IIROC publishes proposal to enhance transparency and fair pricing for over-the-counter (OTC) traded securities

    TORONTO, April 17 /CNW/ - The Investment Industry Regulatory Organization
of Canada ("IIROC") today published a proposed rule and guidance note to
address fair pricing of over-the-counter (OTC) traded securities including
fixed income securities such as bonds. The proposal would amend existing trade
confirmation requirements by mandating yield disclosure for fixed income
securities. It will require firms to disclose on confirmations sent to retail
clients for OTC transactions if the dealer's remuneration has been added to
the price in the case of a purchase or deducted in the case of a sale. The
general purpose of these proposed amendments is to enhance the fairness of
pricing and transparency of OTC market transactions.
    The proposed rule is intended to ensure that clients, in particular
retail clients, are provided bid and offer prices for OTC securities (both
fixed income and equity) that are fair and reasonable in relation to
prevailing market conditions. IIROC-regulated firms currently have a duty to
deal fairly when marketing, entering into, executing and administering trades
in the domestic debt market. The proposed amendments establish clear,
principles-based standards to ensure that the firm has in place, and
supervises and enforces, policies and procedures so that the price paid or
received by the end client is a fair and reasonable one.
    Over-the-counter markets differ significantly in structure and operation
from markets for listed securities. These differences generally result in less
trade price transparency to clients. Retail investors in particular have less
access to OTC security pricing (and yield) information than they do in the
listed securities markets. The proposed yield disclosure requirement is
intended to provide investors with sufficient information to enable them to
determine if they are in fact receiving a fair price for a product.
    "The proposed rule would set enhanced standards of fairness and
transparency which will benefit investors who purchase OTC traded securities,"
said Susan Wolburgh Jenah, IIROC President and CEO. "These proposals, once
implemented, represent an important step forward in enhancing our ability to
conduct oversight and enforce compliance against a set of standards". The
proposed rule is now available for a 90-day public comment period. Following
the public comment period, IIROC staff will draft and publish a consolidated
response to the comments received, make revisions to the proposal as
appropriate and may re-publish them for further comment. Once approval of the
proposed rule is received from the IIROC Board of Directors and recognizing
regulators, the rule will be made effective on a date that allows for a
reasonable implementation period.

    The full IIROC proposal is available at:

    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

For further information:

For further information: Connie Craddock, Vice-President, Public
Affairs, (416) 943-5870, ccraddock@iiroc.ca

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