HSBC Securities (Canada) Inc. has reached a proposed agreement with regulators to settle allegations that it allowed market timing practices in the trade of mutual funds.

The Investment Dealers Association of Canada announced Friday that a hearing will be held before a hearing panel for the presentation, review and consideration of a settlement agreement.

The alleged market timing activity in mutual funds occurred between January 2002 to July 2002. The hearing also concerns under-reporting by HSBC Securities of information requested by the IDA.

The hearing is scheduled to commence on Wednesday in Toronto.

The hearing is closed to the public, although the proposed settlement and disciplinary penalties against HSBC Securities will be disclosed if the deal is accepted by an IDA panel.

In late 2004, RBC Dominion Securities Inc., BMO Nesbitt Burns Inc. and TD Waterhouse (Canada) Inc. paid penalties totalling almost $50 million in connection with market timing activities in mutual funds by some of their clients.