Regulators release discussion paper on trading obligations

By Kate McCaffery | July 22, 2005 | Last updated on July 22, 2005
2 min read

(July 22, 2005) The Canadian Securities Administrators (CSA) released a discussion paper today, soliciting feedback from market participants on market structure developments and trade-through obligations.

A trade-through occurs when a dealer bypasses a quote on one market trading system to execute trades at an inferior price on another system. Until recently no issues arose under the current rules because there haven’t been multiple marketplaces trading the same securities in Canada, the technology systems of existing marketplaces, namely the TSX, TSX Venture Exchange and the Canadian Trading and Quotation System (CNQ), enforced the best price obligation, and only dealers had direct access to these marketplaces.

Recently, an Alternative Trading System (ATS) trading Canadian listed securities has been registered to carry on business in a number of jurisdictions in Canada. Although dealers are subject to trade-through obligation rules to ensure clients receive the best possible execution of their trades, “non-dealer market participants” or anyone directly accessing the markets, are not held to the same rules.

To deal with these recent developments, the CSA issued the discussion paper, entitled CSA Discussion Paper 23-403 Market Structure Developments and Trade-Through Obligations, to consider how the market should evolve and the role of trade-through obligations going forward.

“We believe it is important to identify the objectives we are trying to achieve, and any problems that we are trying to avoid or minimize,” says Randee Pavalow, director of capital markets at the Ontario Securities Commission. “We want to hear broadly from market participants about these issues that are fundamental to the structure of our capital markets.”

Copies of the discussion paper are available on member regulator websites. The deadline for comment submissions is September 19, 2005. The CSA has scheduled a public forum on trade-through protection, to take place in Toronto on Friday, October 14.

Filed by Kate McCaffery,,


Kate McCaffery