ARTICLE
8 August 2011

IIROC Proposes Allowing Dealers To Guarantee Trade At Price That Outperforms Benchmark Price

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On July 4, the Investment Industry Regulatory Organization of Canada published proposed guidance on the guarantee by a Participant (dealer) of a trade price for a client order.
Canada Strategy
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On July 4, the Investment Industry Regulatory Organization of Canada published proposed guidance on the guarantee by a Participant (dealer) of a trade price for a client order. The proposed guidance would allow a certain amount of "outperformance" to be guaranteed under certain circumstances if a dealer agreed to take the trade as principal. According to IIROC, expanding the guidance in this way would allow dealers to "offer institutional clients more execution options while ensuring that the Participant does not abuse the ability to provide a guarantee to sidestep the obligations of the Participant to orders displayed in a consolidated market display."

Under the proposal, dealers would only be able to guarantee outperformance up to a maximum of the lesser of 50% of the Participant's historical realized outperformance of the same benchmark over the prior calendar quarter and 30 basis points.

For more information, see IIROC Notice 11-0202.

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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