IIROC announces settlement with BMO Nesbitt Burns

TORONTO, Aug. 25 /CNW/ - On August 16, 2010, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) approved a Settlement Agreement between IIROC staff and BMO Nesbitt Burns Inc. (BMONB) in which the firm admitted it breached Universal Market Integrity Rules (UMIR) when it failed to make reasonable efforts to meet its best price obligations.

Under UMIR 5.2, the best price obligation is a general duty owed to the market to ensure that better priced orders are not bypassed and traded through. Its objective is to ensure fairness to all market participants and promote efficiency and transparency while maintaining investor confidence in the market. UMIR Policy 5.2 requires IIROC-regulated firms adopt policies and procedures that will ensure compliance with their best price obligations and that these policies are updated to reflect changes in the trading environment and market structure.

Notwithstanding two warnings from IIROC in December 2008 and February 2009 that it was responsible for a larger-than-average number of "trade through" alerts (which identify possible violations where investors' orders were not executed at the best price), BMONB failed to respond in a timely manner and make reasonable efforts to connect to the Omega ATS until October, 2009.

In the agreement, BMONB admitted to the following misconduct:

    
    -   Between October 2008 and October 2009, it failed to make reasonable
        efforts to connect to the Omega ATS protected marketplace.
    

BMONB agreed as part of the agreement to pay a fine in the amount of $250,000 and costs of $15,000.

IIROC formally initiated the investigation into BMONB's conduct on September 30, 2009. BMONB is an IIROC-regulated firm.

The panel's decision and reasons will be made available to the public at www.iiroc.ca.

IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets. IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.

SOURCE Investment Industry Regulatory Organization of Canada (IIROC) - General News

For further information: For further information: Jeff Kehoe, Vice President, Enforcement, 416 943.6996, jkehoe@iiroc.ca


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