Recap: Canadian Market Rules & Regulations

As per the Trader Go Live Training Module (which all traders must complete before accessing Live markets through our systems), traders have a responsibility to be aware of, and abide by, all applicable rules and regulations on the market(s) which they trade.

Where the Trader Go Live Training Module highlighted your general responsibilities as well as some more detailed guidance, as provided for by the Market Abuse Regulations ("MAR") which was implemented by ESMA on July 3, 2016, we would like to take this opportunity to highlight some of the applicable rules and regulations specific to the Canadian marketplace.

Note that the content provided here (as with the Trader Go Live Training Module) is not exhaustive, and in no way limits your responsibility to be aware of and abide by all applicable rules and regulations.

The Investment Industry Regulatory Organization of Canada ("IIROC") maintains the Universal Market Integrity Rules ("UMIR"). These rules cover all aspects of market integrity, and the full text of the rules can be found online.

IIROC will also provide additional guidance on the interpretation of UMIR from time to time, to help clarify those rules. In particular, we would like to refer traders to the Guidance Notice published on February 14, 2013: Guidance on Certain Manipulative and Deceptive Trading Practices.

That Guidance Notice more clearly defined some forms of potentially manipulative and deceptive practices. While we encourage all traders to review the original notice and underlying UMIR sections, we have reproduced key elements of the notice below.


It is the position of IIROC that placing a bona fide order on one side of the market while simultaneously “layering” orders in the consolidated market display on the other side of the market without intention to trade is a contravention of Rule 2.2(2) and Policy 2.2, Parts 2 and 3, as inducing a false or misleading appearance of trading activity or artificial price. In this case, the purpose of the “layering” is to “bait” other market participants to react and trade with the bona fide order on the other side of the market at an artificial price.

Quote Stuffing

It is the position of IIROC that the input by a Participant or Access Person of excessive market data messages with the intent to “flood” systems and create “information arbitrage” opportunities for itself, is a contravention of Rule 2.2(1) as an activity which, by its very nature, will be considered to be a manipulative or deceptive method, act, or practice.

Quote Manipulation

IIROC is concerned about potential manipulative activity intended to affect the price at which dark orders that are tied to prices on visible markets, trade in dark pools or visible markets. It is the position of IIROC that entering non-bona fide orders on visible markets in an attempt to change the best bid price and/or the best ask price and affect the price calculation at which a trade will occur with a dark order, contravenes Rule 2.2(1), (2)(b), and Policy 2.2, Part 2(e). This activity (which may be combined with liquidity detection) results in a trade with a dark order at an improved price, following which orders are removed from the visible market.


It is the position of IIROC that the entry of non-bona fide orders in the pre-opening on a marketplace that displays a “Calculated Opening Price” (indicating the price at which trading would commence based on the orders entered to that point on the marketplace), with the intent of affecting the Calculated Opening Price to the advantage of the party that entered the order, contravenes Rule 2.2(2) and Policy 2.2, Part 2(f).

Abusive Liquidity Detection

IIROC is of the view that strategies which enter orders (disclosed or iceberg during the pre-open, or “pinging” * ) to detect the existence of a large buyer or seller with the intention to trade ahead of, rather than with, the large buyer or seller, is a manipulative and deceptive practice contrary to Rule 2.2(1). This strategy harms the large trading interest when, after a profitable price movement, the trades are reversed, or in the event the price moves contrary to the position taken, the trading interest of the large buyer or seller may be viewed as a free option to trade against.

Keep in mind that rules and regulations are not static, and as a result you should periodically review the applicable rules and regulations which apply on the market(s) which you trade.

We will continue in our efforts to make such information available to you. However, it is ultimately your responsibility to know these rules and regulations before you trade.

If you have any questions or concerns, regarding this update or any other rules & regulations which apply on the markets you are interested in trading, please do not hesitate to let us know.

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