Sistema de relatórios de comércio do mercado iiroc

Lei de Valores Mobiliários.

Aviso da equipe da CSA e solicitação de comentários 21-315 Próximos passos em regulamentação e transparência do mercado de renda fixa.

17 de setembro de 2015.

I. Introdução.

Este aviso descreve as etapas que os funcionários do CSA (Canadian Securities Administrators) (equipe da CSA ou nós) estão realizando para:

• melhorar a regulação no mercado de renda fixa, e.

• identificar oportunidades para melhorar a transparência do mercado e proteger melhor os interesses dos investidores.

1. os dados de renda fixa disponíveis são limitados e fragmentados em várias fontes, o que dificulta a realização de uma avaliação abrangente do mercado de renda fixa;

2. o mercado secundário de renda fixa é um mercado descentralizado de balcão, onde os grandes investidores têm significativamente mais poder de barganha que os pequenos investidores;

3. há adoção limitada de negociação eletrônica e sistemas alternativos de negociação, especialmente para títulos corporativos; e.

4. A participação direta do varejo no mercado primário e secundário de renda fixa é baixa e os investidores de varejo normalmente acessam o mercado de renda fixa através da compra de fundos de investimento.

O objetivo deste aviso é definir o plano da equipe da CSA para melhorar a regulamentação de renda fixa para:

1. facilitar a tomada de decisões mais informada entre todos os participantes do mercado, independentemente da sua dimensão;

2. melhorar a integridade do mercado; e.

3. avaliar se o acesso ao mercado de renda fixa é justo e equitativo para todos os investidores.

Cada uma dessas etapas é discutida nas seções abaixo.

II. Tomada de decisão mais informada entre todos os participantes do mercado.

No Relatório, o pessoal da OSC observou que a transparência no mercado de renda fixa é geralmente limitada. As informações de renda fixa não são divulgadas publicamente como no mercado de ações e não estão facilmente disponíveis para os participantes do mercado. Isso se aplica não somente à ordem de renda fixa e informações comerciais, mas também às informações relativas ao custo das transações dos investidores e aos dados relacionados às ofertas de renda fixa. Não existe uma fonte abrangente de dados comerciais confiáveis ​​disponíveis para revendedores, investidores ou reguladores. Além disso, o Relatório identificou o fato de que há mais informações disponíveis para investidores institucionais (principalmente maiores). Esses investidores podem alavancar suas redes de concessionárias para acessar informações pré-negociação. No entanto, informações mais limitadas estão disponíveis para instituições menores e investidores de varejo.

Essas questões estão sendo abordadas pela implementação de requisitos de relatórios de desempenho, alterações no Sistema de Análise e Recuperação Eletrônica de Documentos (SEDAR) e trabalho com a Organização Reguladora do Setor de Investimentos do Canadá (IIROC) para aumentar a transparência pós-negociação de títulos de dívida corporativa. Além disso, os reguladores terão acesso a dados de renda fixa, conforme descrito abaixo neste Edital.

1. Implementação de Requisitos de Custo e Desempenho no Modelo de Relacionamento com o Cliente - Fase 2 (CRM 2)

As alterações ao CRM 2 do National Instrument 31-103 Requisitos de Registro, Isenções e Obrigações Contínuas do Registrante (NI 31-103) e as regras do IIROC e da Associação de Distribuidores do Fundo Mútuo do Canadá, quando totalmente implementadas até julho de 2016, ajudarão investidores que são clientes de concessionários e consultores entender melhor o custo de suas transações de renda fixa. Especificamente, os investidores receberão informações sobre o valor total de quaisquer acréscimos, descontos, comissões ou outras taxas de serviço pagas, ou o valor total das comissões cobradas e a notificação de que eles já pagaram a empresa do revendedor.

Os investidores se beneficiarão de melhorias no SEDAR que foram implementadas no início de 2015. O SEDAR é o sistema eletrônico para o arquivamento oficial de documentos por empresas públicas e fundos de investimento em todo o Canadá. Seu objetivo é facilitar a apresentação eletrônica de informações sobre valores mobiliários exigidos pela CSA, permitir a divulgação pública dessas informações e fornecer comunicação eletrônica entre os arquivadores eletrônicos, os agentes de arquivamento e a CSA. Em abril de 2015, o SEDAR foi aprimorado para tornar mais fácil para os investidores encontrar documentos relevantes para ofertas de renda fixa, especialmente contratos de crédito e fideicomissos.

Especificamente, dois novos tipos de documentos foram adicionados ao SEDAR:

• documentos que afetam os direitos dos portadores de títulos - fideicomissos em relação à dívida, que incluem contratos de fideicomisso e contratos de fideicomisso suplementares arquivados em conexão com uma oferta de dívida; e.

• contratos relevantes - contratos de crédito, que incluem contratos de crédito, ambos no contexto de arquivamento de prospectos e registros contínuos de divulgação.

3. Transparência para os Títulos de Renda Fixa.

(a) Requisitos de transparência aplicáveis ​​aos títulos de rendimento fixo.

Os requisitos de transparência para títulos de renda fixa estão incluídos na Parte 8 do NI 21-101.

Esses requisitos exigem que os revendedores ofereçam informações sobre pedidos e transações de títulos de renda fixa a um processador de informações (conforme exigido pelo processador de informações). O processador de informações é uma entidade que coleta, agrega e divulga publicamente os dados.

(i) Exigências de transparência existentes para os títulos de dívida do governo e a isenção de transparência.

(ii) Requisitos de transparência existentes para títulos de dívida de empresas.

As exigências de transparência para os títulos da dívida corporativa também estão incluídas no NI 21-101. Para títulos de dívida corporativos, os marketplaces, corretores e negociantes entre corretoras são obrigados a relatar informações de pedidos e / ou de negociação a um processador de informações, conforme exigido pelo processador de informações. Esses requisitos estão atualmente em vigor e as informações são fornecidas a um processador de informações para títulos de dívida corporativa. A CanPX Inc. (CanPX) é processadora de informações para títulos de dívida corporativa desde 2003. Ela define critérios e designa os títulos de dívida corporativa (os Títulos de Dívida Corporativa Designados) pelos quais recebe e divulga informações pós-negociação dos participantes que possuem menos 0,5% do mercado relevante. As informações divulgadas pela CanPX estão sujeitas a limites de volume, que mascaram o verdadeiro tamanho do dólar dos grandes negócios e são divulgados a cada hora.

O CanPX divulga dados de negociação por meio de fornecedores de informações, que os disponibilizam para seus clientes. Ele também exibe em seu site, gratuitamente, informações consolidadas de preços de fim de dia para os Títulos de Dívida Corporativa Designados que foram negociados no dia anterior.

(iii) Transparência em outras jurisdições.

Observamos que os requisitos de transparência para títulos de dívida corporativa também são obrigatórios em jurisdições estrangeiras como os EUA, por meio do Trade Reporting and Compliance Engine (TRACE) administrado pela Financial Industry Regulatory Authority e Europa, onde a MiFID II exige transparência para títulos corporativos admitidos negociação em locais de negociação.

(b) a proposta da equipe da CSA de aumentar a transparência dos títulos de dívida das empresas.

Como mencionado acima, a meta da equipe da CSA é expandir a transparência de títulos corporativos. Existem dois aspectos no plano para atingir esse objetivo. A primeira é aproveitar a plataforma de relatórios de renda fixa que será introduzida pelo IIROC a partir de novembro de 2015 (essa plataforma é descrita abaixo) e ter o IIROC como processador de informações sob o NI 21-101. A segunda é ampliar a transparência dos títulos corporativos para que as informações estejam disponíveis para todos os títulos corporativos, sujeito a um atraso de divulgação e aos limites de volume, até o final de 2017.

(i) IIROC como o processador de informações.

A Regra de Relatório de Dívidas do IIROC exige que os membros do revendedor do IIROC reportem informações de renda fixa para todas as transações de renda fixa (dívida governamental e corporativa) ao IIROC para fins de vigilância. O relatório será feito através do sistema de relatórios de comércio de renda fixa do IIROC, o Sistema de Relatório de Comércio do Mercado (MTRS 2.0), e terá início em 1º de novembro de 2015.

É intenção da equipe da CSA usar as informações reportadas ao MTRS 2.0 relacionadas a títulos de dívida corporativa para implementar nossa proposta de transparência. Especificamente, o IIROC atuará como um processador de informações para os títulos da dívida corporativa sob o NI 21-101 e divulgará publicamente informações comerciais relativas a esses títulos, sujeito a um atraso de divulgação e limites de volume (descritos abaixo).

Há uma série de benefícios em ter o IIROC atuando como o processador de informações e disseminar informações sobre o comércio de títulos corporativos. Especificamente:

• A implementação da Regra de Relatório de Dívidas do IIROC é oportuna, pois o relatório dos membros do revendedor do IIROC para o IIROC terá início em novembro de 2015 e será concluído até 1º de novembro de 2016.

• Todas as negociações de renda fixa executadas pelos membros do Dealer IIROC serão reportadas ao IIROC em conformidade com a regra de relatório de dívida do IIROC. Isso garantirá a disponibilidade de uma fonte abrangente de informações comerciais sobre dívidas corporativas que serão usadas para obter transparência.

• A exatidão e integridade dos dados estarão sujeitas a supervisão regulatória, o que garantirá a integridade dos dados que serão divulgados publicamente.

• Nenhum desenvolvimento de sistema adicional ou outros esforços por parte dos revendedores serão necessários para fornecer dados a uma plataforma de transparência, uma vez que eles já serão obrigados a fornecer dados para cumprir com a regra de relatório de dívida IIROC. Isso também garantirá que não haverá relatórios duplicados pelos revendedores.

O IIROC apoia totalmente essa abordagem e participará ativamente dessa iniciativa de transparência.

Espera-se que o status da CanPX como processador de informações seja estendido para acomodar um período de transição após o primeiro estágio da implementação da regra de relatório de dívida da IIROC. Um aviso indicando qualquer extensão será publicado em uma data posterior.

(ii) Expandir a transparência para negócios em títulos de dívida de empresas.

O segundo aspecto do plano proposto para aumentar a transparência dos títulos corporativos é expandir a informação disponível publicamente. Isso será alcançado ao disponibilizar publicamente um subconjunto das informações relatadas pelo sistema MTRS 2.0, de acordo com os requisitos do NI 21-101. No curto prazo, as informações que serão disponibilizadas publicamente referem-se a negociações em Títulos de Dívida Corporativa Designados e negociações marcadas como "varejo" no MTRS 2.0. A longo prazo, as informações para todos os títulos da dívida corporativa serão disponibilizadas. Abaixo, incluímos uma descrição das informações que serão tornadas transparentes e os cronogramas propostos para a implementação da estrutura aprimorada de transparência.

As informações relatadas pelo MTRS 2.0 que serão disponibilizadas publicamente incluem:

• informações sobre títulos de dívida de empresas, conforme relatado pelos revendedores, conforme prescrito pelo NI 21-101; e.

• para cada título de dívida corporativa, apenas os campos de dados que facilitariam a tomada de decisões mais informada para os investidores. Enquanto estamos considerando os campos de dados específicos que serão disponibilizados publicamente, é nossa expectativa que as informações divulgadas incluam, para cada título de dívida corporativa, o nome do título, preço, cupom, rendimento, volume negociado (sujeito a volume caps), o tipo de transação, indicação de se a negociação foi uma negociação entre negociantes ou se era uma compra ou venda de cliente, data e hora da negociação e data de liquidação.

No contexto da revisão da transparência no mercado de dívida corporativa, nos reunimos com uma variedade de partes interessadas, incluindo as empresas buy-side e sell-side. Discutimos com eles o impacto potencial da transparência adicional na liquidez e como qualquer impacto potencialmente negativo pode ser mitigado. Eles indicaram que a disseminação atrasada e os limites de volume são formas possíveis de mitigar esse impacto. Concordamos e observamos que nossa abordagem para aumentar a transparência inclui o uso de tais mecanismos para mitigar qualquer possível impacto negativo de maior transparência. Em nossa opinião, a abordagem para aumentar a transparência é equilibrada, pois aborda a necessidade de informações, mas o faz de uma forma que responde às preocupações de que muita transparência pode afetar a liquidez. Mais detalhes são fornecidos abaixo.

A. Demora de divulgação

Reconhecemos que a disseminação em uma base T + 2 constitui um atraso maior quando comparado ao atraso de disseminação de uma hora da CanPX. No entanto, somos de opinião que a disponibilidade de uma fonte abrangente de informações ajudaria a obter transparência para todas as negociações de dívida corporativa, maior disponibilidade dessas informações para os investidores e a eficiência obtida com o uso do MTRS 2.0 para fins de transparência (ou seja, revendedores só serão obrigados a relatar seus dados comerciais uma vez) são benefícios que excedem em muito o impacto potencial de um atraso maior. Iremos monitorizar o atraso da disseminação com vista a diminuí-lo ao longo do tempo.

As informações a serem publicadas pelo IIROC também estarão sujeitas a limites de volume. Isso significa que, para os negócios que têm volumes acima de US $ 2 milhões para títulos corporativos de grau de investimento e US $ 200.000 para títulos corporativos sem grau de investimento, os volumes reais não serão mostrados no display. Em vez disso, os volumes serão refletidos como $ 2 milhões + e $ 200.000 +, respectivamente. Esses limites de volume são os mesmos que são usados ​​hoje e estão descritos na Política complementar para NI 21-101. Os limites de volume existentes que mascaram negociações de grande volume protegerão o anonimato das transações de grande porte. A longo prazo, à medida que os dados do MTRS 2.0 são analisados, determinaremos se o tamanho dos limites de volume continua a ser apropriado.

C. Proposta de cronograma para implementar a transparência pós-negociação dos títulos de dívida das empresas.

Conforme observado acima, é objetivo da equipe da CSA alcançar a transparência para as negociações em todos os títulos da dívida corporativa até o final de 2017. Consideramos como atingir essa meta à luz de:

• o fato de que o IIROC implementará a Regra de Relatório de Dívidas do IIROC em duas fases (descritas abaixo); e.

• preocupações que foram levantadas globalmente sobre uma diminuição da liquidez nos mercados de dívida corporativa e o impacto potencial de transparência adicional sobre a liquidez.

Pretende-se que a transparência para todos os títulos de dívida corporativos seja progressiva ao longo dos próximos dois anos em duas fases, como segue:

• na Fase I (prevista para meados de 2016), o IIROC, como processador de informações, divulgará informações pós-negociação para todos os negócios nos Títulos de Dívida Corporativa Designados e para negociações de varejo para todos os outros títulos de dívida corporativos reportados ao IIROC; e.

• na Fase II (prevista para ocorrer em meados de 2017), o IIROC divulgará informações para todos os negócios em todos os títulos de dívida corporativa e para novas emissões de dívida corporativa.

É nossa opinião que o fornecimento de uma abordagem em fases permite que o IIROC facilite a implementação suave da Regra de Relatório de Dívida IIROC e MTRS 2.0 antes de ter que disseminar a informação. Isso também ajudará a mitigar as preocupações em relação ao impacto de maior transparência na liquidez.

III Melhoria da integridade do mercado.

Outro tema-chave identificado no Relatório foi a falta de uma fonte abrangente de dados comerciais confiáveis ​​disponíveis para os reguladores.

Como mencionado acima, o IIROC adotou recentemente a Regra de Relatório de Dívidas do IIROC para resolver essa lacuna. Os novos requisitos permitirão que os reguladores monitorem melhor o mercado e identifiquem e resolvam os problemas de integridade do mercado. Apoiamos esses esforços e supervisionaremos a implementação da Regra de Relatório da Dívida IIROC à medida que ela for implementada. Também analisaremos os dados da transação da dívida no futuro para entender as tendências do mercado e informar as decisões políticas.

Além disso, estamos analisando se é apropriado exigir que os revendedores de mercado isentos reportem informações de renda fixa ao IIROC, para que o IIROC possa estabelecer uma fonte abrangente de informações que incluiria todos os participantes relevantes do mercado. Também estamos considerando se os requisitos de transparência devem se aplicar a essa informação. Iremos relatar o status de nossa revisão e as próximas etapas no devido tempo.

IV. Avaliação do acesso ao mercado de renda fixa.

Outra questão que está sendo examinada diz respeito ao acesso ao mercado de renda fixa. Diversos participantes do mercado, em particular investidores institucionais menores, levantaram preocupações de que têm capacidade limitada de participar de novas ofertas de dívida.

No Relatório, a equipe da OSC observou que os subscritores parecem concentrar seus esforços em vender títulos para grandes instituições porque esses investidores:

• comprar blocos maiores de estoque, reduzindo os custos de marketing e as margens associadas;

• fornecer informações de sinalização que ajudem o subscritor a avaliar o problema apropriadamente; e.

• beneficiar de cross-selling, onde os relacionamentos anteriores reduzem os esforços de marketing.

O regulamento para a alocação de ofertas iniciais é encontrado na Conduta Empresarial da Regra 29 do Grupo de Revendedores IIROC, que proíbe a alocação de novos problemas para contas de não clientes à frente dos clientes. Esta regra não cobre alocações entre clientes.

Para examinar esta questão, foi criado um grupo de trabalho composto pelo pessoal do IIROC e da CSA. Esse grupo realizará uma análise abrangente das práticas de alocação dos revendedores entre os clientes para coletar dados relacionados a como as ofertas de dívida inicial são alocadas entre os diferentes participantes do mercado e entender como as alocações são feitas. Com base nessa revisão, determinaremos se é necessária mais ação regulatória.

V. conclusão.

Neste comunicado, definimos as etapas que a equipe da CSA e da IIROC está tomando para melhorar a regulamentação no mercado de renda fixa e identificar oportunidades para melhorar a transparência do mercado e proteger melhor os interesses dos investidores.

Reconhecemos que a negociação no mercado secundário de renda fixa é complexa e nosso plano abrange apenas algumas áreas. No entanto, somos de opinião que assegurar dados de renda fixa está disponível para os reguladores e aumentar a transparência da dívida corporativa constitui primeiros passos significativos na modernização do marco regulatório para o mercado de renda fixa e é uma pré-condição necessária para mais trabalho de política nessa área.

Ao ter acesso a uma fonte abrangente de dados de renda fixa, os reguladores serão capazes de monitorar adequadamente a atividade de negociação no mercado de renda fixa, identificar problemas e tendências e determinar se as mudanças no marco regulatório seriam apropriadas. Com maior transparência, os investidores poderão avaliar a qualidade de suas execuções e levantar quaisquer problemas com os revendedores ou, se aplicável, com os reguladores. Reconhecemos a necessidade de equilibrar transparência e liquidez, e somos de opinião que o plano descrito acima, incluindo o uso de divulgação atrasada e limites de volume, cria esse equilíbrio.

VI. Prazo para Comentários.

Envie seus comentários sobre o plano proposto para melhorar a regulamentação de renda fixa e os cronogramas para a inclusão da transparência de renda fixa até 1º de novembro de 2015. Se você não enviar seus comentários por e-mail, envie um CD contendo os envios (em Formato Microsoft Word).

VII. Para onde enviar seus comentários.

Enderece seus envios para todos os CSA da seguinte forma:

IIROC publica regra de relatório de transação de dívida.

Funcionários / 31 de outubro de 2014.

A Organização Reguladora do Setor de Investimentos do Canadá publicou uma nova regra de relatório de transação de dívida que entrará em vigor em novembro de 2015.

De acordo com a nova estrutura, os membros do revendedor deverão relatar, após o comércio, todas as transações de títulos de dívida feitas por eles e / ou suas afiliadas que sejam consideradas distribuidores de títulos públicos.

A estrutura foi aprovada pelos Administradores de Valores Mobiliários do Canadá, então, até novembro de 2015, espera-se que mais de 90% da atividade de negociação de dívida dos membros do dealer estejam sujeitos à supervisão do IIROC.

A regra é crucial, uma vez que a participação no mercado de dívida por investidores institucionais e de varejo aumentou significativamente nos últimos anos, com o valor do comércio de títulos no Canadá em 2013 estimado em US $ 11,9 trilhões, comparado com US $ 1,95 trilhão em mercados de ações.

"Nós reconhecemos que a renda fixa desempenha um papel importante em ajudar os investidores a atingir suas metas financeiras", diz Susan Wolburgh Jenah, presidente e CEO da IIROC.

Além disso, um Sistema de Relatórios de Comércio do Mercado facilitará a coleta e análise de relatórios detalhados do comércio da dívida.

O IIROC trabalhou cooperativamente com o Banco do Canadá para desenvolver o novo sistema, que será executado em paralelo ao programa MTRS existente por um curto período de tempo para garantir a integridade dos dados.

Consistente com a prática atual, o IIROC continuará a publicar apenas estatísticas agregadas de negociação de dívida. Além disso, com a assistência de um grupo de trabalho da indústria, o IIROC está desenvolvendo um modelo de taxa de recuperação de custos que será publicado pelo IIROC para comentários até o final deste ano.

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Iiroc sistema de relatórios de comércio de mercado.

Este Aviso do IIROC informa que, em 27 de janeiro, o "Conselho de Administração" da Organização Reguladora do Mercado de Investimento do Canadá "IIROC" aprovou a publicação para comentar as emendas propostas "Alterações Propostas" às Regras Universais de Integridade do Mercado "UMIR". respeitando a regulamentação de vendas a descoberto e negócios falidos. Em particular, as propostas de emenda: Além disso, a Diretoria autorizou a retirada de uma análise mais aprofundada de uma proposta anterior de revogar os requisitos relacionados à preparação e apresentação de relatórios semestrais de posições curtas. O IIROC foi reconhecido como uma organização auto-reguladora por cada uma das autoridades reguladoras de valores mobiliários provinciais canadenses, os Reguladores do mercado "e, como tal, está autorizado a ser um provedor de serviços de regulação para os propósitos do National Instrument" Marketplace Operation Instrument "e National Instrument Como provedor de serviços de regulação, o IIROC administra e aplica regras de negociação para os mercados que mantêm os serviços do IIROC. O Comitê Consultivo de Regras de Mercado do IIROC "MRAC" revisou as Propostas de Emendas antes de sua consideração pelo Conselho. Representantes de cada um deles: O texto das Emendas Propostas é apresentado no Apêndice A. As Propostas de Emendas são parte de uma estratégia geral para monitorar e regulamentar as vendas a descoberto e os negócios fracassados ​​nos mercados de ações canadenses que a Diretoria determinou para Os comentários devem ser feitos por escrito e entregues até o dia 26 de maio para: Esteja ciente de que uma cópia de sua carta será apresentada ao público no site do IIROC. Um resumo dos comentários contidos em cada submissão também será incluído em um futuro aviso do IIROC. Depois de considerar os comentários sobre as Propostas de Emendas recebidas em resposta a esta Solicitação de Comentários juntamente com quaisquer comentários dos Reguladores Reconhecedores, o pessoal do IIROC pode recomendar que as revisões sejam feitas para as Emendas Propostas. Se as revisões não forem de natureza material, o Conselho autorizou o Presidente a aprovar as revisões em nome do IIROC e as Emendas Propostas, conforme revisadas, estarão sujeitas à aprovação dos Reguladores Reconhecedores. Se as revisões forem substanciais, as Emendas Propostas conforme revisadas serão submetidas à Diretoria para ratificação e, se ratificadas, serão republicadas para posterior comentário público. O IIROC realizou um processo de avaliação de medidas adicionais que podem ser tomadas no Canadá para lidar com questões relacionadas a vendas a descoberto e negócios com falha. Essas possíveis medidas incluem emendas adicionais à UMIR, mudanças nos procedimentos e sistemas de monitoramento do IIROC e cooperação na coleta de dados e compartilhamento com a Comissão de Valores Mobiliários de Ontário "OSC" e os serviços de compensação e depósito CDS Inc. Ao desenvolver as propostas para o mais regulamentação de vendas a descoberto, o IIROC procurou garantir que quaisquer regras, orientação e regime de monitoramento:. Dado o declínio de preço exigido, juntamente com o período de tempo relativamente curto durante o qual as restrições de preço sobre vendas a descoberto se aplicam após a imposição, a maioria da atividade de mercado dos EUA não está sujeita a um teste de escala. Os estudos do IIROC apoiam a premissa de que o teste do tick não tem impacto apreciável na precificação e, em vista disso, o IIROC acredita que existem mecanismos melhores para detectar e lidar com vendas a descoberto abusivas. Sob as Emendas Propostas, o IIROC continuaria com a proposta pendente de revogar o teste de escala, mas também continuaria a trabalhar com outros reguladores canadenses para melhorar as medidas destinadas a identificar e tratar incidentes de vendas a descoberto "abusivas". Enquanto a SEC adotou a regra ostensivamente para aumentar a "confiança do investidor" na atividade de venda a descoberto, sua adoção também pode ter servido para reforçar o preconceito de que quedas rápidas de preços são geralmente o resultado de vendas a descoberto abusivas. Embora os disjuntores de estoque único tenham entrado em vigor no comércio norte-americano em 11 de junho, a atividade de venda a descoberto não foi sistematizada pelo mercado de centros de mercado como um fator em nenhum dos incidentes em que um disjuntor de estoque único foi acionado. A adoção da Rule pode ter o efeito não intencional de encorajar os investidores de varejo a vender na primeira oportunidade após o acionamento de um disjuntor, a fim de evitar uma pressão ainda mais baixa sobre os preços, o que inadvertidamente colocaria mais pressão sobre os preços. Na visão do IIROC, a confiança do investidor é melhor reforçada por: Em um esforço para aumentar a transparência da atividade de venda a descoberto no mercado canadense, os seguintes passos serão dados: Um CSPR separado é produzido pela CNSX para os títulos listados nessa bolsa. Além das Propostas de Emendas e outras iniciativas do IIROC descritas neste Aviso IIROC, os Administradores de Valores canadenses "CSA" e IIROC estão propondo a publicação de uma notificação conjunta para solicitar feedback sobre se propostas adicionais para aumentar a divulgação de vendas a descoberto e comércios fracassados ​​são necessárias. "Comunicado Conjunto". Em um número limitado de casos, os títulos que estão listados entre uma Bolsa no Canadá e uma bolsa nos Estados Unidos podem ficar sujeitos à U. Quando a regra for implementada nos Estados Unidos, a arbitragem regulatória pode ser evitada mesmo se o Canadá não não adote o mesmo sistema de disjuntor e regras de uptick alternativas. Em parte, isso exige que o Market possa demonstrar que seu regime trata de maneira eficaz as vendas a descoberto "abusivas" por meio de outros mecanismos, incluindo alertas em tempo real baseados em atividades de negociação em todos os mercados canadenses. O IIROC está atualmente em processo de desenvolver um alerta para seu sistema de vigilância que monitorará níveis incomuns de atividade de venda a descoberto, juntamente com movimentos significativos de preços. Se forem detectados níveis incomuns de venda a descoberto que atrapalham o mercado, o IIROC também tem a capacidade de intervir para variar ou cancelar os preços de qualquer transação que seja "não razoável" ou, em circunstâncias particularmente notórias, impor uma suspensão na negociação de ações. uma segurança particular em todos os mercados. Além disso, o IIROC tem a capacidade de designar um título como "Segurança Inelegível de Curta Duração" por um período de tempo. Atualmente, as políticas e procedimentos do IIROC para realizar uma intervenção regulatória para interromper a negociação de um título ou para modificar ou cancelar negociações não são divulgadas publicamente. Em uma iniciativa separada, o IIROC publicou para comentários públicos um projeto de orientação que proporcionaria maior transparência das políticas e procedimentos existentes da IIROC relacionados à variação ou cancelamento de negócios e negócios "não razoáveis" que não estão em conformidade com os requisitos da UMIR. Como parte de qualquer resposta, o IIROC deve melhorar seu monitoramento de vendas a descoberto e negócios com falha. Este sistema de relatórios identificará falhas de "problemas" e permitirá que o IIROC avalie as razões da falha e monitore as etapas que estão sendo tomadas para resolver o problema. Isso também permitirá que a IIROC determine se a venda a descoberto está se concentrando em revendedores ou clientes específicos. O acesso a este banco de dados permitiria que a IIROC determinasse, de tempos em tempos, variações nas quebras comerciais de padrões históricos para determinados valores mobiliários e Participantes. O uso desta designação de pedido permitiria que os dados sobre "vendas a descoberto" refletissem melhor as atividades de pessoas que adotaram uma estratégia de negociação "direcional". A entrada de uma ordem para a venda de uma garantia sem, no momento da entrada na ordem, ter a expectativa razoável de liquidar qualquer negociação que resultaria da execução da ordem constitui uma violação da proibição do iiroc sobre atividades manipuladoras e enganosas. Como tal, "short selling nua", como esse termo é por vezes entendido, não é permitido sob UMIR. No entanto, uma vez que um participante ou pessoa de acesso esteja ciente das dificuldades em obter títulos específicos para fazer a liquidação de qualquer venda a descoberto, o Participante ou a pessoa de acesso não teria mais uma "expectativa razoável" de poder liquidar uma operação resultante e, portanto, não seria capaz de inserir mais ordens de venda a descoberto. Para negociar um determinado título, certos Participantes ou Pessoas de Acesso que não têm a capacidade de pedir emprestado esse título podem ser impedidos de entrar em vendas a descoberto, enquanto outros Participantes ou Pessoas de Acesso com a capacidade de emprestar esse título podem continuar a realizar vendas a descoberto adicionais. Mesmo quando a pessoa que faz o pedido tem "expectativas razoáveis" de poder liquidar qualquer negociação resultante, pode haver circunstâncias em que a pessoa deva tomar providências para "pré-emprestar" os valores mobiliários que são objeto de uma transação. venda a descoberto. Estes tipos de circunstâncias podem incluir quando: O IIROC estabeleceu uma interpretação administrativa que também permitiria a um Participante ou Access Person, quando aplicável, ao determinar o "último preço de venda" de um título em particular para confiar em informações comerciais de: As Propostas de Emendas revogariam todas as restrições sobre o preço pelo qual uma venda a descoberto poderia ser feita. As Emendas Propostas seriam paralelas às medidas tomadas pela SEC para revogar as restrições de preços das vendas a descoberto nos Estados Unidos em 7 de julho. Embora as restrições sobre o preço pelo qual uma venda a descoberto possa ser executada sejam revogadas sob as Propostas de Emendas, a exigência de marcar um pedido como "curto" continuaria. De acordo com as Emendas Propostas, um Participante ou Pessoa de Acesso receberia uma orientação específica quanto à necessidade, sujeita a certas exceções, de tomar providências para tomar emprestado valores mobiliários ao fazer um pedido que, na execução, seria uma venda a descoberto de: Um Comércio Falhado Prolongado é aquele em relação ao qual a notificação do comércio falhado foi exigida a ser fornecida ao IIROC de acordo com a Regra 7. Se um relatório de Comércio Falhado Extendido tiver sido apresentado anteriormente a qualquer momento por um Participante com IIROC com relação a um Extended Failed Trade in the account of a client or non-client, that client or non-client would not be able to enter an order that on execution would be a short sale without having made arrangements to borrow the securities necessary to settle any resulting trade until:. If a Participant or Access Person has filed previously at any time a report of an Extended Failed Trade in respect of a principal trade by that Participant or Access Person in a particular security, the Participant or Access Person would not be able to enter an order that on execution would be a short sale without having made arrangements to borrow the securities necessary to settle any resulting trade until IIROC has consented to the entry of the principal order that is a short sale of that particular security. In providing the consent, IIROC will be able to review with the Participant or Access Person the circumstances surrounding the previous Extended Failed Trade and the reasons why the Participant or Access Person believes that system short sales of that particular security are unlikely to fail to settle. The restriction on future sales by clients and non-clients is broader than for Participants or Access Persons in that it covers short sales of any security and not just the security which was the subject of the Extended Failed Trade. While the Participant is ultimately system for the settlement of any failed trade, the Participant may not fully know the reason for the earlier trade failure or the current circumstances of the particular client or non-client. However, the Proposed Amendments provide the Participant with the ability to waive the pre-borrow requirement if the Participant is satisfied, after reasonable inquiry, that the reason for any prior failed trade by the client trade non-client was solely as a result of administrative error. Until the Participant is able to complete such an inquiry or IIROC otherwise consentsthe client or non-client would be subject to the pre-borrow requirements on any intended short sale. Under the Proposed Amendments, a Participant or Access Person who enters an order that would, on execution, be a short sale of a security that IIROC has designated as a "Pre-Borrow Security" would be iiroc to have made arrangements to borrow the securities necessary for reporting of any trade prior to the entry of the order on a marketplace. Presently, the "short exempt" order designation is used to identify an order for the short sale of a security which is not subject to the tick test. If the tick test is repealed as contemplated in the Proposed Amendments, the use of the "short exempt" order designation will no longer be required for this purpose. Under the Proposed Amendments, the existing field on the order entry would be used to indicate an order that is exempt from being marked as "short" i. Under this proposal, orders from particular accounts for the purchase or sale of a security would be designated as "short-marking exempt" upon entry on a marketplace. More specifically, orders would be marked as "short-marking exempt" if the order is from an account that is:. IIROC expects that the institutional accounts which would be required to mark orders as "short-marking exempt" would include "high-frequency traders" whose trading strategy does not involve the holding of positions in particular securities. Use of the "short-marking exempt" designation would relieve the account from having to mark the order as "short". Given the high volume and speed of orders generated by arbitrageurs, market makers and high-frequency traders coupled with the fact that these types of accounts may have orders on both sides of the market on various marketplaces at the same time, determining whether such orders are made from a "long" or "short" position at the time of the entry of additional sell orders is problematic. Use of the "short-marking exempt" designation in the manner proposed would allow IIROC to monitor separately the trading activities of those accounts which are actively buying and selling the same security without taking a directional position in that security and which have a finite time horizon of a trading day or less to effectively balance purchases and sales of the particular security. Further, this revised order marking requirement is intended to permit IIROC to focus monitoring of short sale activity on accounts that have adopted a "directional" position with respect to particular securities. Additionally, IIROC is in the process of introducing an alert in its surveillance system that will be triggered when there is an increase in the level of short selling of an individual security based on historic levels of short selling activity for that particular security combined with a significant price decline in the market price of the security. Removing much of the "noise" in the short sale data flowing from trades by persons who are not taking a directional position, regarding the security should permit the alert to operate more effectively. Concurrent with the issuance of this Rules Notice, IIROC has issued for public comment draft guidance on the use of the "short sale" and "short-marking exempt" order designations that IIROC would intend to issue upon the Proposed Amendments becoming approved and effective. With the proposed repeal of the tick test, one of the main reasons for using aggregate holdings is removed as there will no longer be a restriction on the price at which the trade may be executed. Changing the basis for determining whether an order is "short" to take into consideration only the holdings in the account entering the sell order at the time the order is entered may simplify the process of determining the appropriate marking while at the same time slightly increasing the proportion of trades which are marked "short". As an alternative, IIROC had considered the introduction of a separate, new account identifier that would be required for the three types of accounts described above. However, IIROC was of the view that it would be more efficient to reuse the existing "short exempt" designation as marketplaces, service providers, Participants and Access Persons would have to modify their systems to remove functionality and provision for the "short exempt" designation. IIROC specifically seeks comment on the relative merits from an operational perspective for the two approaches. The Proposed Amendments would require a Participant or Access Person to have made arrangements to borrow securities prior to the entry of an order that would, on execution, be a short sale of a security that IIROC has designated as a "Pre-Borrow Security". The Proposed Amendments add a definition of "Pre-Borrow Security" to Rule 1. In determining whether to make such a designation, IIROC would have to consider whether:. With the repeal of the price restrictions on the price at which a short sale may be made, clause d of Part 1 of Policy 2. The following is a summary of the most significant impacts of the adoption of the Proposed Amendments:. The technological implications of the Proposed Amendments on Participants, marketplaces or service providers are as follows:. IIROC would expect that if the Proposed Amendments are approved by the Recognizing Regulators, the amendments would become effective one hundred and eighty days following the date IIROC publishes notice of the approval. Early inthe Technical Committee of IOSCO published a report entitled Regulation of Short Selling which contains principles designed to help develop a more consistent international approach to the regulation of short selling. The objective of the report was to help eliminate gaps between the different regulatory approaches to naked short selling while minimising any adverse impact on legitimate activities, such as securities lending and hedging, which IOSCO indicated are critical to capital formation and reducing market volatility. The report recommends that effective regulation of short selling should be based on the following four principles and the report outlines the minimum actions that regulators should undertake in order to support each of the four principles. A number of "high level" observations on the application of each principle in the Canadian context follow the discussion of each principle. A more market analysis of the IOSCO recommendations and their reconciliation to the provisions of UMIR and various procedures and proposals of IIROC are set out in Appendix "C":. Short selling activities should be subject to appropriate controls to reduce or minimise the potential risks that could affect the orderly and efficient functioning and stability of financial markets. In order to reduce or minimise the potential risks from short selling, regulators should have an effective discipline for the settlement of short selling transactions. As a minimum requirement this should impose strict settlement such as compulsory buy-in of failed trades. IIROC Commentary on the Canadian Context: Under UMIR, a Participant or Access Person is engaging in "manipulative and deceptive" activities if on the entry of an order they do not have the reasonable expectation of being able to settle the resulting trade. As such, "naked short selling", as that term is sometimes understood, is not permitted in Canada. Studies by IIROC have demonstrated that, in Canada, a short sale has a lower probability of settlement failure than trades generally and that the primary reason for trade failure is simple "administrative error". Broad mandatory provisions such as compulsory buy-in do not exist in Canada. Short selling should be subject to a reporting regime that provides timely information to the market or to market authorities. In order to achieve this enhanced level of transparency regarding short selling activity, jurisdictions should consider some form of reporting of short selling information to the market or to market authorities. IIROC recognizes the problems associated with current short position reporting. Short selling should be subject to an effective compliance and enforcement system. As an effective compliance and enforcement system is essential for an effective short selling regulatory regime, the regulators should: Canada has a "flagging" regime that requires all short sales to be marked as such at the time of entry. IIROC is pursuing, in connection with the introduction reporting a new surveillance and monitoring system, the development of alerts that will be generated by the surveillance system when there is:. This alert will allow IIROC to detect "abusive short selling" activity on a timely basis and to take appropriate remedial or investigative actions including designating the security as being ineligible for further short selling activity. To enhance the effectiveness and operation of this alert, IIROC is also proposing to introduce a "short-marking exempt" designation that will ensure that the "short sale" marker is used only by persons who are taking a directional position in a security when their order is entered. The "extended failed trade" report will also allow IIROC to monitor the extent to which short selling is involved in failed trades of particular securities. IIROC monitors trade failure rates generally based on information provided by CDS. IIROC is also co-operating with the OSC in receiving daily CNS trade failure reports from CDS on a daily basis. Access to this database will permit IIROC to determine, from time to time, patterns of failure among Participants and securities. While IIROC is party to a number of information sharing agreements with foreign self-regulatory organizations and regulators, the securities regulatory authorities have authority in respect of cross-border and domestic investigations involving persons who are outside the jurisdiction of IIROC. Short selling regulation should allow appropriate exceptions for certain types of transactions for efficient market functioning and development. It is necessary that there is flexibility in short selling regulation in order to allow market transactions that are desirable for efficient market functioning and development. Therefore regulatory authorities should at a minimum clearly define the exempted activities and the manner in which these exemptions should be reported. UMIR presently permits a series of exemptions from price restrictions on short sales for market making and arbitrage activities and for securities, such as inter-listed securities and Exchange-traded Funds, which have a relatively low possibility of abusive short selling due to their relatively high liquidity or relationship with underlying securities. While the Proposed Amendments would repeal price restrictions on short sales, the Proposed Amendments would also separate out, through the use of the "short-marking exempt" order designation, the trading activities of arbitragers, market makers and certain institutional accounts that pursue "directionally neutral" strategies in the trading of securities. The primary purpose of adopting the proposed "short-marking exempt" order designation is to allow IIROC to focus more directly on "directional" short selling activity. A byproduct of the adoption of this new order designation will be an increase in IIROC's ability to monitor the effects, if any, of "non-directional" trading strategies, including high frequency trading. In July ofthe SEC repealed all price restrictions on short sales and precluded self-regulatory organizations from introducing any rules that restricted the price at which a short sale could be made. This action had followed a multi-year "pilot project" which had concluded that price restrictions on short sales had no effect on market prices. At the time of the Emergency Order, only one of the 19 securities was on the "fails" list maintained in accordance with Regulation SHO by the market centre on which the securities were listed. Notwithstanding this fact, the Emergency Order required that a short seller must have entered into an arrangement to borrow the securities required for settlement prior to the execution of the short sale. The Division of Trading and Markets of the SEC provided guidance that "an arrangement to borrow requires more than a [sic] reasonable grounds to believe that the security can be borrowed. An arrangement to borrow means a bona fide agreement to borrow the security such that the security being borrowed is set aside at the time of the arrangement solely for the person requesting the security. The stated rationale for the Emergency Order was set out in the preamble to the Emergency Order which stated:. False rumors can lead to a loss of confidence in our markets. Such loss of confidence can lead to panic selling, which may be further exacerbated by "naked" short selling. As a result, the prices of securities may artificially and unnecessarily decline well below the price level that would have resulted from the normal price discovery process. If significant financial institutions are involved, this chain of events can threaten disruption of our markets. The events preceding the sale of The Bear Stearns Companies Inc. During the week of March 10,rumors spread about liquidity problems at Bear Sterns, which eroded investor confidence in the firm. As Bear Stearns' stock price fell, its counterparties became concerned, and a crisis of confidence occurred late in the week. In particular, counterparties to Bear Stearns were unwilling to make secured funding available to Bear Stearns on customary terms. In light of the potentially systemic consequences of a failure of Bear Sterns, the Federal Reserve took emergency action. The Emergency Order was scheduled to terminate on July 29, but was extended until August 12, Since September ofthe SEC instituted a number of other temporary or permanent initiatives directed at short sales and failed trades, including measures which, among other things:. On April 8,the SEC unanimously voted to seek public comment on whether short sale price restrictions or circuit breaker restrictions should be imposed and whether such measures would help promote market stability and restore investor confidence. The SEC voted to propose two approaches to restrictions on short sales - one being a price test that would apply on a market-wide and permanent basis "short sale price test" and one that would apply only to a particular security during severe market declines in that security "circuit breaker". The rule requires trading centers to establish, maintain and enforce written policies and procedures that are reasonably designed to prevent the execution or display of a prohibited short sale. Generally, equity securities that are listed on a national securities exchange would be covered by the rule. The rule would apply whether the security is traded on an exchange or in the over-the-counter market such as internally by a dealer and reported on the "tape" using a trade reporting system. Observers have noted certain market regarding the approach adopted by Rule In particular, Rule Inthe Australian Securities and Investments Commission "ASIC" announced a package of interim measures relating to short sales. The ASIC subsequently prohibited, subject to limited exceptions, all short sales including "covered" short sales that had been permitted under the interim amendments. The ban on covered short selling for non-financial securities was ultimately lifted, effective November 19, Following the consultation process, the ASIC provided some limited exemptions to the outright ban on naked short selling. The current regulatory framework in Australia includes: On September 18,the Financial Services Authority "FSA" introduced new provisions which prohibit the creation of, or increase in, a net short position giving rise to an economic exposure to shares in specified financial institutions and insurers including naked and covered short sales. These provisions expired on January 16, The FSA introduced new short reporting requirements that became effective on September 23, The FSA moved to remove the ban on short sales of financial institutions effective January 19, At the same time, the FSA also agreed to extend, with minor modifications, the Disclosure Obligation until June 30, In Februarythe FSA published a discussion paper in which it set out its views with respect to the regulation of short sales, including the trade of various constraints on short sales, including, "tick tests" and "circuit breakers". Inthe European Commission published a proposal on the regulation of short selling. It is anticipated that the regulation would be adopted in mid In the interim, several European Union Members have adopted, or are in the process of adopting, amendments to their respective short sale regimes both on an interim and permanent basis. For example, Austria, Greece and Spain have each adopted requirements that require a person to disclose a net short position that exceeds 0. In Julythe Hong Kong Stock Exchange "HKSE" proposed the suspension of price restrictions on short sales. In Julythe Hong Kong Securities and Futures Commission "SFC" approved the proposal to "relax" the uptick rule. However, later inthe SFC, together with the HKSE, announced that in light of recent market developments overseas they had agreed not to implement the July proposal, and instead, retained the existing regime which limits short sales to "covered" short sales in certain designated securities, at or above the current ask price. Proposed legislation, based on the conclusions derived from the consultation process, is expected to include a position reporting requirement where a short position report will be required on a weekly basis once a short position is the lesser of:. In Julythe Taiwan Stock Exchange removed price restrictions on short sales for a number of securities and the market regulators in both Malaysia and India have iiroc to ease restrictions on short sales. In September ofMarket Regulation Services Inc. In May ofin conjunction with the merger of RS with the Investment Dealers Association, the Board ratified and adopted these amendment proposals as IIROC proposals. In October ofat the height of the market turmoil, the Board agreed to defer consideration of the repeal of the tick test and the repeal of the requirement to file Short Position Reports, pending evaluation of further developments in the market and regulatory initiatives instituted in other jurisdictions. The balance of the proposals listed above was approved by the applicable securities regulatory authorities effective October 15, "Prior Amendments". Implementation of the requirement to provide to IIROC a report of an Extended Failed Trade or notice of certain variations or cancellation of trades was deferred and will become effective on June 1, In light of the SEC's decision in July of to remove price restrictions on short sales, IIROC granted, effective July 6,an exemption from the price restrictions on a short sale under Rule 3. Securities which trade on an ECN in the United States but are not otherwise listed on an exchange in the United States do not qualify for the exemption. The Inter-listed Exemption will reporting in force until those aspects of the Proposed Amendments dealing with the repeal of price restrictions on short sales of all securities and the change in use of the "short exempt" order designation have been approved by the Recognizing Regulators or withdrawn by IIROC. Securities regulators generally have a concern regarding the relationship between failed trades and preserving market integrity. In order to ensure that the audit trail for any trade is accurate and that IIROC has sufficient information to evaluate whether trading activity has been conducted in compliance with UMIR and other regulatory requirements, the Prior Amendments introduced a requirement that each Participant or Access Person is required to report to IIROC if a trade that has failed to settle on the settlement date remains unresolved 10 trading days following the settlement date. The requirement to file an "Extended Failed Trade" report will become effective on June 1, with respect to trades other than those using the "Trade-for-Trade" settlement facility of CDS. These reports of Extended Failed Trades will allow IIROC to determine if the trade has failed to settle for an "improper" reason for example, if a sale had been executed as an undeclared short sale. Once an initial report of an Extended Failed Trade had been filed with IIROC, the Participant or Access Person will be required to file a second report once the account has cured the default. This reporting regime will put IIROC in a position to monitor trends in Extended Failed Trades, including the steps which a Participant or Access Person may be taking to rectify the default. Information from the reports will be used by IIROC in making a determination whether a particular security should be designated as a "Short Sale Ineligible Security". The initial Extended Failed Trade report will indicate the steps that have been taken to resolve the "failure" in the preceding 10 business days and which are proposed to be taken to resolve the failure. A "close-out" report is also required to be filed which will indicate the steps which were ultimately taken to resolve the failure. During the period between the initial report and the close-out report, IIROC would be in a position to inquire of a Participant or Access Person as to whether additional steps had been taken since the filing of the initial report. In making such requests, IIROC would rely on its general investigative power under Rule The Prior Amendments introduced a requirement that a trade cannot be cancelled or varied, with respect to price, volume or settlement date, unless the cancellation or variation was made by:. The requirement to file a "Trade Variation or Cancellation" report will become effective on June 1,concurrent with the introduction of the first phase of filing requirements for the Extended Failed Trade reports. Prior to the settlement of the trade, each Participant or Access Person who is a party to a trade may not agree to a cancellation or variation of the trade with respect to: The use of the procedures and facilities provided by the marketplace or the clearing agency will ensure that information regarding the cancellation or variation can be publicly disseminated. Marketplaces are able to cancel trades in limited circumstances principally related to systems malfunctions or technical problems at the marketplace. The addition of the notice requirement should not impose, in the ordinary course, a greater administrative burden upon a Participant or Access Person. The current practice to add, vary or cancel trades is for a Participant or Access Person to contact the marketplace on trade date prior to the trade being reported by the marketplace to CDS or to contact CDS prior to settlement. If the request has been made to a marketplace, the marketplace will notify IIROC prior to effecting any variation or cancellation. If the request has been made to CDS, CDS reports these variations or cancellations to the marketplace for review and, in turn, the marketplace forwards the report to IIROC. If IIROC concludes that there are no market integrity concerns and agrees with the change, the marketplace amends the official record of the trade. However, if the trade cancellation or variation is made after the settlement of the trade by the clearing agency, system of the trade cancellation or variation will now be required to be provided to IIROC by each Participant and Access Person that is a party to the trade. The purpose of the report directly from a Participant or Access Person is to ensure that a trade variation or cancellation is not effected outside the normal reporting of the marketplaces and CDS unless IIROC is notified of the variation or cancellation and has the opportunity to review the change for possible market integrity concerns. Notice of a trade cancellation or variation will allow IIROC to ensure that the cancellation or variation of the trade is for a bona fide reason and not as part of a manipulative or deceptive manner of trading including the establishment of a price that would trade other trading activity to then be conducted in nominal compliance with UMIR or other securities regulatory requirements. The Prior Amendments allow IIROC to designate a particular security or a class of securities as being ineligible to be sold "short". The purpose of this provision is to provide additional flexibility to IIROC, as the Market Regulator, to respond to developments in trading of a particular security or class of securities if, in IIROC's opinion as concurred in by the applicable securities regulatory authorities, rates of failed trades become excessive. The criteria which IIROC would use in pursuing a designation of a security have been specifically set out in Part 4 of Policy 1. If, based on reports of failed trades submitted to IIROC in accordance with the requirements of Rule 7. Since studies by IIROC indicated that short selling was not the primary reason for the existence of failed trades, IIROC is of the view that a statistical threshold would not, by itself, be appropriate. IIROC must determine that short selling is exacerbating the situation before deciding whether to seek approval to designate the security as being ineligible for further short selling. IIROC is of the view that there are greater risks to market integrity if a series of dealers experience prolonged trade failures for a relatively minor number of shares of a security that is illiquid than from the failure of a single block trade due possibly to administrative problems or delays at a custodian in a highly-liquid security. In the view of IIROC, the need to make a designation will be a relatively rare occurrence. Since the introduction of UMIR, there has been no instance when either RS or IIROC would have sought approval for such a designation. However, IIROC acknowledges that the repeal of price restrictions on short sales will likely result in increased volatility trade less liquid securities. In addition, IIROC acknowledges that junior issuers are concerned with the possibility of "bear raids". IIROC is of the view that the activity which is part of a "bear raid" will be detected with existing monitoring standards employed by IIROC and that such activity may be contrary to existing prohibitions against manipulative and market behaviour. IIROC does not believe that a designation will have to be made in "real time" as the circumstances which will lead to the need to designate a security will build over a period time e. No one factor would necessarily lead to IIROC determining to seek a designation. Also, it is not possible to provide quantitative "thresholds" for each of the factors that would be taken into account by IIROC. IIROC would consider the circumstances of the particular issuer e. IIROC will only designate a security as a "Short Sale Ineligible Security" with the concurrence of the applicable securities regulatory authorities. IIROC will seek that concurrence in a designation from:. While IIROC does not believe that a designation will have to be made in "real time", IIROC nonetheless believes that any designation will have to be "timely" in order to address situations arising in the marketplace. If IIROC detects unusual circumstances and concludes that an issue is developing that appears to be rooted in short selling, IIROC's first step would normally be to issue an IIROC Notice indicating that, with respect to the particular security, market participants should ensure their ability to borrow or obtain securities for settlement in advance of any sale. In the meantime, IIROC would continue to monitor trading in the particular security to determine if further regulatory action was warranted. Under the Prior Amendments, a short sale of a security that is designated as a "Short Sale Ineligible Security" may not be made. The Prior Amendments contained a number of exemptions from this prohibition, including if the order is entered on a marketplace:. In October ofIIROC deferred the proposed repeal of the requirement system Participants and Access Persons to prepare and file a short position report on a semi-monthly basis. To replace the aggregation of the information in the short position reports filed by Participants and Access Persons into the CSPR, IIROC envisioned the dissemination, by third parties, of periodic summary reports of short sales executed on marketplaces in particular securities. IIROC continues to encourage marketplaces to make this information publicly available. Nonetheless, IIROC will pursue the introduction of short sale trade summaries on a semi-monthly basis that will correspond to the reporting cycle for short position reports. IIROC expects to begin issuing these semi-monthly summary reports at the same time as the changes to the marking of "short sales" and "short exempt" orders are implemented. IIROC recognizes that the CSPR has a number of problems and limitations. Despite its flaws and in the absence of the ability to readily produce other short sale report at the present time, the CSPR is a "known" report that is comparable to short position reports in other jurisdictions. Furthermore, the continued production and publication of the CSPR supports IIROC's objective of encouraging greater public awareness of short selling in trading activity in Canada. Trade availability of both trading summaries and the CSPR will allow the current users of the CSPR an opportunity to evaluate the information provided by reporting summaries and would provide IIROC with an opportunity to track the relationship between information provided in the CSPR and the marketplace trading summaries. Concurrent with the issuance of this Rules Notice, IIROC has published a statistical study of trends on Canadian marketplaces in the three-year period from May 1, to April 30, the "Study Period" with respect to overall trading activity, short selling and failed trades the "Trends Study". During the Study Period, there was no "negative" change in the pattern of short selling or trade failures from the findings of the Prior Study. In particular, during the Study Period:. That study found that while there were "unusual" levels of activity in "financial sector" issuers in the period leading up to the temporary imposition of a prohibition on short selling, the proportion of short selling of financial sector issuers was generally consistent with historic patterns and the levels of short selling for inter-listed securities. The study concluded that the ban had a significant impact on market quality by reducing liquidity and increasing "spreads" while not having any effect on price volatility. Concurrent with the issuance of this Rule Notice, IIROC has also published a statistical study that looks at the price movement of securities listed on the TSXV during the Reporting Period that indicates that the significant price declines observed in the second half of were not caused by or exacerbated by short selling activity. InRS undertook a study of failed trades in the Canadian marketplace the "Failed Trade Study". Any proposed changes to UMIR must be approved by the Recognizing Regulators of the CSA. IIROC staff have been participating and prior to June 1, staff of both RS and the Investment Dealers Association of Canada participated in an informal working group with CSA staff the "Working Group" that has been examining various issues related to failed trades and short sales, including the role that short sales play in the occurrence of failed trades. The Working Group has been monitoring developments related to short sales and failed trades in other jurisdictions, particularly SEC initiatives to amend Regulation SHO. IIROC has provided the Working Group with periodic updates to the Recent Trends in Trading Activity, Short Selling and Failed Trades and other research and studies undertaken by IIROC. The Proposed Amendments by IIROC have been discussed with the Working Group. Following the publication of this IIROC Notice, the CSA and IIROC are proposing to publish the Joint Notice to solicit feedback on whether additional proposals to enhance disclosure of short sales and failed trades in Canada are required. For example, the Joint Notice may seek comment on whether disclosure of short positions by institutional investors may be necessary, similar to "buy-side" reporting requirements that have been or are being widely implemented in other jurisdictions. The Joint Notice may also seek input on the type, level and frequency of public disclosure of system trades in equity securities traded on all Canadian marketplaces and cleared through CDS that would be appropriate for the Canadian market. If significant problems emerge after the implementation of the Proposed Amendments as well as the implementation of any other elements of the IIROC proposal relating to the execution or settlement of short sales, IIROC would be in a position to consider appropriate additional regulatory responses. Similarly, if settlement rates deteriorate after the implementation of the Market Amendments, either generally or in specific classes of securities, additional initiatives may be considered by IIROC. As indicated in the Trends Study, the number of trades executed on marketplaces has increased dramatically over the three-year Study Period from approximately 10, trades per month to almost 30, trades while the number of initial buy-in notices received by CDS in connection with iiroc failures has remained relatively constant, in the range of 30, to 40, notices per month. Studies by IIROC indicated that the majority of trade failures arose out of "administrative error" and were readily resolved. For this reason, a "hard" close-out requirement would have the effect of transferring the cost to dealers that have failed to settle for "innocent" reasons. One proposal considered by IIROC was the introduction of a "capital charge" on the dealer that failed to receive the security which would act as an incentive for that dealer to exercise its buy-in rights. Another option considered was the introduction of an administrative penalty to be imposed on the dealer that failed to deliver. Neither option was pursued, as it was unclear that the adoption of either initiative would have materially reduced the incidence of administrative error, the primary cause of settlement failure. IIROC was of the opinion that, if the underlying patterns for trade failure in Canada showed signs of increasing, a simplified "penalty" would be the preferred option, but that consideration might also be given to a "capital charge" on one or both sides of the failed trade. One initiative that IIROC noted in a number of jurisdictions was the introduction of a requirement for the reporting of short positions by "holders" of the short position rather than on an aggregate basis by intermediaries, such as dealers and subscribers to an ATS. The CSPR, which is an aggregation of reports filed by Participants and Access Persons, has not proven to be a useful tool to IIROC for monitoring or investigative purposes. Introducing additional account level requirements would not provide information that would be as timely or as meaningful as the enhanced information available through the monitoring of "marked" trades both in real-time time and on post-trade analysis. IIROC has had outstanding since April of a proposal that would require the unique identifier of each Direct Market Access "DMA" client to be included with each order, including short sales. This proposal would formalize the practice adopted by marketplaces that require the DMA account identified on the order. The inclusion of DMA account information allows real-time monitoring of account level activity of institutional accounts for all system and not just short sales. IIROC's surveillance system provides a comprehensive database for post-trade analysis of all orders and trades on all marketplaces. In the view of IIROC, the monitoring of short sales should be integrated into surveillance systems which already monitor for anomalous price or volume movements in a particular security in real-time. In particular, IIROC is developing an alert which will consider increases in the rate of short selling in conjunction with declines in market price. This alert will help to identify, in real-time, situations that may require regulatory intervention including the possible designation of the security as a "Pre-Borrow Security" or "Short Sale Ineligible Security". A position report only provides a snapshot of the situation at a particular point in time and provides no information on the trading activity during the period, which is what impacts market prices. IIROC also noted that the threshold for making a position report in a number of the jurisdictions that have introduced this requirement is 0. By comparison, in March ofthe average short position in a security listed on TSXV was 0. While comment is requested on all aspects of the Proposed Amendments, comment is specifically requested on the following questions:. Are there any policy reasons, other than those identified in this Request for Comments, that IIROC should consider in pursuing the proposed repeal of the existing "tick test" short sales must be made at a price not less than the last sale price? If you disagree with the proposal to repeal the tick test, please indicate why it should be retained. If restrictions on the price of a short sale are to be retained, should UMIR adopt a "bid reporting at the time of order entry e. If restrictions on the price of a short sale are to be retained, whether in the short-term or on a long-term basis, should there be an exemption provided to securities inter-listed on an exchange in the United States? If restrictions on the price of a short sale are repealed, what regulatory arbitrage opportunities may exist in the case of an inter-listed security, where a circuit breaker has been triggered in the United States giving rise to short sale price restrictions? What measures could be taken, if any, to limit this potential regulatory arbitrage? The Proposed Amendments would "reuse" the existing "short exempt" designation to indicate accounts that qualify for the "short-marking exempt" designation. Are there any specific operational considerations for marketplaces or Participants from this change in use? Would there be any benefits to introducing a separate, new designation if marketplaces, service providers and Participants still have to modify their system to remove functionality and provision for the existing "short exempt" designation? Are there any other operational considerations for marketplaces or Participants that would arise as a result of the adoption of the Proposed Amendments, beyond those identified in this Request for Comments? If the Proposed Amendments are approved, IIROC is proposing to delay the implementation for a period of one hundred and eighty days in order to provide Participants, marketplaces and service providers the time to make necessary changes to their systems, policies and procedures. Should the implementation period be longer and, if so, why? The requirement to mark a sell order as a "short sale" is determined based on the aggregate holdings of the "seller" across multiple accounts which may in fact be held at multiple Participants or dealers while the requirement of a Participant to file a short position report is based on the position of each individual account. If the tick test is repealed, should the basis for determining the marking orders and filing short position reports be harmonized? Would it be preferable for the marking of orders to be determined based on the holdings in the account entering the sell order at the time the order is entered? In addition to these questions posed by IIROC, the CSA and IIROC are proposing to publish the Joint Notice to solicit feedback on whether additional proposals to enhance disclosure of short sales and failed trades in Canada are required. See IIROC Notice -- Rules Notice -- Request for Comments -- UMIR -- Provisions Respecting Market Maker, Odd Lot and Other Marketplace Trading Obligations April 23, CNSX presently operates an "alternative market" known as "Pure Trading" that is entitled to trade securities that are listed on other Exchanges and that presently trades securities listed on the TSX and TSXV. There are reports that short selling actually declined during this period -- a finding which would be consistent with the studies undertaken by IIROC. The most common usage is in connection with a short sale when the seller has not made arrangements to borrow any securities that may be required to settle the resulting trade. Some commentators use a more restrictive interpretation that describes any short sale when the seller has not pre-borrowed the securities necessary for settlement. A report for failures of trades settling through the Trade-for-Trade settlement facility of CDS will become effective at a later date once IIROC has completed the development and testing of trade that would permit IIROC to receive the information directly from CDS. In connection with these requirements, IIROC publishes annually a non-exhaustive list of entities which are "acceptable counterparties" and "acceptable institutions". For a link to the most recent listing, see IIROC Notice -- Rules Notice -- Technical -- Dealer Member Rules -- Acceptable Institutions and Acceptable Counterparties Database August 25, See also IIROC Notice -- Rules Notice -- Technical -- Dealer Member Rules -- List of Basle Accord Countries November 19, which identified the 20 countries that then qualified as "Basle Accord Countries" and IIROC Notice -- Rules Notice -- Technical -- Dealer Member Rules -- List of Recognized Exchanges and Associations Regulated Entities Purposes November 19, which identified 31 exchanges and associations the members of which would qualify as "regulated entities". The rules of CDS provide a procedure for the "buy-in" of failed trades. The party that has not received the security purchased may initiate this procedure and, if the failure persists, CDS will, on the instruction of the party that has failed to receive the security, enter orders on a marketplace to close out the position with the additional costs being borne by the defaulting party. The orders prohibited short sales in financial firms during the period September 18, to October 8, Effective October 17,the SEC adopted an antifraud rule, Rule 10b under the Securities Exchange Act ofaimed at short sellers including broker-dealers acting as principal who deceive specified persons about their intention or ability to deliver securities in time for settlement and that fail to deliver securities by settlement date. The ASIC indicated that concurrent with the anticipated removal of the short sale ban on non-financial securities, the ASIC together with the ASX would be putting in place disclosure and reporting arrangements respecting short sales. See ASIC Release -- ASIC Extends Ban on Covered Short Selling of Financial Securities January 21, The ban was further extended to May 31, See ASIC Release -- ASIC Extends Ban on Covered Short Selling of Financial Securities March 5, However, a legally binding commitment from a lender is considered "unconditional". This means that both the new requirements of the Regulation and disparate national short selling restrictions may remain operative in parallel in various parts of the EU for up to a year. Full harmonisation trade not be achieved until July 1, Short Selling Crackdown", Forbes. A comparable provision was not incorporated into UMIR on the grounds that the general provisions curtailing abusive short selling made the provision unnecessary. The provision does not require that the dealer make a "positive affirmation" that it has the ability to settle the trade but merely have a "reasonable expectation" at the time of the entry of the order. Essentially, a Participant may enter a short sale of a security until such time as the Participant knows, or should reasonably have known, that it can no longer borrow the securities to effect settlement. Among the activities precluded by Policy 2. Historically, a "death spiral" had occurred when an issuer was undergoing certain types of arrangements or capital reorganizations including voluntary or involuntary conversion of debt to a class of listed equity that tied the conversion or reorganization ratios to the market price of the securit y to be issued. As the market price of the listed security fell the number of securities to be issued rose. In anticipation of receiving additional listed securities on the completion of the transaction, investors would sell the additional listed security short into the market resulting in further downward pressure on the market price of the listed security. Since the securities that would be issuable on the arrangement or reorganization would not be available to settle the sales in the ordinary course, the sales would be considered "short sales" for the purposes of UMIR. See "Pre-Borrow Requirements" on pages 9 to 11 [in the IIROC published version of this Notice]. In particular, that Market Integrity Notice indicated that: Increasingly, there is concern whether the CSPR provides a complete or meaningful picture of the short position in any security. In particular, the CSPR report does not reflect system short position in securities held by:. Each of the 7 months between October of and April of had a number of trades in excess of the Study Period average indicating that the trend towards increased trading activity is continuing notwithstanding the turmoil in the markets generally. For the month period ended September 30, covered by the Prior Study there were an average oftrades per day. With respect to average daily volume, the Study Period average was , with a high of , in April of and a low of , in August of when volume on the TSXV was at a low of , With the exception of October ofthe months between October of and April of had average daily trade value below the Study Period average notwithstanding above average number of trades and volume which reflects the general decline in price levels. The number of trades in ETFs increased from 3, per day in May of to a high of 39, in November of for an overall average of 13, for the Study Period. The number of trades in inter-listed securities increased fromper day in May of to a high ofin March of for an overall average offor the Study Period. CNSX averaged 94 trades per day during the Study Period with the number of trades market from in May of to 28 trades per day in April of Both TSXV and CNSX had below the Study Period average number of trades in each of the 7 months between October of and April of For the purposes of this Study, the months October of to April of were included. For the purposes of this Study, five months September of to January of experienced elevated level of market stress across both indexes. This increase in the proportion of short sales was anticipated on the granting of the exemption. On CNSX, short sales accounted for 7. However, the averages for the other four months were significantly lower such that the average for a Market Stress Period was only 2. For MATCH Now, which operates as a non-transparent marketplace, short selling accounted for only On average over the Study Period, the short position on the TSX turned over every 0. The Case of the TSX Venture Exchange February 25, The rate of trade failure on CNQ is comparable to the 2. Clause a of subsection 1 does not apply to an order that has been designated as a "short-marking exempt order" in accordance with subclause 6. Under the definition of a "Pre-Borrow Security", the Market Regulator may designate a security in respect of which an order that on execution would be a short sale may not be entered on a marketplace unless the Participant or Access Person entering the order has made arrangements to borrow the securities that would be required to settle the trade prior to the entry of the order. In determining whether to make such a designation, the Market Regulator shall consider whether:. Text of Current Provisions Marked to Reflect Adoption of the Proposed Amendments. Except as otherwise provided, a Participant or Access Person shall not make a short sale of a security on a marketplace unless the price is at or above the last sale price. A short sale of a security may be made on a marketplace at a price below the last sale price if the sale is: A Participant or Access Person shall not enter an order to sell a security on a marketplace that on execution market be a short sale:. Clause a of subsection 1 does not apply to an order automatically generated by the trading system of an Exchange or QTRS in accordance with the Marketplace Rules in respect of the applicable Market Maker Obligations that has been designated as a "short-marking exempt order" in accordance with subclause 6. A Participant acting as agent shall not enter a client order or a non-client order on a marketplace that would, if executed, be a short sale if the client or non-client has previously executed a sale of any listed security that became a failed trade in respect of which notice to the Market Regulator was required pursuant to Rule 7. A Participant acting as principal or an Access Person shall not enter an order on a marketplace for a particular security that would, if executed, be a short sale if the Participant or Access Person has previously executed a sale in that security that became a failed trade in respect of which notice to the Market Regulator was required pursuant to Rule 7. A Participant or an Access Person shall not enter an order on a marketplace for a Pre-Borrow Security that would, trade executed, be a short sale unless the Participant or Access Person has made arrangements for the borrowing of the securities necessary to settle any resulting trade prior to the entry of the order. In determining whet her to make such a designation, the Market Regulator shall consider whether: There are a number of activities which, by their very nature, will be considered to be a manipulative or deceptive method, act or practice. For the purpose of subsection iiroc of Rule 2. If persons know or ought reasonably to know that they are engaging or participating in these or similar types of activities those persons will be in breach of subsection 1 of Rule 2. Prior to the opening of a marketplace on a trading day, a short sale may not be entered on that marketplace as a market order and must be entered as a limit order and have a limit price at or above the last sale price of that security as indicated in a consolidated market display or at or above the previous day's close reduced by the amount of a dividend or distribution if the security will commence ex-trading on the opening. When reducing the price of a previous trade by the amount of a distribution, it is possible that the price of the security will be between the trading increments. Where such a situation occurs, the price of the short sale order should be set no lower than the next highest price. In the case of a distribution of securities other than a stock split the value of the distribution is not determined until the security that is distributed has traded. For example, if shareholders of ABC Co. Once a security has traded on an ex-distribution basis, the regular short sale rule applies and the relevant price is the previous trade. The Report recognizes that not all jurisdictions consider the same activities to be "short selling". The Report considers "short selling" to be the sale of stock that the seller does not own at the point of sale. The provisions under UMIR differ in the following areas: The UMIR provisions contain a more expansive definition of "short sale" than most jurisdictions, including the United States. As a result, the number of short sales will be higher in Canada than would be the case if the definition in the United States applied. In Canada, this means the person making the sale generally must have a "reasonable expectation" of settlement at the time of the sale. In the United States, the sales are treated as "long" even in circumstances when a failure of settlement is contemplated at the time of the sale. Ownership of securities subject to a resale restriction imposed by securities legislation or a marketplace. Sale of any security subject to a resale restriction is a short sale and the seller must have a "reasonable expectation" of being able to settle at time of the sale. In the US, the sale of certain "restricted" securities is considered a sale from a long position. Even under Rule of Regulation SHO, a dealer is given an additional 36 days following failure to close out the position arising from the sale of certain "restricted" securities. The holder of an option, right or warrant must have taken all steps to "exercise" the system, right or warrant including the payment of money before the person is considered "long". Similar provisions apply when a person is to acquire securities as a result of "tendering" or "converting". In the United States, the practice is that securities which are the subject of an option can be sold in the market from a "long" position and the proceeds of sale used to pay for the securities. If securities would, in the ordinary course, not be available until after the scheduled settlement date, the trade is a short sale and the seller must have a "reasonable expectation" of being able to settle at the time of the sale. The additional restrictions in Canada that apply before a person is considered "long" increase the proportion of short sales and require the Participant to take steps to have a "reasonable expectation" of being in a position to settle. Even under Rulea dealer in the US is given an additional 3 days following failure to close out the position arising from the sale of "unavailable" securities. If a short sale is made without a "reasonable expectation" of settlement, UMIR provides that the trade constitutes manipulative and deceptive activity contrary to Rule 2. Studies by IIROC found that, in Canada, a short sale was significantly less likely to fail than trades from long positions, generally. In part, this result is due to the fact that short selling is concentrated in those classes of securities with the lowest trade failure iiroc senior listed equity securities. Historically, failure rates in Canada have been less than those in the United States. The implementation of Rule significantly reduced US trade failure rates to the extent that US rates may now be less than the prevailing failure rates in Canada. However, studies by IIROC found that failure rates varied significantly amongst securities. Increases in the proportion of trading accounted for by junior securities since early have resulted in slightly higher overall failure rates in Canada, without changing the underlying patterns. In some jurisdictions, settlement of failed trades achieved by compulsory buy-in or close-out provisions. In some markets, the process is initiated by either the securities settlement system or the buyer who has not received the securities. Some markets impose a monetary penalty. CDS has "buy-in" provisions which, if initiated by the purchaser who has failed to receive, are mandatory on the defaulting dealer. As indicated in the studies undertaken by IIROC, the number of trades executed on marketplaces has increased dramatically over the three-year period - May of to April - from approximately 10, trades per month to almost 30, trades while the number of initial buy-in notices received by CDS in connection with trade failures has remained relatively constant in the range of 30, to iiroc, notices per month. Studies by IIROC also indicated that the majority of trade failures arose out of "administrative error" and were readily resolved. For this reason, a "hard" close-out requirement has the effect of transferring the cost to dealers that have failed to settle for "innocent" reasons. Neither option was pursued given the reasons for settlement failure and the rates of failure. IIROC was of the opinion that, if the underlying patterns for trade failure in Canada showed signs of increasing, a simplified "penalty" would be the preferred option but that consideration might also be given to a "capital charge" on one or both sides of the failed trade. Studies by IIROC have indicated that trades which are subject to "special terms", including those related to settlement, have a higher likelihood of settlement failure than "ordinary" trades. To support "strict settlement", regulators could adopt eligibility criteria for stocks eligible for short selling, pre-borrowing or 'locate' requirements, price restrictions or "flagging" as appropriate for individual iiroc. Under UMIR, all short sales must be "marked" either as a "short" sale subject to price restrictions or as "short exempt". UMIR presently provides that a security may be designated as a "Short Sale Ineligible Security" which precludes any short sale of the particular security subject to certain enumerated exceptions. Unless designated as a "Short Sale Ineligible Security", the security may be sold short. Given the historic rates of trade failure, studies by IIROC supported the conclusion that general requirements related to "pre-borrowing" or "locate" of securities were not warranted in the Canadian setting. Under the Proposed Amendments, IIROC is proposing to require a pre-borrowing requirement for short sales but its application would be restricted to persons who had executed an "extended failed trade" in any security i. While IIROC is proposing to proceed with the repeal of price restrictions on short sales, IIROC is proposing that the existing "short exempt" marker be used to identify the purchase or sale of a security by reporting account that is active in the security reporting essentially, in the trade course, aims to be "flat" holdings of a particular security at the end of each trading day such as arbitrage account, market makers, odd lot dealers and high frequency traders. This would simplify the marking of orders for certain accounts and remove the "chaff" from IIROC's monitoring of short sale activity. IIROC would also be in a position to monitor the relative buying and selling activity of "short-marking exempt" accounts in a particular security throughout a trading day. To achieve "enhanced and meaningful" reporting, should consider reporting short selling information to the market or at a minimum, to market authorities. UMIR currently requires the marking of all short sales and this marker is displayed to IIROC but not included in the public display. IIROC has been pursing the introduction of trading summaries of short sales for particular securities aggregated by trading activity across all marketplaces trading the security. One of the objectives of providing this information is to demonstrate to the investing public that there are established patterns for different classes of securities e. These patterns reflect hedging, arbitrage and market making activities, together with the liquidity profile of the particular security. IIROC hopes to be system a position by the implementation date of the Proposed Amendments, to publicly provide such reports on a semi-monthly basis. IIROC continues to encourage the marketplaces to publicly provide information on a more frequent basis and ideally in a consolidated report. Recognize that information on short selling may mislead the market and expose the seller to a "short squeeze". Attempting to "corner" the market to affect a short squeeze is presently recognized as a manipulative and deceptive activity that is prohibited under UMIR. IIROC believes that the important element in short sale data is the underlying pattern or trend. Daily information for a particular security can be distorted by the effects of a small number of trades, particularly with securities of limited liquidity or high volatility. IIROC continues to believe that the "short sale" and "short-marking exempt" flags should not be included in the public order display but must continue to be available to IIROC in real-time. Reporting system could be based on "flagging" or "short position" or acomprehensive regime could adopt both models. IIROC continues to pursue the introduction of trading summaries based on "marked" short sales. UMIR requires that Participants and Access Persons file short position reports on a bi-monthly basis. InIIROC had proposed to repeal the requirement for short position reports to be effective following the introduction of an "adequate replacement" such as the short sale trading summary reports. IIROC is withdrawing the proposed repeal. While the Consolidated Short Position Report is "flawed", relatively costly and cumbersome to compile, IIROC recognizes that the reports are a source of information with an established history. For this reason, the proposed trading summaries of "short sales" for each listed security would be provided semi-monthly to correspond with the reporting period for the Consolidated Short Position Report. Reporting which excludes derivatives may not provide full picture and "induce a migration of trading activities to the derivatives market". UMIR does not require information on derivative positions to be included in the short position report. Information on the outstanding interest in listed derivatives is already publicly available. IIROC acknowledges that there is no source of information on positions subject to over-the-counter derivatives. Including derivatives would increase complexity and have practical issues associated with collection of derivative data. Recommends assessment of the balance of difficulties and benefits. UMIR presently exempts from execution on a marketplace transactions related to the exercise of an option or other derivative transaction. IIROC has indicated that such an initiative, if IIROC were to act as administrator, could be dovetailed with a more comprehensive reporting of trades of listed securities which have been executed off-marketplace including on the exercise of OTC derivatives or execution outside of Canada that has not been reported in that foreign jurisdiction. IIROC does not expect that this initiative will be actively pursued in the foreseeable future. Recommends consideration of objective and usage of data collected in determining whether reporting of short position on gross or net basis is more appropriate. Trigger level for reporting and frequency of reporting must balance costs of compliance with provision of useful information to "reduce the risk of manipulative and other unfair trading practices". UMIR does not require "holder" level reporting. When appropriate, this information is obtained from the dealer providing the short position report. The Consolidated Short Position Report has not proven to be a useful tool for monitoring or investigative purposes. Introducing additional account level requirements would not provide information that was more timely or meaningful than the enhancement of the information available through the monitoring of "marked" trades both in real-time time and on post-trade analysis. IIROC has had outstanding, since April ofa proposal that would require the unique identifier of each Direct Market Access "DMA" client to be included with each order, including short sales. There is also a comprehensive database for post-trade analysis. The alert will help identify in real-time situations that may require further regulatory action including possible designation of the security as "Pre-Borrow Security" or "Short Sale Ineligible Security". For example, the most common proposed threshold is if the short position of a person exceeds 0. By comparison, in March ofthe average short position in a security listed on the TSX Venture Exchange was 0. Studies by IIROC indicated that short selling is not a significant contributing factor in the decline of prices in the Canadian market, even during periods of rapid price decline, such as during the second half of In fact, short selling and short positions declined dramatically during this period particularly in respect of the "junior" securities which were perceived to be the most vulnerable to short reporting abuse. Reporting should be by the "holder" of the short position as brokers may not have complete information but recognize that authorities may not have jurisdiction over the "ultimate" holder. The jurisdiction of IIROC is limited to Participants and Access Person and does not extend to investors. However, IIROC continues to believe that the most effective tool to avoid abusive short selling is to system trading activity in real-time, so that abusive activity can be detected quickly and regulatory action taken, when appropriate, in a timely manner. As brokers are responsible for "flagging", may be easier to monitor compliance with flagging of short sales as compared to short position reporting. Trade Desk reviews and audits of Participants monitor "marking" and "short position reporting" compliance. If such an impact is observed, account level information can be requested from the Participant. UMIR trade requires each dealer to prepare a short position report which is aggregated with other reports in the Consolidated Short Position Report. IIROC's ability to identify institutional DMA clients on orders is an important factor in creating real-time monitoring and the ability to determine trading patterns. IIROC is proposing to withdraw their proposal to repeal the short position report. As such, IIROC will be able to monitor changes in the short positions of individual securities and to then supplement that data with information from the trading summaries. View that instituting a market settlement of failed trades "is one of the pillars of a short selling regulatory regime". Regular monitoring and inspections of settlement failures is important, especially for those iiroc which frequently fail to deliver. UMIR makes Participant responsible for settlement of each trade and provides that they must have a "reasonable expectation" of settlement at the time of order entry. UMIR will require Participants to report with respect to positions that have not been rectified within 10 days of the intended settlement date. IIROC monitors trade failure rates generally, based on information provided by CDS. CDS and iiroc OSC are developing a database of daily initial trade failure reports involving the continuous net settlement facilities of CDS. Access to this database would permit IIROC to determine, from time to time, patterns of failure among Participants and securities. IIROC will also be able to establish patterns with respect to "extended failed trades" based on reports filed with IIROC regarding these positions and their resolution. IIROC has set June 1, as the implementation date of the "extended failed trade reporting" system other than for trades using the "Trade for Trade" settlement system at CDS which will be implemented at a later date. Where there is a "flagging" regime appropriate parties should be required to maintain books and records of short sales for a sufficient period of time. UMIR requires that order information be retained for a period of seven years and during the first two years the retention must be in a "readily accessible location". The UMIR requirements complement National Instrument requirements which deal with the maintenance of order and trade information not otherwise covered by UMIR e. Encourages establishment of a mechanism to analyse the information obtained from flagging or short position reporting to identify potential market abuses and systemic risk. Historically, IIROC has analysed the data with respect to short sales to establish trends and patterns and has periodically provided the results of this analysis to the securities regulatory authorities and published relevant portions of the data in reports. IIROC will be introducing a new alert to monitor for a combination of price movement and changes in patterns of short selling. A Surveillance Officer will then be able to determine, in real-time, if abusive short selling is contributing to a significant price decline for a particular security. IIROC has an "unreasonable" price policy under which IIROC may undertake a "regulatory intervention" if there is unreasonable trading or trading which is not in compliance with UMIR. IIROC is proposing to make the policy for regulatory intervention more publicly transparent through the issuance of guidance. The regulatory intervention policy is both general and comprehensive and is triggered by any "unexplained" price movement and not just price declines resulting from short selling activity. Based on the studies and monitoring undertaken by IIROC, it would appear that the perceived abuses that manifested themselves in other jurisdictions were not evident in the Canadian market. IIROC is therefore reluctant to propose additional administrative and regulatory burdens to address problems which do not presently exist. Should be appropriate exceptions for hedging, market making and arbitrage. Suggest consideration of whether failed trades arising from market making activities should be allowed more time to settle or be exempt from price restrictions. UMIR provides exceptions from price restrictions on short sales for hedging, market making and arbitrage. Additional iiroc are provided for various specialty type orders, Exchange-traded Funds and to satisfy displacement obligations imposed under the "best price" rules of UMIR. Comparable exceptions other than for specialty orders apply to the ability to make a short sale of a Short Sale Ineligible Security. While exempted activities may need to be covered by reporting to regulators consideration should be given to exemptions from "public disclosure" to protect interests of parties engaged in the activity. Under UMIR, the short sale "markings" are not to be included in the public display. However, all "markings" are visible to IIROC for its monitoring activities. Under the Proposed Amendments, IIROC is proposing a separate "flagging" marker for the purchase or sale by an account that in the ordinary course does not "carry a position" such as market makers, arbitrageurs and certain institutional accounts that adopt a "directionally neutral" strategy in the trading of securities. This separate category will allow IIROC to monitor the trading activities of this group of persons separate from traditional short selling activity. This separate marking for "short-marking exempt orders" would not be available to the public. Exemptions should be clearly defined particularly in respect of "market making" and "hedging" activities. UMIR defines "Market Maker Obligations" by reference to Exchange rules. UMIR does not provide exceptions for "informal" market makers. Hedging activities are limited to recognized "derivatives market maker" and "Program Trades" as defined by Exchange rules. IIROC is presently proposing to replace the definition of "Market Maker Obligations" with a new defined term "Marketplace Trading Obligations" which has been expanded to take into account odd lot and other trading obligations imposed pursuant to a contact between marketplaces and their members or users. Twitter LinkedIn Youtube Email Alerts Rss Feeds. Take-Over Bids, Issuer Bids, Special Transactions and Early Warning. Information for Small and Medium Enterprises. Dealers, Advisers and Investment Fund Managers. Who Needs to Register. Applicants for Designation as Trade Repositories. Legal Entity Identifiers LEIs. JavaScript is disabled or not supported by this browser. This website works best with JavaScript enabled. Text of Provisions Following Adoption of the Proposed Amendments. Restrictions on Short Selling - repealed. Restrictions on Short Selling. A Participant or Access Person shall not enter an order to sell a security on a marketplace that on execution would be a short sale: Entry of Orders to a Marketplace. Each order entered on a marketplace shall contain: In determining whether to make such a designation, the Market Regulator shall consider whether: Part 1 -- Manipulative or Deceptive Method, Act or Practice. Part 1 -- Entry of Short Sales Prior to the Opening. Part 1 - Entry of Short Sales Prior to the Opening. Part 2 -- Short Sale Price When Trading Ex-Distribution. Part 2 - Short Sale Price When Trading Ex-Distribution. Description of UMIR Provisions. Additional Commentary and Suggested Proposals. UMIR requires the reporting of short positions on a gross basis. Triggers and threshold levels may need to be fine-tuned as more experience is gained. Flagging may not help in assessing outstanding short positions or large individual positions. Short selling regulation regime should "not stifle legitimate short selling activities".

FG Bonds to trade on the Nigeria Stock Exchange, Debt Management Office present Stockbrokers.

4 thoughts on “Iiroc market trade reporting system”

Ross and Morton are Christians who believe in an old earth, and they demonstrate that an old earth is consistent with the Bible.

What many of us fail to realize is that we are all interconnected and interrelated.

They took the old glass bottles, ground them up and then melted them down.

He attended school when but four years of age, where, during his early years, he received a fair education, after which he was sent to Gorham College, Liverpool, N. S. At the close of two years the college was destroyed by.

IIROC proposes new bond tracking system.

February 21, 2013 7:57 AM EST.

TORONTO & mdash; Canada’s debt market has grown dramatically over the past few years, but much of the business is still done the old way, in private transactions in which commissions are opaque and dealers have all the information.

But that may be about to change.

The country’s investment industry regulatory organization says it wants to shine a light on the $10-trillion-a-year bond market in what it says is a bid to better supervise one of the biggest and most important sectors in capital markets.

The Investment Industry Regulatory Organization of Canada is proposing a new rule requiring the reporting of detailed transaction data by dealers and their affiliates. IIROC said the information would be used only for regulatory purposes and would not be made public, at least for now.

“We are moving forward with [this] because we recognize that robust regulatory supervision and oversight of the debt markets are critical to enhancing market integrity and investor confidence,” IIROC president Susan Wolburgh Jenah said on Wednesday.

Unlike equity markets in which trading is done on an exchange and data is publicly available, fixed-income transactions are part of what’s known as a dealers’ market, in which buyers must contact dealers to get pricing information.

In the current rock-bottom interest rate environment, debt issuance has soared, with money market activity alone accounting for $6.6-trillion last year, according to the regulator.

“In the U. S. there are already rigorous trade reporting standards in place and it is my understanding that IIROC is creating a similar framework in Canada,” said Andy Dickison, head of credit derivatives and emerging markets at Scotia Capital. “I believe transparency is an important aspect of public markets and facilitates client service and market participation.”

In the wake of the global financial crisis regulators have been pushing for better disclosure especially in fixed income markets, in which lack of transparency is seen as one of the key causes of the near meltdown of the financial system. But the process has not been smooth with many players looking to protect their advantage and what they regard, in some cases, as private information.

IIROC’s proposed data tracking system would replace the existing Market Trade Reporting System, a less effective mechanism owned by the Bank of Canada.

Zachary Curry, chief operating officer and portfolio manager at Davis Rea, a Toronto-based money manager that runs about $600-million, called the plan a positive step.

“I think the general trend in credit markets is toward more regulatory oversight, greater investor protection and that’s something we will be hearing about going forward,” said Mr. Curry. However he cautioned that for the time being IIROC is making only a proposal and the regulator will potentially face opposition as it moves to create a new rule.

The bond market “has always been hugely profitable for investment dealers,” Mr. Curry said. Dealers are not required to inform clients about inventories or proprietary positions.

“You get trade confirmation, but bond commission is not broken out unlike the equity market,” ele disse. “If you don’t have to disclose your commission you might just take a little more, and in a market that’s bigger than the equity market it certainly is profitable.”

In 2011, IIROC brought in a rule requiring member firms to ensure clients received “fair prices” on bond deals.

The aims of the current proposal include ensuring consistent and standardized transactions; creating a transaction database for most over-the-counter debt trades; and providing IIROC with the ability to query and analyze trading activity.

Tag Archives: IIROC.

A ‘Win’ for the IIAC – CRM Suitability Assessment (IIAC Blog)

A ‘Win’ for the IIAC – CRM Suitability Assessment (IIAC Blog)

At the urging of the IIAC’s Venture Market Working Group, IIROC issued a Client Relationship Model (CRM)—Frequently Asked Questions (FAQ) Notice clarifying dealers’ suitability assessment obligations for certain clients with a high-risk tolerance. The FAQ specifically addressed speculative investing or trading, such as in TSX Venture Exchange (TSXV) listed securities. The FAQ clearly articulates the portfolio approach to suitability, and does not prohibit venture stocks in accounts/portfolios that are not high risk. The FAQ also clarifies the approach dealers must adopt to assess suitability when a client wishes to engage in speculative trading and has tolerance … Continue lendo & rarr;

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Enhancing Corporate Bond Transparency (IIAC Blog)

Enhancing Corporate Bond Transparency (IIAC Blog)

In September 2015, the Canadian Securities Administrators (CSA) released its long-awaited proposals to enhance corporate bond transparency. In my December 2015 Letter from the President , I discuss the existing CanPX transparency system and the flaws in the IIROC Market Trade Reporting System which was introduced on November 1, 2015, before sharing my thoughts on the optimal transparency approach.

*In striking a new direction for corporate bond transparency, the CSA needs to ensure it understands the full implications of its proposed model, and be convinced that the new approach reaches a better public interest objective.

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IIAC Launches Bond Market Newsletter (IIAC Blog)

IIAC Launches Bond Market Newsletter (IIAC Blog)

The IIAC has launched a new publication titled “IIAC Fixed Income Market Regulatory Update.” You can read our inaugural issue by clicking here.

This monthly newsletter will bring you up-to-date on bond market regulatory developments in Canada, the U. S., Europe and Asia. It also includes relevant links and IIAC commentary.

If you or others in your organization are impacted by regulatory changes in the fixed income markets, then this publication is for you.

The November 2015 issue covers topics such as:

& # 8211; CSA next steps in regulation and transparency of Canada’s fixed income market.

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The IIAC Responds to IIROC’s Proposed Amendments Re: Unprotected Transparent Marketplaces and the Order Protection Rule (IIAC Blog)

The IIAC Responds to IIROC’s Proposed Amendments Re: Unprotected Transparent Marketplaces and the Order Protection Rule (IIAC Blog)

In April 2015, the Ontario Securities Commission (OSC) approved changes to the TSX Alpha Exchange trading model. Effective September 2015, Alpha will apply a short processing delay (a speed bump) on orders to counter high-frequency trading and limit fleeting liquidity. Additionally, orders displayed in the Alpha order book will no longer be protected from trade-through (i. e. the execution of an order at a price that is inferior to a displayed bid price or higher than a displayed offer price) under the Order Protection Rule (OPR).

In response, the Investment Industry Regulatory Organization of Canada (IIROC) announced … Continue lendo & rarr;

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