IIROC proposes electronic trading rules

To address risks stemming from electronic trading, IIROC today issued a package of proposed rule changes to align market trading rules with the implementation of the Canadian Securities Administrators (CSA) N1 23-103 Electronic Trading.

The SRO’s proposals amend the Universal Market Integrity Rules (UMIR) to introduce specific supervision and gatekeeper obligations for dealers to help mitigate the risks related to increasing levels of speed and the automation of trading.

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“These proposed changes to IIROC rules complement the CSA’s establishment of a regulatory framework for the oversight and management of risks associated with the use of electronic trading on Canadian marketplaces,” says Susan Wolburgh Jenah, IIROC’s President and CEO.

IIROC is also issuing proposed guidance on the amendments for comment. The content, much of which was contained in earlier Notices, consolidates and further clarifies IIROC’s expectations for supervision of electronic trading and the use of automated order systems in particular.

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Member dealers will have 90 days to comment to IIROC on how the changes will affect their businesses.

IIROC’s proposals coincide with the CSA decision to implement NI 23-103, which is designed to require firms actively monitor and manage risks stemming from electronic trading. The new framework will, among other things, require marketplace participants that enter orders electronically maintain policies, procedures and controls to manage the risks associated with accessing the markets in this manner.

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“Establishing the right regulatory framework to oversee and manage the risks of electronic trading is a priority for the CSA,” says Bill Rice, Chair of the CSA and Chair and CEO of the Alberta Securities Commission.

“The regulatory obligations in this new rule provide better protection for investors and support the integrity of Canada’s capital markets by outlining the obligations required when participating in this activity.”

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.