IIROC currently provides regulation services in relation to equity securities trading on a number of Canadian marketplaces. A marketplace that retains IIROC to be its regulation services provider will become a Marketplace Member.
In order to retain IIROC’s market regulation services, an marketplace must be recognized by or registered with a member of the Canadian Securities Administrators, in compliance with the applicable securities laws within each jurisdiction. In addition, where the marketplace is an alternative trading system, it must also be an IIROC Dealer Member in order to qualify as a Marketplace Member. For more information, please see “Becoming a Dealer Member”. Further details on requirements can be found in National Instrument 21-101 of the Canadian Securities Administrators.
The process of becoming a Marketplace Member involves initial meetings between IIROC and the marketplace to discuss the marketplace model. All organizations expressing an interest in retaining IIROC’s market regulation services will be asked to fill out an IIROC Information Form and to provide a copy of either Form 21-101F1 or 21-101F2 (as applicable) provided to the relevant Canadian Securities Administrator(s) who will be recognizing or registering the marketplace. In addition, a membership application must be submitted outlining, among other things, specifics of the marketplace’s operations and technical systems.
A comprehensive regulation services agreement (“RSA”) must be executed to govern the terms of IIROC’s engagement as regulation services provider. Among other things, the RSA will specify:
- the services and service levels to be delivered by IIROC
- the fees for services
- the various obligations of IIROC, including those related to:
- communicating changes to UMIR
- notification of systems changes
- information confidentiality
- sharing of information with other regulatory authorities
- the various obligations of the marketplace, including those related to:
- electronic connectivity of trading systems to IIROC systems
- the provision of trading and order entry data
- data retention
- provision of billing information
- notification of systems changes
- obligations of the marketplace’s issuers and their employees to abide by IIROC rulings
- regulatory information confidentiality
- provision of information to IIROC
In the course of providing regulation services, IIROC utilizes a variety of technologies. Prior to commencing the regulation of order entry and trading activity on a marketplace, IIROC must ensure that the marketplace’s technology provides an adequate flow of information to enable IIROC to carry out its required regulatory activities. A marketplace can expect detailed discussions and negotiations to take place regarding technology issues prior to the completion of an RSA. The scope of technology work required to ensure IIROC’s ability to fulfill its regulatory responsibilities under the RSA will impact on the connectivity fees charged to the marketplace and the time required to bring the surveillance capabilities online.
The process of review and negotiation between IIROC and a marketplace is expected to take 30 to 60 days, though required technological changes may take substantially longer.
Marketplaces wishing to retain IIROC as a regulation services provider should contact Jim Twiss or Tim Ryan at IIROC.