IIROC finalizes guidance on marketplace thresholds

Mitigating volatility

TORONTO, Aug. 25, 2015 /CNW/ - The Investment Industry Regulatory Organization of Canada (IIROC) today published guidance on the establishment and operation of price thresholds by Canadian marketplaces to further reduce short-term, unexplained price volatility and address risks arising from electronic trading. The guidance takes effect on August 25, 2016.

Today's publication reflects responses from stakeholders to proposed guidance which IIROC re-published for comment in March 2015 and input from further industry consultations.

IIROC currently regulates trading activity on all lit and dark equity marketplaces in Canada. The new guidance sets specific price thresholds for securities beyond which a marketplace must preclude trading activity. A marketplace threshold is to be triggered when an order is received that would exceed the prescribed threshold level if executed.  All marketplaces, including dark marketplaces, will be required to implement marketplace thresholds.

"The operation of marketplace thresholds reflects IIROC's commitment to maintaining fair and orderly markets while lessening the need for regulatory intervention," said Victoria Pinnington, IIROC's Vice President, Trading Review and Analysis. "Marketplace thresholds complement a series of IIROC reforms that help enhance market integrity and foster investor confidence."

Since 2010, IIROC has implemented a number of reforms to reduce the number of erroneous trades and unexplained short-term price volatility, including: 

  • controls at the participant level introduced through electronic trading rules in March 2013, and implementation of third-party marketplace access rules in March 2014;
  • introduction of single-stock circuit breakers in February 2012, and their subsequent expansion in February 2015;
  • enhancements to market-wide circuit breakers in February 2013; and
  • clarification in August 2012 of IIROC's policies and procedures on erroneous and unreasonable trades.

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: June Yee, Manager, Corporate Communications, 416 943-6921, jyee@iiroc.ca; Karen Archer, Manager, Media Relations, 416 865-3046, karcher@iiroc.ca


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