The Investment Industry Regulatory Organization of Canada is proposing rule amendments that are designed to discourage abusive trading in U.S. over-the-counter securities.

On April 30, the IIROC board approved the proposed amendments publication for comment. Specifically, the proposed amendments will prohibit a dealer from accepting an order to sell the securities of a U.S. OTC issuer until it has identified the beneficial owner of those securities. They also provide assorted exemptions, including for American Depository Receipts and OTC securities for which the issuer is also traded on a major North American exchange.

The primary objective of the proposed amendments is to discourage abusive and illegal OTC market activity, and prevent such activity from migrating to other parts of Canada as a result of similar requirements imposed by the BC Securities Commission, the IIROC says.

Comments are sought on the proposed amendments by July 21.

IE