proposed amendments

For further information, please contact:
June Yee
Manager, Corporate Communications
416 943-6921
[email protected]
Paul Howard
Director, Communications &
Public Affairs
416-646-7279
[email protected]
Plans to withdraw Dark Rules Anti-Avoidance Provision
IIROC proposes amendments and guidance for best execution
December 10, 2015 (Toronto, Ontario) – The Investment Industry Regulatory Organization of
Canada (IIROC) today published proposed rule amendments and guidance that together seek to
update and streamline existing best execution requirements for IIROC-regulated firms.
IIROC is proposing to consolidate the best execution requirements in Universal Market Integrity
Rules and Dealer Member Rulebook requirements for fair pricing of over-the-counter securities
into a single dealer member rule respecting best execution.
Today’s publication addresses findings of an IIROC survey that looked at the best execution
practices of IIROC-regulated firms. These updates are intended to assist dealer members in
complying with their best execution obligations in a multi-marketplace environment. IIROC’s
proposal also aligns with changes being proposed by the Canadian Securities Administrators
that would require firms to disclose their best execution policies.
IIROC also considered feedback from a roundtable discussion it hosted earlier this year to foster
debate about the best approach to maintaining healthy and competitive Canadian markets.
The roundtable explored alternatives to IIROC’s proposed Dark Rules Anti-Avoidance Provision
published in January 2015 which sought to impose price discovery and “better price”
requirements to cross-border trading.
IIROC concluded that enhanced best execution requirements and guidance may form part of an
effective solution to address concerns about systematic routing of small orders southbound and
is proposing additional requirements to help dealer members better understand the
circumstances under which routing to a foreign market may not achieve best execution.
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Specifically, a statement is included in the Proposed Rule that the sending of client orders in
bulk to a specific foreign organized regulated market without considering other liquidity
sources, including liquidity sources in Canada, is not in compliance with the requirement to
achieve best execution. IIROC intends to withdraw the proposed Dark Rules Anti-Avoidance
Provision.
“After careful consideration of all the constructive feedback we received from stakeholders and
with enhanced transparency, we believe best execution for Canadian investors can be achieved
efficiently and with consistency,” said Victoria Pinnington, Senior Vice President, Market
Regulation for IIROC.
Comments on the proposals are requested by March 24, 2016.
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IIROC is the national self-regulatory organization which oversees all investment dealers and
their trading activity in Canada’s debt and equity markets. IIROC sets high quality regulatory
and investment industry standards, protects investors and strengthens market integrity while
maintaining efficient and competitive capital markets. IIROC carries out its regulatory
responsibilities through setting and enforcing rules regarding the proficiency, business and
financial conduct of dealer firms and their registered employees and through setting and
enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.
L’OCRCVM est l’organisme d’autoréglementation national qui surveille l’ensemble des courtiers
en placement et l’ensemble des opérations que ceux-ci effectuent sur les marchés des titres de
capitaux propres et les marchés des titres de créance au Canada. L’OCRCVM établit des normes
élevées en matière de réglementation et de commerce des valeurs mobilières, assure la
protection des investisseurs et renforce l’intégrité des marchés tout en favorisant l’efficacité et
la compétitivité des marchés financiers. L’OCRCVM s’acquitte de ses responsabilités de
réglementation en établissant des règles qui régissent la compétence, les activités et la
conduite financière de ses sociétés membres et de leurs employés inscrits, et en veillant à leur
application. Il établit aussi des règles d’intégrité du marché qui régissent les opérations
effectuées sur les marchés des titres de capitaux propres canadiens et veille à leur application.
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