IIROC proposes derivatives trading rules

IIROC proposes derivatives trading rules

The Investment Industry Regulatory Organization of Canada (IIROC) is proposing rule changes that would enable it to oversee derivatives trading on exchanges.

The industry self-regulatory organization published a set of proposed changes to both the trading rules and the dealer rules that would create a framework for regulating trading of listed derivatives on markets that IIROC oversees.

The goal of the proposals is to establish a derivatives trading framework that “strengthens market integrity and investor protection,” IIROC said in a notice spelling out its proposals.

IIROC’s existing trading rules regulate practices such as manipulative trading, short selling and front-running, while also setting practices for trading halts, delays and suspensions.

While those rules apply to listed securities, they don’t cover listed derivatives trading.

To address that, the revisions would expand certain equity trading requirements to derivatives trading and introduce new derivatives-focused requirements, while specifically limiting certain existing requirements to securities trading.

IIROC is publishing its proposals in two phases, with the first focusing on market integrity issues, such as manipulative and deceptive activities, electronic trading and routing arrangements, and audit trail and record keeping requirements, among others.

The second phase will deal with trading-related provisions, such as gatekeeper obligations, trading priority and supervision, among a variety of other issues.

The proposals are out for comment until Dec. 7.

Source: Investment Executive

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