TORONTO, April 3, 2014 /CNW/ - The Investment Industry Organization of Canada (IIROC) today published for comment proposed guidance that would establish a framework for marketplaces to adopt price thresholds. Together with other IIROC measures, the marketplace thresholds are designed to mitigate short-term, unexplained price movements in the trading of individual stocks.
The proposed guidance is principles-based, allowing each marketplace the flexibility to tailor its thresholds to the type of trading on the market. While the proposed guidance does not prescribe levels of acceptable price movement, marketplace thresholds must generally prevent trades that would otherwise trigger regulatory intervention by IIROC.
"Together with related IIROC initiatives, including circuit breakers and new risk controls at the dealer level, marketplace thresholds are important to enhancing investor confidence and market integrity," said IIROC Senior Vice President, Market Regulation and Policy, Wendy Rudd. "These mechanisms will help to reduce the number of erroneous trades and unexplained price movements, and lessen the need for IIROC intervention."
This initiative complements a series of reforms that IIROC has introduced to maintain fair and orderly markets. Other related measures implemented by IIROC over the past two years include:
- controls at the participant level introduced through implementation of third-party marketplace access rules in March 2014 and electronic trading rules in March 2013;
- direction to dealers in July 2013 on the use and management of stop loss orders;
- update in February 2013 to market-wide circuit breakers; and
- clarification in August 2012 of policies and procedures on erroneous and unreasonable trades.
The proposal is out for comment until July 3, 2014.
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
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