IIROC finalizes guidance on management of stop loss orders

Dealers reminded of responsibility for fair and orderly markets

TORONTO, July 11, 2013 /CNW/ - The Investment Industry Regulatory Organization of Canada (IIROC) today issued final guidance on the management and execution of stop loss orders to protect market integrity.

The guidance addresses concerns about the ongoing incidence of trades resulting from the automated execution of stop loss orders, requiring regulatory intervention by IIROC.

"When multiple stop loss orders are triggered and executed without regard for their impact, investor confidence is unnecessarily compromised," said Wendy Rudd, IIROC's Senior Vice-President, Market Regulation and Policy. "This guidance confirms that dealers are responsible for the appropriate execution of their clients' orders, and for the maintenance of fair and orderly markets. Regulatory intervention by IIROC should be required only in exceptional circumstances."

The final guidance provides specific direction to dealers on the use and management of stop loss orders in relation to their obligations under UMIR electronic trading rule amendments ("ETR"), which took effect March 1, 2013.

IIROC intends to continue monitoring the impact of stop loss orders on fair and orderly markets and will assess whether additional regulatory steps are required.

IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.  Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets.

IIROC carries out its regulatory responsibilities by creating and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through the creation and enforcement of market integrity rules regarding trading activity on Canadian marketplaces.

SOURCE: Investment Industry Regulatory Organization of Canada (IIROC) - General News

Sherri Haigh
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Karen Archer
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