Last week, IIROC released proposed
guidance regarding the circumstances in which it
may engage in regulatory intervention in order to vary or cancel
trades. As we discussed in December 2010, IIROC released an earlier version of the
guidance just over a year ago with the intention
of providing transparency and certainty with respect to
intervention criteria. Ultimately, the proposal, which takes into
account comments received in response to the earlier version,
would, among other things:
restrict intervention when the price difference between an
erroneous trade and the current fair value of the security does not
exceed the greater of 10% of the price of the security or 10
allow for a higher price threshold depending on market
conditions when a trade has been executed during a period of
significant market volatility, outside normal trading hours or in a
security of a very limited liquidity;
limit intervention to circumstances of extreme price
dislocation where there is no reasonable expectation of execution,
or a trading error that does not impact market price but which
places the issuer at risk;
clarify the erroneous trade review process.
Ultimately, according to IIROC, regulatory intervention is
intended to be engaged only when market integrity is at risk and
necessary to maintain fair and orderly markets, and trades will not
necessarily be varied or cancelled to remedy client error. Until
such time that final guidance is issued, regulatory intervention
will be undertaken in accordance to the revised proposal. Comments
on the proposal is being accepted until May 29, 2012. For more
information, see IIROC Notice
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.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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