The British Columbia Securities Commission (BCSC) is stepping up its efforts to combat abusive trading in U.S. over-the-counter (OTC) markets by local dealers.
The B.C. regulator is proposing amendments to registration conditions for investment dealers that trade in the U.S. OTC markets, which would prohibit firms from doing business with institutions in jurisdictions that haven’t signed on to IOSCO’s Multilateral Memorandum of Understanding (MOU), which allows regulators to share information.
In a notice requesting comment on the proposals, the commission notes that B.C. investment dealers’ OTC trading is already subject to conditions that were introduced in June 2008 in an effort to curb abusive trading in U.S. OTC markets. Now, it is seeking to further tighten those conditions.
“The amendments further decrease opportunities for abusive trading and address impediments to our investigative efforts,” it says. “They prevent investment dealers from trading with financial institutions in jurisdictions that might not provide timely, or any, information to securities regulators investigating abusive trading.”
Jurisdictions that provide anonymity to those engaged in abusive market practices prevent the commission from effectively enforcing the securities laws, it notes, adding, “This undermines public confidence in our markets.”
Regulators that have signed the MOU are committed to sharing information and assisting the international enforcement of laws against misconduct.
“Reducing the likelihood of abusive practices occurring through British Columbia investment dealers will benefit both the dealer directly and other dealers by association,” it says. And, it suggests that the burden on affected dealers is outweighed by the benefit to the integrity of the capital markets.
The proposed conditions will be in effect until Dec. 31, 2014; and, during that time, the BCSC intends to assess their impact. Comments on the proposed changes are due by December 30.