Following a similar effort by the Canadian Investment Regulatory Organization (CIRO) last year, the Canadian Securities Administrators (CSA) is proposing changes to its trading rules that would keep requirements in Canada in line with the U.S. when it comes to inter-listed securities.
Last December, CIRO proposed changes to its trading rules that would harmonize minimum tick size requirements for inter-listed securities. Today, the CSA proposed changes to its rules that would also match trading fee caps in Canada with the U.S.
The reforms are designed to align the trading rules in Canada on tick sizes and trading fee caps with changes to those requirements announced by the U.S. Securities and Exchange Commission (SEC) last year.
While the SEC initially planned to adopt these changes on Nov. 3 of this year, the regulator has since stayed its proposed reforms, pending completion of a judicial review of those rules by the U.S. Court of Appeal for the D.C. circuit.
The CSA said today that its proposed changes, and the proposed CIRO reforms, won’t take effect until the stay is lifted and the rules are implemented in the U.S.
In the meantime, CIRO’s proposals are out for comment until Jan. 27, and the CSA’s new proposals are open for comment until March 24.
If the proposed fee cap changes are adopted, the CSA said that marketplaces could see their trading fee revenues drop by an estimated $101 million per year, but that a corresponding reduction in trading fee rebates should largely offset this decline in fees.
On the upside, the changes should also preserve the relative competitive position of U.S. and Canadian markets, it said.
“We considered maintaining the current trading fee cap,” the CSA said in a notice outlining its proposals, but it ultimately concluded that this “is not a viable option” as starkly different fees on stocks that are traded on both sides of the border could distort trading.
For securities that aren’t inter-listed with the U.S., the CSA said that it intends to review the fee caps for these stocks too, but that it’s not currently proposing any changes there.