The order protection rule, which came into effect in 2011,
requires marketplaces to establish and ensure compliance with
policies and procedures designed to prevent trade-throughs on that
marketplace. The protection is intended to ensure that all
immediately accessible, visible, better-priced limit orders are
executed before inferior-priced limit orders and are not traded
While the CSA believe that the rule enhances confidence in the
fairness and integrity of the market, the fragmentation of order
flow across multiple marketplaces has led to increased complexities
and costs for market participants. For example, some dealers may
pay more in respect of membership or subscriber fees to access
certain marketplaces than the total amount invoiced for trades on
that marketplace, while the technology costs and risks of managing
connections to multiple marketplaces can also impose a significant
burden. Meanwhile, the CSA noted that the rule may lead to trading
inefficiencies by providing incentives for the launch of new
marketplaces or by supporting the viability of existing
marketplaces that would not otherwise exist.
In light of these concerns, the proposed amendments to
NI 23-101 Trading Rules would reduce the
scope of the order protection rule by limiting order protection to
marketplaces that meet a certain threshold. Specifically, the
displayed orders on a marketplace that enjoys a 5% market share of
the adjusted share volume and value of trades would be protected.
Based on 2013 market share, displayed orders on the TSX, TSX-V,
Alpha and Chi-X would be protected, while those on TMX Select,
Omega, CX2 and CSE would not be. The displayed orders of a
recognized exchange that did not meet the market share threshold,
however, would be protected with respect to those securities listed
and traded by the exchange.
While the order protection rule remains a "fundamental
part" of the regulatory regime, the CSA believe the reduced
scope of the rule would give dealers the flexibility to
determine when and if to access trading on certain
marketplaces to achieve best execution for clients while still
satisfying the objectives of the rule. According to the CSA, the
proposed threshold would result in capturing at least 85-90% of the
volume and value of adjusted trades. The proposal would also
provide for limits on certain trading fees, while introducing a
plan to study the impact of disallowing the practice of rebate
payments by marketplaces. Further action to regulate certain market
data fees is also being considered.
The CSA are accepting comments on the proposal, including
specific questions asked in the request for comment, until
September 19, 2014.
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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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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