The Investment Industry Regulatory Organization of Canada
(IIROC) has released its finalized Guidance on Marketplace
Thresholds. As discussed in our 2014 post on the draft version, the Guidance is
intended to promote stable markets by controlling short-term price
volatility and catching erroneous orders before they can be
The primary effect of the Guidance, which is to take effect on
August 25, 2016, is to limit the amount by which the price to be
paid in a trade in a security may vary from (a) the price paid in
the most recent trade in that same security on that day (defined as
the "national last sale price") and (b) the national last
sale price as it stood at the most recent one-minute interval
(defined as the "one minute reference price"). The
threshold level depends largely on the price of the security and
generally ranges between 10% and 20%, with the exception of
securities trading between $1 and $5 (30%), between 50 cents and $1
(50%) and below 50 cents (300%). Notwithstanding these limits,
securities subject to Single Security Circuit Breakers (SSCBs) are
subject to a 10% limit in all cases, as are Exchange-Traded Funds
(ETFs). Exchange-listed debt is subject to a 20% limit in all
Each marketplace governed by IIROC must adopt the thresholds,
which incorporate nuances and exceptions beyond those indicated in
the abbreviated summary that we have just provided. IIROC notes
that enforcement actions may still be taken with respect to trades
that fall within the thresholds, where appropriate. Finally, while
IIROC has decided that it is impractical to attempt to implement
volume controls as part of the Marketplace Thresholds, the Guidance
notes that under NI 23-103 a market may introduce volume controls
as part of its risk management and supervisory authority.
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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