IIROC implements single-stock circuit breakers

TORONTO, Feb. 2, 2012 /CNW/ - The Investment Industry Regulatory Organization of Canada (IIROC) has implemented single-stock circuit breakers (SSCBs) as part of a series of reforms to help control short-term volatility in stock prices.

This means that a five-minute halt of trading in a security will now automatically trigger across all Canadian marketplaces if the price of the security swings 10% or more within a five-minute period.

"Single-stock circuit breakers will be an important tool to help mitigate volatility in the trading of individual stocks," said Susan Wolburgh Jenah, IIROC's President and Chief Executive Officer.

"Together with other complementary IIROC initiatives, this tool is an important ingredient in building investor confidence and enhancing market integrity."

The introduction of SSCBs is one of a series of IIROC reforms following the events of the May 6th Flash Crash of 2010. Others include:

• industry guidance and an investor forum in 2011 on the use of certain order types in today's high-speed, multiple-marketplace environment;
• ongoing discussions on the harmonization of volatility controls at the marketplace level;
• a recently issued request for comments revisiting the current approach to market-wide circuit breakers; and
• ongoing review and clarification of our policies and procedures on erroneous and unreasonable trades.

Initially, SSCBs will apply to all securities included in the S&P/TSX Composite Index, as well as to those exchange-traded funds (ETFs) which are comprised principally of listed securities. All trades executed at more than 5% beyond the price that triggered the SSCB will be cancelled.

Read more in the IIROC Notice: Guidance Respecting the Implementation of Single-Stock Circuit Breakers, issued today.

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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 through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.