The Canadian Securities Administrators Friday announced the adoption of a variety of trading rule amendments, which will, among other things, allow regulators to implement a regulatory regime for dark trading.
The amendments were originally published for comment in March 2011, and, in response to the 12 comments it received, the CSA has made some changes that it deems minor, so the amendments are not going out for another comment period.
One of the primary impacts of the changes will be to facilitate the introduction of a regulatory regime for dark liquidity. The amendments propose to revise the exemption from the pre-trade transparency requirements to include a requirement that orders meet a size threshold in order to be exempt.
The CSA notes that many of the commenters objected to the idea of imposing a size requirement on dark orders, and it stresses that it isn’t proposing an actual threshold at this time. “However, we continue to be of the view that it is important to establish a regulatory framework that would allow the CSA and IIROC to introduce a threshold when appropriate,” it says.
The regulators say they will examine trading in the market over a period of time to evaluate what the minimum size threshold should be, and that more details regarding the specific review that will be undertaken will be published in a separate notice, and any decision regarding an appropriate size threshold will involve industry consultation.
Apart from that, the amendments also aim to: update and streamline the regulatory and reporting requirements in the trading rules; increase market transparency; and, update the requirements for conflicts of interest, outsourcing arrangements, and business continuity plans; among other things. The amendments also extend the current exemption from transparency requirements for government debt securities until December 31, 2014; and, they extend the obligation not to intentionally lock or cross markets.
In Ontario, the changes were delivered to the finance minister for approval on March 22, and unless they are rejected, they will come into force on July 1 (although changes to one form won’t take effect until Dec. 31).