Reversed
There is a risk that trades may have to be unwound because a legally binding order requires SDT to unwind the transaction. This risk exists on all marketplaces for equity and debt securities trading.
6.7 Risk You Make a Mistake in Your Order
A Participant might make an order with the wrong amount of Crypto or the wrong price and not discover that error until after your offer is accepted. Clients bear this risk in the CoinSmart TOS. To reduce the risk, SDT require clients to review their order and confirm they are correct before submitting it to the CoinSmart Platform. Clients are responsible for reviewing orders carefully and ensuring they have been prepared to accurately reflect which Crypto and what amount they intend to purchase or sell.
6.8 AML Regulation
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and its regulations (AML Regulation) require SDT to verify the identity of clients and record transactions on the CoinSmart Platform. SDT must report suspicious transactions (activity SDT reasonably suspects is related to money laundering) to FINTRAC (a federal government agency). SDT is prohibited from telling clients that SDT has made a suspicious transaction report or anything about what SDT reported. SDT may also be required to freeze client accounts and suspend trading on the Marketplace if they have reasonable suspicion under AML Regulation.
The nature of Crypto may lead to an increased risk of fraud or cyber-attack. A breach in cyber security refers to both intentional and unintentional events that may cause SDT to lose proprietary information or other information subject to privacy laws, suffer data corruption, or lose operational capacity. This in turn could cause SDT to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to SDT’s digital information systems (e.g., through “hacking” or malicious software coding), but may also result from outside attacks such as denial-of-service attacks (i.e., efforts to make network services unavailable to intended users). In addition, cyber security breaches of SDT’s third-party service providers can also give rise to many of the same risks associated with direct cyber security breaches. As with operational risk in general, SDT has established risk management systems designed to reduce the risks associated with cyber security.
6.10 No Advice about Crypto
When you opened your Client Account, SDT informed you of whether investments in Crypto available on the CoinSmart Platform are suitable for you based on the information you provided to SDT at the time of account opening and on an ongoing basis. If your information has changed, you should update it before you buy more Crypto.
You are responsible for selecting your own Crypto on the CoinSmart Platform. SDT will not provide you with any advice or recommendations about a particular Crypto or mix of Cryptos that you choose. You must rely on your own judgment and the information available on the CoinSmart Platform and, where necessary, seek independent advice.
6.11 No Securities Regulatory Review
No securities commission has reviewed the offerings of Crypto available on the CoinSmart Platform. Neither SDT nor any Crypto project is a reporting issuer. SDT has never received a receipt for a prospectus and is not required by law to provide full, true, and plain disclosure to the public regarding investments in Crypto. Under the terms of SDT’s registration as a restricted dealer in Canada, SDT is required to maintain a Crypto Asset Statement for each Crypto which sets out certain key information about the Crypto. The Crypto Asset Statements are available here.
Participants must not breach securities laws or our requirements when you trade on the CoinSmart Platform. Securities laws prohibit fraud and market manipulation. We also prohibit trading that mimics securities law prohibitions against illegal insider trading, tipping, recommending, or frontrunning. If you use a nominee to trade for your benefit when you otherwise would not be able to trade on the CoinSmart Platform, that is a breach of your agreement with us and may be a breach of securities laws. Potential consequences for trading that breaches securities laws or our requirements include:
● disabling your access to the CoinSmart Platform by reprogramming your account so that it can be closed in an orderly fashion;
● restricting your trading privileges to “sell only”[3]; and
● reporting your activity to relevant law enforcement authorities and securities regulators. If you breach securities laws or our trading requirements, you will no longer be able to purchase Crypto on the CoinSmart Platform; you will only be able to sell.
6.12 Using Borrowed Money
Using borrowed money to finance the purchase of Crypto, including by using your credit card, involves greater risk than using cash resources only. If you borrow money to purchase Crypto, your responsibility to repay the loan and pay interest as required by the terms of the loan remains the same even if the value of the Crypto purchased declines. We do not lend money, extend credit or provide margin to our clients. You can pay for Crypto on the CoinSmart Platform using your credit card, however, the credit is being provided by your credit card company, not by SDT.
6.13 Data Location
Some of our vendors and service companies may be located or may have servers outside of Canada. If a service provider or its systems server is located in a foreign jurisdiction, it is bound by the laws of that jurisdiction and may be able to disclose your personal information under those laws. This is described more fully in our Privacy Policy.
6.14 Recordkeeping Risk
Ownership records and transaction histories are recorded in book entry only form in the books of the SDT. These books and records are subject to regulatory oversight and we use permissioned based technology and audit tracking to create a complete audit trail of every action on the CoinSmart Platform.
6.15 If We Ever Go Out of Business
If we go out of business for any reason and SDT is unable to continue operating, we will with your instructions, transfer your Crypto to another account or digital wallet under your ownership and control and we will return any funds to your credit to the Canadian financial institution of your choice.
6.16 Lack of Investor Protection Insurance
Crypto purchased and held in your Client Account are not protected by the Canadian Investor Protection Fund, the Canadian Deposit Insurance Corporation or any other investor protection insurance scheme.
6.17 Waiver; Limitation of liability
Any up-to-date market information, including quotes or charts that we provide you is provided ‘as is’ and ‘where is’ without representations or warranties of any kind, and may contain typographical errors, be incomplete, or inaccurate. While we may correct any such errors, missing information, or inaccuracies, we are under no obligation to do so.
We make no representation or warranty as to the ongoing availability of the site or services. Although we strive to provide uninterrupted services, we do not guarantee the absence of interruptions. Outages and downtime may occur for a variety of reasons.
7. DISPUTE RESOLUTION
7.1 SDT Complaint Procedure
SDT is required to document and respond to each complaint made by a client about any product or service that SDT or its representatives offer whether the complaint is received verbally or in writing, fairly and promptly.
In addition, SDT is required to make available to clients an independent dispute resolution service at its own expense for specified complaints, referred to as ‘reportable complaints’, if the resolution has not produced a timely decision that is satisfactory to the client.
7.2 Complaint Types
There are three types of complaints: 1) service complaints, 2) reportable complaints, and 3) SDT LP complaints. Complaints regarding potential abusive trading on the CoinSmart Platform as described in Article 4 above are considered reportable complaints.
7.2.1 Service complaints:
Are complaints made by a client which are founded on customer service issues and are not the subject of any applicable laws and regulations. A service complaint is often operational in nature and might include:
● Late delivery of account statements
● Inadvertent or minor errors in documentation
● Failure to promptly return phone calls
Service complaints that can be directly resolved without further difficulty do not need to be reported to compliance. If there is any doubt as to whether a complaint is service or reportable in nature, it should be discussed with compliance.
Are complaints made by a client which are not founded on customer service issues and are the subject of applicable laws and regulations.
Complaint means a complaint that
(a) Relates to trading of a registered firm of a representative of the firm; and
(b) Is received by the firm within 6 years of the day when the client first knew or reasonably ought to have known of an act or omission that is a cause of the complaint.
Reportable complaints generally involve a claim for compensation. A reportable complaint might include:
● breach of client confidentiality
● more serious documentation errors
● theft, fraud, misappropriation, forgery, misrepresentation, unauthorized trading
● personal financial dealings with a client, money laundering, market manipulation
7.2.3 SDT LP complaints
A client may have a complaint relating to the conduct of SDT LP which does not involve a claim for compensation and is therefore not a reportable complaint under Section 6.2.2 (e.g., such complaint cannot be referred to OBSI under Section 6.4).
Issues relating to the conduct of SDT LP may also be identified through SDT’s market surveillance program.
All complaints and issues relating to SDT LP will be escalated promptly to SDT’s Chief Operating Officer (COO) and Chief Compliance Officer (CCO). The COO and CCO are authorized to conduct an investigation and, if necessary, implement additional internal controls with respect to the activities of SDT LP to prevent problematic conduct from recurring on the CoinSmart Platform.
7.3 Responsibility for Handling Client Complaints
Anyone at SDT may be the first person to receive a client complaint. As mentioned above, a service complaint that is easily and quickly resolved need not be referred to compliance. However, if there is any doubt as to the seriousness or nature of a complaint or if initial efforts to directly and simply resolve a complaint are unsuccessful, compliance should be consulted. It is the responsibility of compliance to determine whether a complaint requires investigation or other supervisory action. The CCO is responsible for overseeing all client complaints.
All complaints regarding potential abusive trading on the CoinSmart Platform relating to an order entered by, or trade executed with, SDT LP, must be escalated promptly to the COO and CCO.
7.4 Independent Dispute Resolution Services and Referral To OBSI
When a complaint is received, the client must be given the option to use an independent dispute resolution service provider in accordance with provisions under part 13.16 of NI 31-103. The ombudsman for banking services and investments (OBSI) will be the independent dispute resolution and mediation service made available to a client. In this instance,
SDT must as soon as possible, provide the client with a written acknowledgement of the complaint that includes,
(a) A description of the firm’s obligation to provide the OBSI as the dispute resolution service available to the client, at the firm’s expense;
(b) The steps the client must take to access the OBSI and under what circumstances;
(c) The contact information for the OBSI.
The client may refer the complaint to the OBSI if,
(a) A complaint was brought within 6 years from the time when the client first knew or reasonably ought to have known of an act or omission that is a cause of the complaint;
(b) after 90 days of receiving the complaint, SDT was unable to provide a written decision regarding the complaint and the client has contacted the OBSI to have the matter dealt with; or
(c) Within 180 days of the client receiving SDT’s written response, the client is unsatisfied and has requested the matter be considered by the OBSI.
SDT is only required to provide and cover the cost of the OBSI as the independent dispute resolution provider – it is not required to cover the cost of any other mediation service whether engaged by the client or not.
To be considered as an eligible complaint by the OBSI, the client must agree that the amount claimed (if any) will be no greater than $350,000. Clients retain the option of pursuing claims for amounts exceeding this limit through other means, such as civil litigation.
It’s important to note, the use of the OBSI does not apply to clients who reside in Quebec, since the Québec securities commission (Autorité Des Marchés Financiers) has its own complaint handling requirements.
Complaints must never be concealed or hidden nor should individual registrants try to resolve a serious complaint directly or personally compensate a client for losses. The CCO on behalf of the firm must review any complaints that involve a claim for compensation, or conduct of an individual in connection with trading or advising activity.
7.5 Client Complaint Procedures
All reportable complaints submitted to SDT are elevated to, and handled by, the CCO or his/her delegate, except in instances when the complaint is directly concerning the CCO. In such instances, the complaint will be handled by the UDP. The CCO must be notified as soon as possible (ideally within 2 business days) of any reportable complaints whether received verbally or in writing.
All written reportable complaints (received by mail, facsimile, chat or email) are reviewed by the CCO or his/her delegate, and copies are maintained in the client’s file. When a complaint is received in person or by telephone, detailed notes are taken, reviewed by the CCO, and maintained in the client’s file. The file is to include:
● A copy of any written correspondence from the client – if the complaint was received verbally, then the complaint must be documented by the individual who received the complaint
● All follow-up notes and memos regarding the complaint
● Any client account information that is pertinent to the complaint
● Any written statements made by the registered individual in relation to the complaint
● Copies of any emails or other correspondence between the registered individual and the client.
● Any calculations or analysis conducted in the investigation of the complaint.
After the initial review of the complaint, within five days of the complaint being received, the CCO or his/her delegate, sends an acknowledgement email to the client advising the client that the complaint has been received and is being investigated, and requesting any further information required from the client. The acknowledgement letter will advise the client that the matter is being investigated, and provide information on how to access the OBSI, including under what circumstances this option is available. After a full investigation, within 90 days of receiving the complaint the CCO or his/her delegate shall respond in writing to the client with the results of the investigation and a proposed resolution of the matter. The client is also advised that, if the client is unsatisfied with the proposed resolution of the dispute, the client has access to independent dispute resolution or mediation services, at our expense, and is provided with contact information for such dispute resolution or mediation services.
7.6 Investigating the Decision
Compliance will involve legal counsel if the matter involves fraud, or potential criminal activity, breach of securities law, reputational harm to the firm or its affiliates or a proceeding filed in a court of law. If any kind of settlement is to be made, it must first be reviewed and approved by the CCO and presented to the client. Clients will be required to sign a release upon acceptance of any settlement.
If a member of SDT personnel is found to be negligent or having acted inappropriately, further disciplinary action may be taken upon approval of the UDP. Internal discipline might include:
● a reprimand;
● a suspension from duties;
● monetary fine;
● new training or re-write of exams;
● reporting to the regulator;
● dismissal/termination of business relationship
The CCO will report on the status of complaints as part of the annual compliance report to the board.
7.7 Client Complaint Reporting
SDT’s client complaint policy requires that the CCO or designated individual maintain a record of all reportable client complaints and resolutions. A reportable complaint is a complaint involving a claim or allegations of inappropriate behaviour related to a breach in a Registrant’s duty of care or negligent conduct by any individual at SDT, such as allegations of:
● Theft
● Fraud
● Misappropriation of funds or crypto assets
● Forgery
● Misrepresentation
● Unauthorized trading involving the client’s account(s)
The CCO or his/her delegate maintains a record of all written and verbal reportable complaints, along with their resolution.
2. Autorité Des Marchés Financiers Requirements
Pursuant to provisions of the Securities Act (Quebec), SDT will establish a file for each complaint received from Quebec clients and notify the complainant promptly upon receipt of the complaint that SDT will be investigating the complaint and that the complaint may be forwarded to the Autorité des Marchés financiers. Once SDT has completed its review and if the complainant is dissatisfied with the outcome of the review, the firm will forward the complaint to the AMF for review at the complainant’s request.
SDT is required to report to the AMF semi-annually regarding the number of complaints it has received from clients during the relevant period. The CCO or his/her delegate, is responsible for filing this declaration electronically with the AMF within 30 days of June 30 and December 31 in each year.
The following is a summary of SDT’s policies and procedures for identifying and responding to conflicts of interest.
SDT is registered as a restricted dealer under applicable securities legislation in all of the provinces and territories of Canada. When carrying out our responsibilities, there will be circumstances where material conflicts of interest may arise between SDT, including our employees, and our clients.
A conflict of interest includes any circumstance where:
(i) The interests of different parties, such as the interests of a client and SDT, are inconsistent or divergent
(ii) SDT or our representatives may be influenced to put their interests ahead of the client’s interests, or
(iii) Monetary or non-monetary benefits available to SDT or its staff, or potential detriments to which SDT may be subject, may compromise the trust that a reasonable client has in SDT and its staff.
The materiality of a conflict will depend on the circumstances. SDT should consider whether the conflict may be reasonably expected to affect either of the following or both:
(i) the decisions/instructions of the client in the circumstances;
(ii) the actions or decisions of SDT in the circumstances.
SDT has a responsibility to address all material conflicts of interest between a client and itself, including each individual acting on its behalf, in the best interest of the client. SDT must avoid any material conflict of interest between a client and the firm, including each individual acting on its behalf, if the conflict is not, or cannot be, otherwise addressed in the best interest of the client. SDT must document the identification, review and analysis of conflicts of interest, the determination as to whether a conflict is material, and the controls used by the firm to ensure that material conflicts have been addressed in the client’s best interest.
SDT acts as a passive liquidity provider on the CoinSmart Platform exclusively for the purposes of providing liquidity to SDT clients. Orders entered by SDT are the same order types available to clients through Advanced Trade. SDT may be a significant provider of resting orders displayed on the CoinSmart Platform at any time.
SDT prices orders based on the pricing available from its liquidity providers, plus a “spread” on such trades, which is the positive difference between the price that SDT pays for crypto assets from its liquidity providers and the price that SDT charges to clients.
SDT’s liquidity provider activities does not have an unreasonable advantage over clients as the matching engine on the central limit order book that powers the CoinSmart Platform does not distinguish between the SDT orders and the orders of the clients. SDT’s liquidity provider activities also does not analyze or consider, or have any advance knowledge of, existing orders of clients in the central limit order books when determining the bid and ask orders to place. The spread increases slightly as the order size increases. Currently, SDT’s spread is in the range of 1 to 2%. The CEO, CCO and COO of SDT review spread levels on a quarterly basis or more frequently as necessary within the context of the global markets and activity on the CoinSmart Platform and may adjust spread levels.
Orders placed by SDT LP may not be cancelled, and trades entered into with SDT LP may only be cancelled in the limited circumstances set out in Section 3.6.
Any complaint made by a client in connection with an order entered by, or trade executed with, SDT LP on the CoinSmart Platform, will be escalated promptly to the CCO. The CCO will determine whether the complaint is a reportable complaint or not based on whether a claim for compensation is made.
9. PROCESS FOR PAYMENT AND SETTLEMENT OF TRANSACTIONS
The process for payment and settlement of transactions is described in the CoinSmart TOS.
10. ALL FEES PAYABLE IN CONNECTION WITH TRADING ON THE COINSMART PLATFORM
All fees and compensation payable to SDT or any affiliate of SDT and all benefits received by SDT are disclosed in the Relationship Disclosure Information which are incorporated into the CoinSmart TOS. The spread charged by SDT LP is also discussed above in Section 9.
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