In an effort to keep pace with U.S. market structure reforms, the Canadian Investment Regulatory Organization (CIRO) is proposing trading rule changes that would align trading requirements in Canada with the U.S. when it comes to inter-listed securities.
On Thursday, CIRO issued proposed amendments to the trading rules for public comment that would distinguish between the trading increments that apply to securities that are listed in both Canada and the U.S., as well as the requirements for stocks that only trade in Canada.
The rules would also empower the self-regulatory organization (SRO) to determine trading increments for inter-listed securities on an ongoing basis.
The proposals come in the wake of market structure reforms that were announced earlier this year by the U.S. Securities and Exchange Commission (SEC), which included a move to sub-penny trading increments for stocks priced at more than US$1/share, and revised caps on market access fees (to reflect the lower minimum trading increment).
The SEC adopted these changes — which are slated to take effect on Nov. 3, 2025 — in an effort to further reduce trading costs, enhance transparency and improve market quality.
In response, the Canadian Securities Administrators and CIRO signalled in October that they would aim to align the Canadian trading environment with the U.S. for stocks that are traded in both countries. That pledge came in the wake of a public consultation, which generally encouraged the Canadian regulators to harmonize with the U.S. reforms, given the high degree of interconnection between the markets.
Now, CIRO is proposing to harmonize with the U.S., adopting 0.5¢ trading increments for inter-listed stocks on the same date as the SEC — with no currency conversion, so in Canada, stocks can trade in sub-Canadian penny increments.
“Given the degree of interconnectivity and the ease with which a U.S. inter-listed security can be traded in either Canada or the United States, it is important that the Canadian market remains competitive relative to the United States,” the SRO noted in its proposals.
Alongside the proposed changes to the trading rules, which are out for comment until Jan. 27, 2025, the SRO issued new proposed guidance that sets out the plan for CIRO to set trading increments for inter-listed securities on an ongoing basis — allowing it to harmonize the Canadian and U.S. requirements as they evolve in the future.
Under the new guidance, CIRO said it “will designate the applicable trading increment for each U.S. inter-listed security on a semi-annual basis and will publish a technical rules bulletin that lists each U.S. inter-listed security and the applicable trading increment for the next six months.”