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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.
The following are specific questions and IIROC’s response to each question.
Dealer Members should file a report to RMCS where:
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.
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.
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
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:
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.
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
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
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.
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:
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.
UMIR and DMRs/IIROC Rules this Guidance Note relates to:
This Guidance repeals and replaces the following Guidance as shown:
This Guidance is related to the following Notice: