A Participant or Access Person shall not enter an order on a marketplace or execute a trade if the Participant or Access Person knows or ought reasonably to know that that the entry of the order or the execution of the trade would not comply with or would result in the violation of:
- applicable securities legislation;
- applicable requirements of any self-regulatory entity of which the Participant or Access Person is a member;
- the Marketplace Rules of the marketplace on which the order is entered;
- the Marketplace Rules of the marketplace on which the trade is executed; and
- UMIR and the Policies.
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Defined Terms: NI 14-101 section 1.1(3) – “securities legislation” NI 21-101 section 1.1 – “order” and “self-regulatory entity” UMIR section 1.1 – “Access Person”, “marketplace”, “Marketplace Rules”, “Participant”, “Policy” and “UMIR” UMIR section 1.2(2) – “trade” Related Provisions: UMIR Policy 1.2 Part 3 – interpretation of “ought reasonably to know” |
Regulatory History:
Effective April 1, 2005, the applicable securities commissions approved an amendment to add Rule 2.3. See Market Integrity Notice 2005‑011 - “Provisions Respecting Manipulative and Deceptive Activities” (April 1, 2005).
In connection with the recognition of IIROC and its adoption of UMIR, the applicable securities commissions approved an amendment to Rule 2.3 that came into force on June 1, 2008 to make editorial changes. See Footnote 1 in Status of Amendments
Disciplinary Proceedings: In the Matter of Sean Conacher (“Conacher”) (April 6, 2018) DN 18-0073
Facts – Between June 2013 and October 2013, Conacher, the Ultimate Designated Person at Blackwatch Capital Corp., allowed a U.S. based client to enter orders directly on an IIROC-regulated marketplace through a firm inventory account assigned to him. Conacher knew or ought reasonably to have known that permitting the Client to enter orders and execute trades directly to the marketplace through a firm inventory account would result in a failure to comply with applicable regulatory requirements.
Disposition – Pursuant to a Settlement Agreement, Conacher admitted that he permitted trades to be executed that he knew or ought reasonably to have known would not comply with applicable regulatory requirements, contrary to UMIR 2.3.
Requirements Considered – Rule 2.3.
Sanction – Conacher agreed to pay a fine of $15,000, to a suspension of access to IIROC-regulated marketplaces for 3 months, and to pay costs in the amount of $2,000.