CSA issues rules for Direct Electronic Access, IIROC approves

The Canadian Securities Administrators (CSA) today announced that it has issued amendments to National Instrument 23-103 Electronic Trading (NI 23-103), which will establish a consistent framework for the offer and use of direct electronic access (DEA) and address the financial and regulatory risks associated with DEA.

NI 23-103 requires appropriate controls to ensure the integrity of dealers that offer DEA and the market as a whole.

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And IIROC has adopted these rule amendments.

“This new framework aligns Canada’s regulations with rapidly evolving trading technologies and practices. It ensures there are proper controls in place for all trading activity regardless of the source,” says Wendy Rudd, IIROC’s senior vice president, Market Regulation and Policy.

The amendments are effective March 1, 2014 to ensure there is sufficient time for implementation by dealers and their clients. As well, IIROC dealers with existing access agreements have until September 1, 2014 to replace or amend them.

Background

The CSA first published NI 23-103 for comment in April 2011, proposing requirements to address the risks to Canadian markets related to the speed and automation of electronic trading, including the risks related to DEA.

NI 23-103 was finalized in June 2012 without the DEA-related provisions to allow the CSA sufficient time to align these requirements with amendments to IIROC’s Universal Market Integrity Rules, which are also being published today.

Read: 5 regulatory changes you need to know

The amendments were developed following consultations with marketplaces, marketplace participants and service vendors, and are consistent with international approaches to regulating direct electronic trading.

A copy of NI 23-103 and its related Companion Policy are available on the websites of various CSA members. Subject to ministerial approval, the amendments will come into force on March 1, 2014 and will change the title of NI 23-103 to Electronic Trading and Direct Electronic Access to Marketplaces.

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Staff

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