CSE Unveils Canada’s First Platform for Clearing and Settling Securities through Blockchain Technology

̶ Signs MOU for First Security Token Offering ̶

February 13, 2018 – Toronto, ON – The Canadian Securities Exchange (“CSE” or “the Exchange”) is pleased to announce that it is introducing an innovative securities clearing and settlement platform that harnesses the unique features of blockchain technology. The platform will enable companies to issue conventional equity and debt through tokenized securities, which would be offered to investors through Security Token Offerings (“STOs”). Unlike blockchain-based cryptocurrencies, the STOs will be subject to full regulation by applicable securities commissions. The platform is expected to provide major benefits to investors and the Canadian financial services community, including real-time clearing and settlement and substantial cost and error reductions compared to conventional clearing services. The CSE intends to file an application to seek approval from Canadian regulators to recognize the new clearing house, which it will operate.

Benefits of the new platform include:

Reduction of risk for investment dealers and their clients by ensuring that trades clear and settle immediately, compared to the current system used for equities which requires two full business days following the trade date to settle each trade;

Substantial cost savings achieved by eliminating the need for investment dealers to post initial and mark-to-market capital with a clearing house pending the settlement of trades;

Cost savings and error reductions associated with processing corporate actions (such as splits, consolidations, and dividend payments);

Facilitation of shareholder communications;

Reduction of risk for the initial investors in STOs and for investors purchasing tokens in the secondary market by formalizing the disclosure environment. Token issuers will be required to adhere to the same Exchange requirements as conventional, non-tokenized issuers in order to achieve and maintain a listing on the CSE;

Significant oversight of STOs compared to unregulated Initial Coin Offerings, including regulated review protocols for STOs prior to a token’s acceptance for trading, and ongoing oversight by both an established national securities exchange and provincial securities regulators;

Broadened participation in tokenized security markets by enabling access for new categories of investors.

“This is a landmark announcement for the Canadian capital markets. The Canadian Securities Exchange expects to be the first recognized exchange in Canada to introduce a fully developed blockchain platform for trading, clearing and settling tokenized securities,” said Richard Carleton, Chief Executive Officer of the CSE. “Our platform represents an intersection between blockchain and the capital markets that delivers on blockchain’s promise to disrupt conventional transaction and record-keeping mechanisms, thereby providing tangible benefits for market stakeholders. By harnessing this technology, the potential exists to extend corporate finance beyond the limits of traditional equity and debt offerings. We look forward to working with regulators and with corporations seeking to raise capital through STOs to fully realize the benefits of the new platform. We believe it represents a tremendous opportunity for stakeholders in the Canadian marketplace.”

In connection with this announcement, the CSE has signed a Memorandum of Understanding (“MOU”) with Kabuni Technologies Inc., a private company based in Vancouver, British Columbia. Kabuni intends to file a prospectus with the British Columbia Securities Commission (“BCSC”) for approval to issue tokens to investors through a STO. Subject to meeting the requirements of the BCSC and CSE, the tokens would be traded on the CSE’s existing equity trading platform. This would mark the first time a tokenized security has been listed for trading on a recognized securities exchange.

The CSE is confident that Kabuni is the first of many entities that will elect to issue tokenized securities for trading on the Exchange’s platform. The inherent benefits of blockchain-based clearing and settlement services apply to large, established companies as much as they apply to start-up entrepreneurs seeking to access the public capital markets for the first time. Accordingly, the platform has the potential to raise the global profile of the Canadian capital markets and introduce the CSE to a much larger stakeholder base in Canada and around the world.

The CSE has licensed the necessary technology for the clearing house from New York-based Fundamental Interactions Inc. Fundamental Interactions has extensive experience delivering blockchain-enabled solutions to clients in the United States and Asia.

For more information on the CSE’s tokenized security trading platform and to register for updates, please visit http://www2.thecse.com/blockchain

About the Canadian Securities Exchange:

The CSE is home to more than 350 uniquely listed issues covering a broad range of industry sectors. The CSE provides trade execution, smart routing, risk management, compliance and market information services for Canadian listed instruments.

Recognized as an exchange by the Ontario Securities Commission in 2004, the CSE is designed to facilitate the capital formation process for public companies through a streamlined approach to company regulation that emphasizes disclosure and the provision of efficient secondary market trading services for investors.

For more information, please visit www.thecse.com and our blog at http://blog.thecse.com

Contact:

Richard Carleton, CEO

416-367-7360

richard.carleton@thecse.com