1. Each order in a listed security entered on a marketplace shall contain:
   1. the identifier of:
      1. the Participant or Access Person entering the order as assigned to the Participant or Access Person in accordance with Rule 10.15,
      2. the marketplace on which the order is entered as assigned to the marketplace in accordance with Rule 10.15,
      3. the Participant for or on behalf of whom the order is entered, if the order is a jitney order,
      4. the client for or on behalf of whom the order is entered:
         1. in the form of a Legal Entity Identifier for:
            1. orders entered using direct electronic access
            2. orders entered using a routing arrangement
            3. an identified order execution only client that is eligible to receive a Legal Entity Identifier under the standards set by the Global Legal Entity Identifier System
            4. orders for accounts that are supervised under Part D of Corporation Rule 3900 – Supervision of institutional client accounts
         2. in the form of an account number for all other client orders not included under UMIR 6.2(1)(a)(iv)(1)
      5. the client of a foreign dealer equivalent for or on behalf of whom the order is entered under a routing arrangement, where such client order is automatically generated on a predetermined basis by that client, and in the form and manner acceptable to the Market Regulator; and
   2. a designation acceptable to the Market Regulator for the marketplace on which the order is entered, if the order is:
      1. a Call Market Order,
      2. an Opening Order,
      3. a Market-on-Close Order,
      4. a Special Terms Order,
      5. a Volume-Weighted Average Price Order,
         (v.1) a Basis Order,
         (v.2) a Closing Price Order,
         (v.3) a bypass order,
         (v.4) a directed action order as defined in the Trading Rules, 
         (v.5) a Contingent Derivative Order, 
         (v.6) a Net Asset Value Order,
      6. part of a Program Trade,
      7. part of an intentional cross or internal cross,
         (vii.1) a derivative-related cross,
      8. a short sale but not including an order which is designated as a “short-marking exempt order” in accordance with subclause 6.2(1)(b)(ix),
      9. a short-marking exempt order,
      10. a non-client order,
      11. a principal order,
      12. a jitney order,
      13. for the account of a derivatives market maker,
      14. for the account of a person who is an insider of the issuer of the security which is the subject of the order,
      15. for the account of a person who is a significant shareholder of the issuer of the security which is the subject of the order,
      16. for the account of a client where the order is sent using direct electronic access,
      17. for the account of a client where the order is sent under a routing arrangement,
      18. for the account of an order execution only client,
      19. of a type for which the Market Regulator may from time to time require a specific or particular designation,
      20. a bundled order, or
      21. a multiple client order.
   3. Where a designation is required under 6.2(1)(b)(xx) or (xxi), the Participant does not need to include a client identifier on the order under 6.2(1)(a)(iv).
2. Each order in a listed derivative entered on an Exchange shall contain:
   1. the identifier of:
      1. the Participant or Access Person entering the order as assigned to the Participant or Access Person in accordance with Rule 10.15,
      2. the Exchange on which the order is entered as assigned to the Exchange in accordance with Rule 10.15,
      3. the Participant for or on behalf of whom the order is entered, if the order is a jitney order,
      4. the client for or on behalf of whom the order is entered under direct electronic access, and
      5. the investment dealer or foreign dealer equivalent for or on behalf of whom the order is entered under a routing arrangement; and
   2. a designation acceptable to the Market Regulator for the Exchange on which the order is entered, if the order is:
      1. a non-client order,
      2. a principal order,
      3. for the account of a derivatives market maker,
      4. for the account of a person who is an insider of the issuer of the underlying security which is the subject of the order,
      5. for the account of a person who is a significant shareholder of the issuer of the underlying security which is the subject of the order,
      6. one that includes an opening or closing transaction indicator
      7. of a type for which the Market Regulator may from time to time require a specific or particular designation.
3. If the order entered on a marketplace is a Special Terms Order, the order shall contain, in addition to all designations and identifiers required by subsection (1), information in such form as is acceptable to the Market Regulator of the marketplace on which the order is entered respecting:
   1. any condition on the execution of the order; and
   2. the settlement date.
4. If following the entry of an order on a marketplace for the sale of security that has not been designated as a short sale such order would become a short sale on execution, the order shall be modified to include the short sale designation required by subsection (1).
5. Each order entered on a marketplace including all designations and identifiers required by subsection (1) and (2) shall be disclosed to each Market Regulator.
6. The marketplace on which the order is entered shall determine if the identifier of the Participant or the marketplace shall be displayed:
   1. in a consolidated market display for a security, or
   2. in a marketplace for a derivative.
7. Unless otherwise permitted or directed by the Market Regulator, a marketplace shall:
   1. disclose for display in a consolidated market display any designation attached to an order that is required by sub-clause (i) to (vii.1) inclusive of clause (1)(b), but for a bypass order that is not part of a designated trade, and
   2. not disclose for display in a consolidated market display any designation attached to an order that is required by:
      1. sub-clause (viii) to (xxi) inclusive of clause (1)(b)
      2. sub-clause (i) to (vii) inclusive of clause (2)(b).

1. Regulatory Halts and Suspensions - No order for the purchase or sale of a security or a derivative shall be executed on a marketplace or over-the-counter, at any time while:
   1. an order of a securities regulatory authority to cease trading in the security, derivative, related security or related derivative remains in effect;
   2. in the case of a listed security or a listed derivative, the Market Regulator of the Exchange on which the security or derivative is listed has halted or suspended trading in the security or derivative while such halt or suspension remains in effect;
   3. in the case of a quoted security, the Market Regulator of the QTRS has halted or suspended trading in the security while such halt or suspension remains in effect; and
   4. in the case of any security other than a listed security or a quoted security, a Market Regulator of an ATS on which such security may trade has halted trading for the purposes of the public dissemination of material information respecting such security or the issuer of such security.
2. Regulatory Delay - No order for the purchase or sale of a security or derivative shall be executed on a marketplace or over-the-counter, at any time while:
   1. in the case of a listed security or a listed derivative, the Market Regulator of the Exchange on which the security or derivative is listed has delayed trading in the security or derivative while such delay remains in effect; and
   2. in the case of a quoted security, the Market Regulator of the QTRS has delayed trading in the security while such delay remains in effect.
3. Exceptions for Non-Regulatory Purposes - Despite subsections (1) and (2), an order may be entered on a marketplace or an order may trade on a marketplace, if the Exchange or QTRS has:
   1. suspended trading in the security or derivative by reason only that the issuer of the security or underlying security has:
      1. ceased to meeting listing or quotation requirements established by the Exchange or QTRS, or
      2. failed to pay to the Exchange or QTRS any fees in respect of the listing or quotation of securities of the issuer or underlying securities of a derivative; or
   2. delayed or halted trading in the security or the derivative as a result of:
      1. technical problems affecting only the trading system of the Exchange or QTRS, or
      2. the application of a Marketplace Rule.
4. Trading Outside Canada During Regulatory Halts, Delays and Suspensions -
   1. If trading in a security has been prohibited on a marketplace in accordance with clauses (1)(b), (c) or (d) or subsection (2), a Participant may execute a trade in the security, if permitted by applicable securities legislation, outside of Canada on a foreign organized regulated market;
   2. If trading in a security has been prohibited on a marketplace under clause 1(a), a Participant may execute a sale in the security on a foreign organized regulated market if:
      1. all conditions set forth in the order of a securities regulatory authority are met, and
      2. the sale is in accordance with applicable securities legislation.

(4)-(6) Repealed and moved to Rules 3.2 and 3.4  

POLICY 6.1 – ENTRY OF ORDERS TO A MARKETPLACE

Part 1 – Execution Price of Orders

An order may execute at such price increment as established by the marketplace for the execution of such orders and the marketplace shall report the execution price to the information processor and information vendor provided, if required by the information processor or information vendor, the marketplace shall report the price at which the trade was executed as the nearest trading increment and if the price results in one-half of a trading increment the price shall be rounded up to the next trading increment.

1. A Participant shall not enter on a marketplace or an organized regulated market a principal order or a non-client order of the Participant that, based on the information known or reasonably available to the person or persons originating or entering the principal order or non-client order, the Participant knows or should have known will execute or have a reasonable likelihood of executing in priority to a client order received by the Participant prior to the entry of the principal order or non-client order for the same security that is:
   1. at the same price or a lower price than the client order in the case of a purchase or the same or a higher price than the client order in the case of a sale; and
   2. on the same side of the market.
2. Despite subsection (1) but subject to Rule 4.1, a Participant is not required to give priority to a client order if:
   1. the client specifically has consented to the Participant entering principal orders and non-client orders for the same security at the same price on the same side of the market on the same settlement terms;
   2. the principal order or non-client order is:
      1. automatically generated by the trading system of a marketplace in respect of the Marketplace Trading Obligations of that marketplace,
      2. automatically generated by a system operated by the Participant or on behalf of the Participant based on pre-determined order and trading parameters established, programmed and enabled for trading prior to the receipt of the client order,
      3. for a managed account and the client order is for a managed account under the direction of the same person and in respect of which executions are allocated between the various managed accounts on an equitable basis in accordance with the established practices of the Participant,
      4. a Basis Order,
      5. a Contingent Derivative Order, or
      6. a Net Asset Value Order;
   3. the client order has been entered directly by the client of the Participant on a marketplace;
   4. the principal order or non-client order is executed pursuant to an allocation by the trading system of a marketplace and:
      1. either:
         1. the security which is the subject of the order trades on no marketplace other than that marketplace,
         2. the principal order or non-client order is a Call Market Order, a Contingent Derivative Order, an Opening Order, a Market-on-Close Order, a Net Asset Value Order or a Volume-Weighted Average Price Order,
         3. each of the client order and the principal order or non-client order was entered on the same marketplace,
         4. the client has instructed the Participant to enter the client order on a particular marketplace, or
         5. the client has instructed the Participant to enter the client order in a manner that does not disclose the identifier of the Participant in a consolidated market display,
      2. the client order was entered by the Participant on that marketplace immediately upon receipt by the Participant, and
      3. if the client order was varied or changed by the Participant at any time after entry, the variation or change was on the specific instructions of the client;
   5. either the client order or the principal order or non-client order is a Special Terms Order and the client order would not have executed in the transaction or transactions involving the principal order or non-client order due to the terms and conditions of at least one Special Terms Order; or
   6. a Market Integrity Official requires or permits the principal order or non-client order to be executed in priority to a client order.
3. For the purposes of clause (2)(a), a client shall be deemed to have consented to the Participant entering principal orders and non-client orders for the same security at the same price on the same side of the market on the same conditions and settlement terms if the client order, in accordance with the specific instructions of the client, is to be executed in part at various times during the trading day or at various prices during the trading day.

POLICY 5.3 – CLIENT PRIORITY

Part 1 – Background

Rule 5.3 restricts a Participant and its employees from trading in the same securities as a client of the Participant. The restriction is designed to minimize the conflict of interest that occurs when a Participant or its employee compete with the firm’s clients for execution of orders. The Rule governs:

• trading ahead of a client order, which is taking out a bid or offering that the client could have obtained had the client order been entered first. By trading ahead, the pro order obtains a better price at the expense of the client order.
• trading along with a client, or competing for fills at the same price.

The application of the rule can be quite complex given the diversity of professional trading operations in many firms, which can include such activities as block facilitation, market making, derivative and arbitrage trading. In addition, firms may withhold particular client orders in order to obtain for the client a better execution than the client would have received if the order had been entered directly on a marketplace. Each firm must analyze its own operations, identify risk areas and adopt compliance procedures tailored to its particular situation.

A Participant has overriding agency responsibilities to its clients and cannot use technical compliance with the rule to establish fulfillment of its obligations if the Participant has not otherwise acted reasonably and diligently to obtain best execution of its client orders. 

Part 2 – Prohibition on Intentional Trading Ahead

A Participant can never intentionally trade ahead of a client order that is either a market order or tradeable limit order received prior to the entry of the principal order or non-client order except in accordance with an exemption from the requirements of Rule 5.3(1), which exemptions include obtaining the specific consent of the client. Examples of "intentional trades” include, but are not limited to:

• withholding a client order from entry on a marketplace (or removing an order already entered on a marketplace) to permit the entry of a competing principal order or non-client order ahead of the client order;
• entering a client order on a relatively illiquid market (other than on the instructions of the client) and entering a principal order or non-client order on a more liquid marketplace where the principal order or non-client order is likely to obtain faster execution;
• adding terms or conditions to a client order (other than on the instructions of the client) so that the client order ranks behind principal orders or non-client orders at that price;
• putting terms or conditions on a principal order or non-client order for the purpose of differentiating the principal order or non-client order from a client order that would otherwise have priority at that price; and
• entering a principal order or non-client order as an “anonymous order” (without the identifier of the Participant) which results in an execution in priority to a previously entered client order that discloses the identifier of the Participant.

Part 3 – No Knowledge of Client Order

The Participant must have reasonable procedures in place to ensure that information concerning client orders is not used improperly within the firm. These procedures will vary from firm to firm and no one procedure will work for all firms. If a firm does not have reasonable procedures in place, it cannot rely on the exceptions. Reference should be made to Policy 7.1 – Policy on Trading Supervision Obligations, and in particular Part 4 – Specific Procedures Respecting Client Priority.

If a client has instructed a Participant to withhold an order or has granted a Participant discretion with respect to the entry of an order, details of the instruction or grant of discretion must be retained for a period of seven years from the date of the instruction or grant of discretion and, for the first two years, the consent must be kept in a readily accessible location.

Part 4 – Client Consent

A Participant does not have to provide priority to a client order if the client specifically consents to the Participant trading alongside or ahead of the client. The consent of the client must be specific to a particular order and details of the agreement with the client must be noted on the order ticket. A client cannot give a blanket form of consent to permit the Participant to trade alongside or ahead of any future orders the client may give the Participant.

If the client order is part of a pre-arranged trade that is to be completed at a price below the best bid price or above the best ask price as indicated on a consolidated market display, the Participant will be under an obligation to ensure that “better-priced” orders on a protected marketplace are filled prior to the execution of the client order. Prior to executing the client order, the Participant must ensure that the client is aware of the better-priced orders and has consented to the Participant executing as against them in priority to the client order. The consent of the client must be noted on the order ticket.

If the client has given the Participant an order that is to be executed at various times during a trading day (e.g. an “over-the-day” order) or at various prices (e.g. at various prices in order to approximate a volume-weighted average price), the client is deemed to have consented to the entry of principal orders and non-client orders that may trade ahead of the balance of the client order. Unless the client has provided standing written instructions that all orders are to be executed at various times during the trading day or at various prices during the trading day, the client instructions should be treated as specific to a particular order and the details of the instructions by the client must be noted on the order ticket. However, if the un-entered portion of the client order would reasonably be expected to affect the market price of the security, the Participant may be precluded from entering principal orders or non-client orders as a result of the application of the frontrunning rule.

In certain circumstances, a client may provide a conditional consent for the Participant to trade alongside or ahead of the client order. For example, a client may consent to a principal order of Participant sharing fills with the client order provided the client order is fully executed by the end of the trading day. If the client's order is not fully executed, the client may expect that the Participant "give up" its fills to the extent necessary to complete the client order. In this situation, the Participant should mark its orders as "principal" throughout the day. Any part of the execution which is given up to the client should not be re-crossed on a marketplace but should simply be journalled to the client (since the condition of the consent has not been met, the fills in question could be viewed as properly belonging to the client rather than the principal order). To the extent that a Participant "gives up" part of a fill of a principal order to a client based on the conditional consent, the Participant shall report the particulars of the "give up" to the Market Regulator not later than the opening of trading on marketplaces on the next trading day. The conditional consent of the client must be specific to a particular order. The details of the agreement with the client must be noted on the order ticket.

POLICY 5.2 – BEST PRICE OBLIGATION – Repealed

POLICY 5.1 – BEST EXECUTION OF CLIENT ORDERS - Repealed

1. A Participant with knowledge of a client order that on entry could reasonably be expected to affect the market price of a security or a derivative, shall not, prior to the entry of such client order,
   1. enter a principal order or a non-client order on a marketplace, foreign organized regulated market or other market, including any over-the-counter market, for the purchase or sale of the security, derivative or any related security or related derivative;
   2. solicit an order from any other person for the purchase or sale of the security, the derivative, or any related security or related derivative; or
   3. inform any other person, other than in the necessary course of business, of the client order.
2. A Participant does not contravene subsection (1) if:
   1. no director, officer, partner, employee or agent of the Participant who made or participated in making the decision to enter a principal order or non-client order or to solicit an order had actual knowledge of the client order;
   2. an order is entered or trade made for the benefit of the client for whose account the order is to be made;
   3. an order is solicited to facilitate the trade of the client order;
   4. a principal order is entered to hedge a position that the Participant had assumed or agreed to assume before having actual knowledge of the client order provided the hedge is:
      1. commensurate with the risk assumed by the Participant, and
      2. entered into in accordance with the ordinary practice of the Participant when assuming or agreeing to assume a position in the security;
   5. a principal order is made to fulfil a legally binding obligation entered into by the Participant before having actual knowledge of the client order; or
   6. the order is entered for an arbitrage account.

POLICY 4.1 – Frontrunning

Part 1 – Examples of Frontrunning

Rule 4.1 provides that no Participant shall trade in equities or derivatives to take advantage of information concerning a client order that has not been entered on a marketplace that reasonably can be expected to change the prices of the equities or the related derivatives. Without limiting the generality of the Rule, the following are examples of transactions covered by the prohibition:

1. a transaction in an option, including an option where the underlying interest is an index, when the Participant has knowledge of the unentered client order for the underlying securities;
2. a transaction in a future where the underlying interest is an index when the Participant has knowledge of the unentered client order that is a program trade or index option transaction; and
3. a transaction in an index option when the Participant has knowledge of the unentered client order that is a program trade or an index futures transaction.

Rule 10.4 extends the prohibition to cover orders entered by a related entity of the Participant or a director, officer, partner or employee of the Participant or a related entity of the Participant.

Part 2 – Specific Knowledge Required

In order to constitute frontrunning contrary to Rule 4.1, the person must have specific knowledge concerning the client order that, on entry, could reasonably be expected to affect the market price of a security or derivative. A person with knowledge of such a client order must insure that the client order has been entered on a marketplace before that person can:

• enter a principal order or non-client order for the security, derivative, any related security or any related derivative;
• solicit an order for the security, derivative, any related security or any related derivative; or
• inform any other person about the client order, other than in the necessary of course of business.

Trading based on non-specific pieces of market information, including rumours, does not constitute frontrunning.

1. A Participant or Access Person shall not enter an order to sell a security on a marketplace that on execution would be a short sale:
   1. unless the order is marked as a short sale in accordance with subclause 6.2(1)(b)(viii);
   2. if the security is a Short Sale Ineligible Security at the time of the entry of the order; or
   3. if the security is a Pre-Borrow Security, unless the Participant or Access Person has made arrangements for the borrowing of the securities necessary to settle any resulting trade prior to the entry of the order.
2. Clause (a) of subsection (1) does not apply to an order that has been designated as a “short-marking exempt order” in accordance with subclause 6.2(1)(b)(ix).
3. Clause (b) of subsection (1) does not apply to an order entered on a marketplace:
   1. in furtherance of the Marketplace Trading Obligations of that marketplace;
   2. for the account of a derivatives market maker and is entered:
      1. in accordance with the market making obligations of the seller in connection with the security or a related security, and
      2. to hedge a pre-existing position in the security or a related security;
   3. as part of a Program Trade in accordance with Marketplace Rules;
   4. to satisfy an obligation to fill an order imposed on a Participant or Access Person by any provision of UMIR or a Policy; or
   5. that is of a class of security or type of transaction that has been designated by a Market Regulator.

POLICY 3.1 – RESTRICTIONS ON SHORT SELLING – Repealed

Part 1 – Entry of Short Sales Prior to the Opening – Repealed

Part 2 – Short Sale Price When Trading Ex-Distribution – Repealed

A Participant or Access Person shall not enter an order on a marketplace or execute a trade if the Participant or Access Person knows or ought reasonably to know that that the entry of the order or the execution of the trade would not comply with or would result in the violation of:

1. applicable securities legislation;
2. applicable requirements of any self-regulatory entity of which the Participant or Access Person is a member;
3. the Marketplace Rules of the marketplace on which the order is entered;
4. the Marketplace Rules of the marketplace on which the trade is executed; and
5. UMIR and the Policies.