Ms. Wendy Rudd reports

IIROC REPUBLISHES PROPOSAL ON MARKETPLACE THRESHOLDS

The Investment Industry Regulatory Organization of Canada has republished for comment a proposed guidance on the establishment and operation of price thresholds by Canadian marketplaces, to further reduce short-term, unexplained price volatility and address risks arising from electronic trading.

Today's publication reflects responses from stakeholders to a proposed guidance that IIROC published for comment in April, 2014, and input from further industry consultation. There are three significant changes in today's revised proposal:

• IIROC is proposing specific price thresholds beyond which a marketplace must preclude trading activity, rather than allowing each marketplace to determine its threshold levels;
• All marketplaces, including dark marketplaces, would be required to implement marketplace thresholds;
• Marketplace thresholds would not apply to opening orders or market-on-close orders.

"This revised proposal reflects IIROC's commitment to maintaining fair and orderly markets while lessening the need for regulatory intervention," said Wendy Rudd, IIROC's senior vice-president, market regulation and policy. "Marketplace thresholds complement a series of IIROC reforms that help enhance market integrity and foster investor confidence."

Since 2010, IIROC has implemented the following reforms to reduce the number of erroneous trades and unexplained short-term price volatility:

• Controls at the participant level, introduced through electronic trading rules in March, 2013, and implementation of third party marketplace access rules in March, 2014;
• Introduction of single-stock circuit breakers in February, 2012, and their subsequent expansion in February, 2015;
• Enhancements to market-wide circuit breakers in February, 2013;
• Clarification in August, 2012, of IIROC's policies and procedures on erroneous and unreasonable trades.

The revised proposal is out for comment until May 29, 2015.