ARTICLE
24 December 2013

No Gaps Found In Review Of Electronic Trading Regulation

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The Ontario Securities Commission released an update yesterday in respect of its risk analysis of electronic trading.
Canada Finance and Banking

The Ontario Securities Commission released an update yesterday in respect of its risk analysis of electronic trading. As we discussed in November 2012, the OSC retained a consultant last year to analyze tools and controls with respect to electronic trading in Canada and to gather information from market participants regarding the risks posed by electronic trading and the provision of direct electronic access. 

The consultant's report, included as an appendix of the OSC notice, ultimately finds that the new NI 23-103 Electronic Trading provides adequate and comprehensive controls for the risks associated with electronic trading. The report also includes recommendations for improving industry testing, protocols and standards for marketplace operations. The OSC's update also identifies additional risks introduced by the increased use of complex trading technology, namely (i) credit risk; (ii) market integrity risk; and (iii) technology or systems risk, and sets out the regulatory mechanisms in place to address them.

The OSC also stated that it is currently considering whether automated review program requirements for key infrastructure entities require updating and if any of the proposed provisions of the U.S. SEC's proposed Regulation Systems Compliance and Integrity would enhance the Canadian regulatory framework.

For more information, see OSC Staff Notice 23-702.

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