On February 20, IIROC released for comment a proposed new rule that would require reporting of debt transactions.
Specifically, under the proposal, each IIROC dealer member would have to report on a post-trade basis all debt market transactions executed by the dealer member, including those executed on an Alternative Trading System (ATS) or through an Inter-Dealer Bond Broker (IDBB).
For these purposes, "debt securities" would mean any securities that provide the holder with a legal right, in specified circumstances, to demand payment of the amount owing, including in respect of a debtor-creditor relationship. The fact that a security was issued in another country or denominated in a foreign currency would not disqualify it from being a debt security and the term would include securities with short-term maturities or mandatory tender periods such as commercial paper and floating rate notes as well as traditional notes and bonds. Debt securities, however, would not include derivative products that are not securities (e.g., futures contracts, interest-rate swaps).
The stated purpose of the proposed rule is to facilitate the creation of a database of transaction information that would enable IIROC to carry out its responsibilities with respect to surveillance and oversight of over-the-counter (OTC) debt market trading. IIROC acknowledges in its notice that historically, the standards for regulatory reporting for debt instruments have been quite different from those for equities, whereas equities traded on exchanges and ATSs with a high degree of transparency, including real-time order-and trade data as well as complete post-trade (historical) information. IIROC notes, however, that as market structure has continued to evolve, significant changes have increased the amount of information available in real time or post-trade for such securities and many regulators have also begun to implement more stringent requirements for trade reporting.
IIROC expects to publish the final version of the rule in Q4 of this year. The new requirements would then be phased in over time, with implementation beginning between six and 12 months after publication of the final rule.
IIROC is accepting comments on the proposals until May 22, 2013. For more information, see IIROC Notice 13-0058.
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