On April 24, the Investment Industry Regulatory Organization of Canada re-published proposed amendments to UMIR and its Dealer Member Rules intended to achieve consistency in the oversight of similar activity occurring through different forms of third-party electronic access. IIROC first proposed similar amendments in October 2013, and the latest version address comments received from stakeholders.
Specifically, the proposal would require that dealers providing order execution service (OES) include a client ID on each ordered entered for or on behalf of any client that traded on a marketplace for which IIROC was the regulation services provider and: (i) whose trading activity exceeded a daily average of 500 orders per trading day in any calendar month; (ii) that was not an individual and was registered as a dealer or adviser under applicable securities legislation; or (iii) that was not an individual and was in the business of trading securities in a foreign jurisdiction in a manner analogous to a dealer or adviser.
The OES dealer would be required to provide each client ID and the name of the client associated with it to IIROC. Participants providing execution services for OES dealers would also have to ensure that each order sent to a marketplace included the client ID on each order.
Under the proposed amendments, a definition of "Manipulative and Deceptive Activities" consistent with the definition found in UMIR would also be added to the Dealer Member Rules to ensure clarity, and OES dealers would be required to consider the heightened risks associated with the entry of orders that are not directly handled by staff of the dealer. Related guidance was also published.
IIROC is accepting comments on the proposed amendments until June 23, 2014, and intends to implement the amendments on the later of 180 days following the publication of the notice of approval of the amendments and March 1, 2015. For more information, see IIROC Notice 14-0101.
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