Canadian Securities Regulators enact order protection rule to maintain integrity of multiple marketplaces

CSA Securities

Toronto – The Canadian Securities Administrators (CSA) today announced amendments to National Instrument 21-101 Marketplace Operation (NI 21-101) and National Instrument 23-101 Trading Rules (NI 23-101) to create an Order Protection Rule and other additional requirements relating to trading on multiple marketplaces.

The Order Protection Rule requires all visible, immediately accessible, better-priced limit orders to be filled before other limit orders at inferior prices, regardless of the marketplace where the order is entered. Other amendments include a prohibition on intentionally locking or crossing markets.

“These amendments, the Order Protection Rule in particular, will help maintain investor confidence in the integrity of the Canadian market, which has rapidly evolved into a multiple marketplace environment,” said Jean St-Gelais, Chair of the CSA and President & Chief Executive Officer of the Autorité des marchés financiers (Québec). “The new rules will ensure that orders that are entered are being treated fairly, regardless of the participant’s sophistication or the order size.”

The Order Protection Rule will require each marketplace to have policies and procedures in place to reasonably prevent trade-throughs. By introducing these requirements, the rule maintains the historical obligation of full depth-of-book protection in Canada and continues to facilitate fairness and provide investors an incentive to participate in the price discovery process, which in turn increases market liquidity.

Subject to ministerial approvals, the amendments (other than the Order Protection Rule) will come into force in all CSA jurisdictions on January 28, 2010. The Order Protection Rule will come into effect on February 1, 2011. The CSA continues to consult with industry and it will be developing and publishing a plan for the rollout of the Order Protection Rule.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

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For more information:

CSA member name

Point of contact

Phone number

Autorité des marchés financiers

Sylvain Théberge

514 940-2176

Alberta Securities Commission

Mark Dickey

403 297-4481

British Columbia Securities Commission

Ken Gracey

604 899-6577

Financial Services Regulation Division, Newfoundland and Labrador

Doug Connolly

709 729-2594

Manitoba Securities Commission

Ainsley Cunningham

204 945-4733

New Brunswick Securities Commission

Wendy Connors-Beckett

506 643-7745

Nova Scotia Securities Commission

Natalie MacLellan

902 424-8586

Ontario Securities Commission

Carolyn Shaw-Rimmington

416 593-232361

PEI Securities Office, Department of the Attorney General

Janice Callbeck

902 368-6288

Saskatchewan Financial Services Commission

Barbara Shourounis

306 787-5842

Securities Office, Northwest Territories

Donn MacDougall

867 920-8984

Securities Office, Nunavut

Louis Arki

867 975-6587

Securities Office, Yukon

Fred Pretorius

867 667-5225