IIROC is publishing guidance to clarify when and how Dealer Members should file reports to the Regulatory Marker Correction System (RMCS).
IIROC’s Universal Market Integrity Rules (UMIR) and Dealer Member Rules/IIROC Rules 1 require Dealer Members to use the correct identifier or designation on an order that is sent to a marketplace that is regulated by IIROC. 2 Where there is a missing or erroneous marker or identifier on the order and that order has been executed at least in part, the Dealer Member would need to file a report to RMCS.
RMCS is not intended to support a secondary method for Dealer Members to report information. We expect all Dealer Members to have sufficient processes in place to ensure that each order sent to a marketplace contains the required regulatory markers upon entry.
This Notice provides responses to frequently asked questions respecting the use of RMCS.
- 1. References to the IIROC Rules would be effective as of December 31, 2021.
- 2. For details on the requirements to use the correct identifier or designation on an order, please see:
UMIR 6.2 Designations and Identifiers
DMR 3600 / IIROC Rule 3140 Identifying clients of a Non-Executing Dealer Member
DMR 3200 Minimum Requirements For Dealer Members Seeking Approval Under Rule 1300.1(T) To Offer An Order-Execution Only Service / IIROC Rule 3241 Order execution only account services.
For a list of marketplaces regulated by IIROC, please go to https://www.iiroc.ca/markets/markets-we-regulate
Questions and Answers
The following are specific questions and IIROC’s response to each question.
1. When should Dealer Members file a report to RMCS?
Dealer Members should file a report to RMCS where:
- there is a missing or erroneous marker or identifier on the order, or
- the Participant or Access Person is ”unbundling” a bundled order, multiple client order, or a grouped order containing only non-client orders (grouped non-client order) in certain circumstances as set out below.
1.1 Missing or Erroneous Marker or Identifier
1.1.1 If a Dealer Member used the wrong identifier or marker (or failed to include the correct client identifier or marker) on several orders that were sent to a marketplace, does the Dealer Member need to file separate reports to provide the correct client identifier or marker for each individual order?
Dealer Members only need to submit correction reports for those orders that have been executed at least in part on the marketplace. A correction report is not required in respect of an order that has not executed. For executed trades, the Dealer Member can use the bulk upload option to submit multiple corrections at once via RMCS. Please see the RMCS UserGuide for instructions on how to submit a bulk correction.
1.1.2 Can Dealer Members use the bulk upload option in RMCS to correct markers or identifiers other than those introduced under the Client Identifiers Amendments?
Yes, use of the bulk upload option in RMCS is not limited to the new identifiers or markers introduced under the Client Identifiers Amendments 3 that will become effective on July 26, 2021. 4 Dealer Members can use the bulk upload option in RMCS to correct designations or identifiers required under UMIR 6.2. However, where these corrections relate to the “insider” or “significant shareholder” marker, the Participant or Access Person would need to report these changes via a gatekeeper report instead of using the bulk upload option in RMCS. Please see the RMCS UserGuide for further details.
1.1.3 When is an RMCS report due for correcting erroneous or missing markers or identifiers?
Dealer Members should submit an RMCS report immediately upon becoming aware that an order had been “mismarked” on its entry on any marketplace and the order has been at least partially executed, regardless of how the Dealer Member became aware of the error. 5
1.2 “Unbundling” bundled orders, multiple client orders or grouped non-client orders in certain circumstances
1.2.1 Other than correcting an erroneous or missing marker or identifier, are there other instances where a Participant or Access Person needs to file a report to RMCS?
Yes. While “bundled orders” 6, “multiple client” orders 7, and grouped non-client orders do not generally need to be unbundled, there are instances when a Participant or Access Person must file a report to RMCS to “unbundle” such orders including where:
- a portion of the trade is for an insider or significant shareholder as defined in UMIR 8, or
- the trade contains sales from long and short positions and/or from an account that is eligible to use the short-marking exempt designation. 9
Participants or Access Persons need to “unbundle” trades executed as a bunded order, multiple client order or a grouped non-client order on the marketplace in the instances set out above in order to facilitate an accurate audit trail and prevent the over-reporting of trades by certain persons and trade types. This is because Participants or Access Persons must mark the entire order with the most “restrictive” applicable designation when entering a bundled order, multiple client order or grouped non-client order on the marketplace. For example, if an order from a long position is combined with a sale order from a short position, the entire order is to be marked “short” or, if applicable, “short exempt”. Similarly, in the case of an order for an “insider” or “significant shareholder” that is combined with a non-“insider” or non-“significant shareholder” order, the entire order is to be marked “insider” or “significant shareholder”, as appropriate. The obligation to mark a bundled order, multiple client order or a grouped non-client order with the most restrictive applicable designation ensures that orders are not intentionally grouped together to avoid marking an order with the applicable “restrictive” marker.
1.2.2 When is an RMCS report due for “unbundling” bundled orders, multiple client orders, or grouped non-client orders where applicable?
Participants and Access Persons should file correction reports to “unbundle” trades entered as a bundled order, multiple client order or a grouped non-client order in the two instances specified above by the later of 5 p.m. and 15 minutes following the close of trading on the marketplace on which the trade was executed. 10
2. An executing Participant received an order that originated from another IIROC Dealer Member. If a correction report needs to be filed pursuant to one of the reasons listed above, who (executing Participant or originating IIROC Dealer Member) is responsible for submitting the report via RMCS?
Both executing Participants and originating Dealer Members are responsible for using the correct identifiers and/or markers on orders sent to a marketplace pursuant to UMIR 6.2, DMR 3600/IIROC Rule 3140 and DMR 3200/IIROC Rule 3241.
Depending on where the error occurred and whether the order has been at least partially filled, either the originating Dealer Member or the executing Participant can submit a report to RMCS.
Executing and originating Dealer Members should confirm responsibilities to ensure: 11
- the originating Dealer Member provides the applicable client identifier and/or designation to the executing Participant
- the executing Participant includes this information on an order that is sent to a marketplace
- an RMCS report is filed in a timely manner where there is a missing or erroneous identifier or marker on an order that has been executed at least in part on the marketplace.
Subject to the arrangements between the executing Participant and the originating Dealer Member, the executing Participant has an obligation to make reasonable inquiries of the originating Dealer Member (including a Jitney Participant 12) regarding appropriate designations and identifiers when sending an order to the marketplace. However, as with other regulatory markers such as insider or significant shareholder, the Participant is entitled to rely on what is reported by the originating Dealer Member (including a Jitney Participant). While the Participant would need to document this process as part of its records under audit trail requirements and UMIR 7.1, there is no additional requirement for Participants to independently verify what is being reported to them by the originating Dealer Member.
3. If a Participant or Access Person wants to vary or cancel a trade that has been executed on a marketplace, should a report be filed to RMCS?
No, Participants and Access Persons should only use RMCS to report a change in an identifier or order marker. UMIR 7.11 governs the cancellation of trades, or the variation and correction of trades with respect to the price, volume or settlement date. 13 To vary, cancel or correct a trade after initial settlement, the Participant or Access Person must provide notice to IIROC in the form of a Trade Variation or Cancellation Report (TVCR) to [email protected] 14 pursuant to UMIR 7.11 and IIROC Notice 11-0079. 15
Where a Participant or Access Person executes a trade that involves an insider or significant shareholder and subsequently cancels or varies that trade, the Participant or Access Person should specify in its TVCR that:
- the cancelled or varied trade involved an insider or significant shareholder
- the nature of the change, including the corrected volume and/or price where applicable.
4. Where can I access RMCS to file a report?
Users can access RMCS through IIROC Services, which is available through the Regulatory Reporting tab on the IIROC website. For details on how to obtain an IIROC Services account, please see the IIROC Services User Guide or contact [email protected].
For instructions on how to submit a report using RMCS, please see the RMCS UserGuide.
5. Applicable Rules
UMIR and DMRs/IIROC Rules this Guidance Note relates to:
- UMIR 1.1
- UMIR 6.2
- DMR 3200 / section 3241 of the IIROC Rules
- DMR 3600 / section 3140 of the IIROC Rules
6. Previous Guidance Notes
This Guidance repeals and replaces the following Guidance as shown:
- IIROC Notice 08-0033 – Rules Notice – Guidance Note – UMIR – New Procedures for Order Marker Corrections (July 15, 2008).
- IIROC Notice 08-0050 – Rules Notice – Guidance Note – UMIR – User Guide for the Regulatory Marker Correction Report (July 30, 2008).
- RMCS UserGuide dated July 30, 2008.
7. Related Documents
This Guidance is related to the following Notice:
- IIROC Notice 19-0071 – Rule Notice – Notice of Approval – UMIR and DMR – Amendments Respecting Client Identifiers (April 18, 2019).
- 3. For a list of IIROC Notices related to the Client Identifiers Amendments, please go to https://www.iiroc.ca/members/client-identifiers
- 4. IIROC Notice 20-0056 – Rules Notice - Technical Notice – UMIR and DMR – Revised Implementation of Client Identifier
Amendments for Listed Securities (March 26, 2020).
- 5. IIROC Notice 08-0033 – Rules Notice – Guidance Note – UMIR – New Procedures for Order Marker Corrections (July 15, 2008).
- 6. IIROC Notice 17-0039 – Rules Notice – Notice of Approval/Implementation – UMIR – Amendments Respecting Designations and Identifiers (February 16, 2017).
- 7. Effective July 26, 2021, UMIR 1.1 defines a “multiple client order” to mean an order that includes orders from more than one client, but does not include a principal order or a non-client order. (See IIROC Notice 19-0071 - Rule Notice – Notice of Approval - UMIR and DMR – Amendments Respecting Client Identifiers (April 18, 2019) and IIROC Notice 20-0056 – Rules Notice - Technical Notice – UMIR and DMR – Revised Implementation of Client Identifier Amendments for Listed Securities (March 26, 2020) for further details.)
- 8. IIROC Notice 15-0135 – Guidance Note – UMIR – Alternative Guidance on “Insider” Order Marking (June 24, 2015).
- 9. IIROC Notice 2005-025 – Guidance Note – UMIR – Bundling orders from a Long and Short Position (July 27, 2005) and IIROC Notice 12-0300 – Guidance Note – UMIR – Guidance on “Short Sale” and “Short-Marking Exempt” Order Designations (October 11, 2012).
- 10. IIROC Notice 08-0050 – Rules Notice – Guidance Note – UMIR – User Guide for the Regulatory Marker Correction Report (July 30, 2008).
- 11. IIROC Notice 21-0052 – Rules Notice - Technical Notice – UMIR and DMR/IIROC Rules – Implementation of Client Identifier Amendments for Listed Securities (March 18, 2021).
- 12. IIROC Notice 2005-003 – Marking Jitney Orders (March 4, 2005).
- 13. Pursuant to UMIR 7.11 and IIROC Notice 11-0079, the requirement to file a TVCR came into effect on June 1, 2011.
- 14. IIROC Notice 13-0045 – Rules Notice – Technical – UMIR – Requirements for Secure Electronic Regulatory Communication (February 7, 2013).
- 15. IIROC Notice 11-0079 – Rules Notice – Guidance Note – UMIR – Implementation Date for the Reporting of Trade Variations and Cancellations (February 25, 2011).