IIROC has published guidance on the establishment and operation of price thresholds by Canadian markets to further reduce short-term, unexplained price volatility and address risks arising from electronic trading. The guidance takes effect on August 25, 2016.
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 precludes trading activity. A marketplace threshold is 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.
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.