Last week, the Canadian Securities Administrators
(CSA) published for comment Proposals that would require trade information
for all corporate debt securities executed by dealers to be made
publicly available, subject to delayed dissemination and volume
caps, by the end of 2017. The CSA Proposals aim to enhance the
regulation and transparency of the Canadian fixed income market,
partly in response to certain limitations highlighted in a Report on "The Canadian Fixed Income Market
2014" published earlier this year by the Ontario
Securities Commission which suggested that retail investors in
corporate fixed income securities have less access to market
information than institutional investors.
The CSA Proposals would only affect trades in corporate debt
securities (not government debt securities) executed by investment
dealers (not exempt market dealers or dealers relying on the
international dealer exemption). National Instrument 21-101 –
Marketplace Operation (NI 21-101) already
sets out transparency requirements for government debt securities
effective January 1, 2018. The CSA is considering whether exempt
market dealers should also be required to report fixed income trade
information and whether transparency requirements should apply to
Currently, under NI 21-101, dealers are required to report order
and trade information for designated corporate debt
securities1 to an information processor
(CanPX) who collects, aggregates and publicly
disseminates the data with a one-hour delay subject to volume caps,
which mask the true dollar size of large trades.
Under the CSA Proposals, IIROC would become the information
processor for corporate debt securities under NI 21-101, and will
publicly disseminate trade information relating to those
securities, subject to the following dissemination delay and volume
data will be made public at least one day following the trade (T+1)
and likely T+2. This is significantly longer than CanPX's
one-hour dissemination delay currently in effect.
Volume caps: actual
volumes will not be shown for trades that have volumes over $2
million for investment grade corporate bonds and $200,000 for
non-investment grade corporate bonds. Instead, the volumes will be
reflected as $2 million+ and $200,000+, respectively. These volume
caps are the same as the ones currently in effect.
In addition to information prescribed by NI 21-101, IIROC
expects to make public, for each corporate debt security,
information that would facilitate more informed decision-making for
investors, including the name of the security, price, coupon,
yield, volume traded (subject to volume caps), the transaction
type, indication of whether the trade was an inter-dealer trade or
whether it was a client purchase or sale, date and time of the
trade, and settlement date.
The CSA acknowledge concerns raised by market participants
regarding the potential negative impact of enhanced transparency on
liquidity. It is felt that enhanced transparency and the ensuing
pressure on spreads might discourage dealers from maintaining debt
inventories to the degree they do now when making markets for debt.
The proposed dissemination delay and volume caps are meant to be
responsive to such concerns.
Some smaller institutional investors have also raised concerns
about their ability to participate in new debt offerings. The CSA
and IIROC have established a working group to examine these
concerns. The working group will conduct a comprehensive review of
how initial debt offerings are allocated between different market
participants and assess whether further regulatory action is needed
in this area.
Comments on the CSA Proposals may be submitted until November 1,
 A "corporate debt security" means a debt
security issued in Canada by a company or corporation that is not
listed on a recognized exchange or quoted on a recognized quotation
and trade reporting system or listed on an exchange or quoted on a
quotation and trade reporting system that has been recognized for
the purposes of NI 21-101 and NI 23-101, and does not include a
government debt security
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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