Last week, the Investment Industry Regulatory Organization of Canada announced amendments to UMIR intended to align IIROC's trading supervisory requirements with the requirements found in NI 23-103 Electronic Trading. As we've discussed previously on this blog, NI 23-103 and its Companion Policy were recently adopted in order to address the risks of electronic trading, specifically with respect to credit risk, market integrity risk, technology or systems risk and regulatory arbitrage risk
The amendments to UMIR, meanwhile, are intended to: (i) expand existing trading supervision obligations to specifically address the risks associated with electronic trading ; (ii) set out specific supervisory provisions related to the use of automated order systems; (iii) clarify the circumstances under which a trade may be cancelled, varied or corrected with notice to, or consent of, a market regulator; (iv) allow for a participant to authorize an investment dealer to perform on its behalf the setting or adjusting of a specific risk management or supervisory control, policy or procedure, or for a participant to use the services of a third party provider; and (v) establish certain gatekeeper obligations for participants who have authorized an investment dealer to perform on its behalf the setting or adjustment of a risk management or supervisory control, policy or procedure.
The amendments become effective on March 1, 2013 and, while most requirements must be implemented by that date, IIROC will allow participants and access persons until May 31, 2013 to complete testing and implementation of automated controls. Meanwhile, IIROC also released guidance that address the amended provisions. For more information, see IIROC Notices 12-0363 and 12-0364.
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