On May 28, 2010, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) published Joint Staff Notice 23-308, which provides an excellent summary of the comments of various marketplaces, dealers and buy-side representatives expressed during the CSA-IIROC joint forum held in Toronto on March 23, 2010, to discuss the Consultation Paper 23-404 Dark Pools, Dark Orders, and Other Developments in Market Structure in Canada. The Consultation Paper was issued for public comment on October 2, 2009, and the Notice summarizes in Appendix A the 23 response letters received. Finally, the Notice discusses regulatory initiatives underway to address the comments raised in the response letters and at the joint forum. Market participants are invited to contact CSA and IIROC staff with any further input and perspectives on these issues and initiatives.
Themes of the forum included:
- the practice of broker preferencing at the marketplace level;
- dissemination of indications of interest (IOIs) by dark pools;
- market pegged orders and whether those orders "free-ride" off the visible market;
- whether dark pools should be required to offer price improvement and sub-penny pricing;
- marketplace data fees;
- electronic trading and direct market access; and
- the impact of high frequency trading in the Canadian market.
Regulatory initiatives underway include:
- the consideration of additional transparency requirements for marketplaces;
- a review of sub-penny pricing;
- ongoing reviews of new order types proposed my marketplaces;
- CSA staff's review of fees charged by marketplaces, including data fees;
- a review of electronic trading, including direct market access; and
- monitoring the impact of high frequency trading on the Canadian market.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
