Canadian securities regulators are seeking comment on possible changes to the existing market-wide circuit breakers, in the wake of planned changes to U.S. circuit breakers.
The Investment Industry Regulatory Organization of Canada is requesting comment on possible changes to its current policy for triggering market-wide circuit breakers, following a similar move by the securities exchanges and the Financial Industry Regulatory Authority in the U.S. in response to the “flash crash” of May 2010.
Canada’s circuit breakers are currently harmonized with the U.S. IIROC has identified three possible approaches to Canadian policy if the U.S. adopts its proposed changes: continued harmonization with U.S. policies; adopting specific Canadian parameters to set the triggers for the circuit breakers; or, a hybrid approach which might include elements of the U.S. approach while accommodating distinctly Canadian features.
“Given the significant changes in market structure and volatility over that period of time, it is important to review our current approach in order to ensure that market- wide circuit breakers trigger in appropriate circumstances,” said Susan Wolburgh Jenah, IIROC president and CEO. “This set of market controls is intended to help mitigate extraordinary short-term price volatility on a market-wide basis in order to maintain fair and orderly markets.”
The request for comment discusses the proposed alternatives and poses a number of questions for commenters to consider. Comments are due by February 13, 2012.