Entering Orders on Both Sides of the Market

1. General Prohibition

Rule 2.2(1) of UMIR prohibits any manipulative or deceptive method, act or practice in connection with any order or trade on a marketplace. A Participant or Access Person is prohibited from entering an order on a marketplace if the Participant or Access Person knows or ought reasonably to know that any resulting trade will be either fictitious or involve no change in beneficial or economic ownership.

Similarly, a Participant or Access Person will have contravened Rule 2.2(2) if the Participant or Access Person knows or ought reasonably to know that the entry of the order or the execution of the trade will create or could reasonably be expected to create:

• a false or misleading appearance of trading activity in or interest in the purchase or sale of the security; or
• an artificial ask price, bid price or sale price for the security or related security.

A Participant or an Access Person may be considered to have engaged in a manipulative and deceptive activity, if the Participant or Access Person knows or ought reasonably to know that:

• orders for the purchase and for the sale of the same security are being entered on a marketplace;
• the orders are for the benefit of an account or accounts which have the same economic or beneficial owner or are under the direction or control of the same person; and
• the orders have the potential of trading with each other.

CIRO Guidance Note GN-URPart2-26-0003 – Use of Market-On-Close Facilities published on February 23, 2026 sets out CIRO’s position that the entry of a limit MOC order by a Participant or Access Person into a Market-on-Close Facility offered by a Canadian marketplace in order to offset a market MOC Order entered by that Participant or Access Person constitutes a wash trade (a type of manipulative and deceptive activity). It is unacceptable for a Participant or Access Person to undertake a wash trade, directly or indirectly, even in circumstances where the Participant or Access Person is trying to “correct” an erroneous market MOC Order that may not otherwise be cancellable.

2. Exceptions from the General Prohibition

CIRO will not consider a Participant or Access Person to be engaging in a manipulative or deceptive activity if the wash trade arises in the following circumstances:

2.1 Trades executed when an order is entered in error

If a Participant or Access Person enters an order in error on a marketplace which executes against an existing order for the same beneficial or economic owner, the resulting wash trade will not be considered manipulative or deceptive provided the Participant or Access Person cancels the erroneous trade on the same trading day. If a wash trade occurs and cannot be cancelled, the wash trade must be reported in accordance with UMIR 10.16 as a gatekeeper report.

2.2 Orders generated by a marketplace

If a Participant has “Marketplace Trading Obligations”1 in accordance with the Marketplace Rules of a marketplace and the trading system of that marketplace automatically generates orders in accordance with the Marketplace Rules in respect of the applicable “Marketplace Trading Obligations”, the matching of principal orders, in whole or in part, with an automatically generated order will not be treated as a manipulative or deceptive activity.

2.3 Consent of CIRO

If a Participant or Access Person is unable for any reason to cancel an existing order that the Participant or Access Person is otherwise entitled to cancel (e.g., for temporary technology problems experienced by the Participant or Access Person), CIRO may specifically permit a Participant or Access Person to enter additional orders that may execute as a wash trade if Market Surveillance is satisfied that the entry of such orders would be in the interest of a fair and orderly market.

As set out in Guidance Note GN-URPart2-26-0003 Use of Market-On-Close Facilities, Market Surveillance may in some cases specifically authorize the entry of an off-setting limit MOC Order for a market MOC Order in a Market-on-Close Facility. In determining whether to permit the entry of an off-setting order for the amount of an error or a lesser amount, Market Surveillance will consider:

• the possible impact of the erroneous MOC Order on the closing price;
• the extent to which trading activity may have already occurred in the affected security based on a MOC imbalance report; and
• where applicable, whether there is sufficient time to issue a notice to the market of an adjustment to an imbalance report.

3. Applicable Rules

UMIR Rules this Guidance Note relates to:

• UMIR 2.2

4. Previous Guidance Note(s)

This Guidance Note repeals and replaces:

• Market Integrity Notice 2005-029 – Entering Orders on Both Sides of the Market (September 1, 2005).

5. Related Documents

This Guidance Note is related to the following Guidance Notes:

• Guidance Note GN-URPart2-26-0003 – Use of Market-On-Close Facilities (February 23, 2026)

• 1See UMIR definition of “Marketplace Trading Obligations”