Alert:

Canada Post continues to operate, but with expected delays in delivery. Should a strike occur, Members must take steps to ensure that document delivery requirements prescribed under CIRO Rules continue to be met.

Part 3 - Short Selling

3.4 Short Selling after a Reportable Extended Failed Trade

A Participant acting as principal or an Access Person shall not enter an order on a marketplace for a particular security that on execution would be a short sale if the Participant or Access Person has previously executed a sale in that security that became a failed trade in respect of which notice to the Market Regulator was required pursuant to Rule 7.10 unless:
1. 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; or
2. the Market Regulator has consented to the entry of such order or orders.
A Participant acting as agent shall not enter a client order or a non-client order on a marketplace that on execution would be a short sale if the client or non-client has previously executed a sale of any listed security that became a failed trade in respect of which notice to the Market Regulator was required pursuant to Rule 7.10 unless:
1. the Participant has made arrangements for the borrowing of the securities necessary to settle any resulting trade prior to the entry of the order; or
2. the Participant is satisfied, after reasonable inquiry, that the reason for any prior failed trade was not as a result of any intentional or negligent act of the client or non-client.

Defined Terms:

NI 21-101 section 1.1 – “order”

NI 21-101 section 1.4 – Interpretation -- “security”

UMIR section 1.1 – “Access Person”, “failed trade”, “listed security”, “Market Regulator”, “marketplace”, “non-client”, “Participant”, “Policy”, and “short sale”.

UMIR section 1.2(2) – “trade”

Guidance on UMIR Requirements Related to Short Selling and Failed Trades

December 5, 2024

GN-URPart3-24-0002

On November 15, 2024, the applicable securities commissions approved amendments to UMIR to consolidate provisions related to short selling to a common location within UMIR. See CIRO Bulletin 24-0349 – “Amendments Respecting the Reasonable Expectation to Settle a Short Sale” (December 5, 2024).

Disciplinary History

Part 1 - Definitions and Interpretation

1.1 Definitions

1.2 Interpretation

1.3 Transitional Provision

Part 2 - Abusive Trading

2.1 Specific Unacceptable Activities

2.2 Manipulative and Deceptive Activities

2.3 Improper Orders and Trades

Part 3 - Short Selling

3.1 Restrictions on Short Selling – Repealed

3.2 Prohibition on the Entry of Orders

3.3 Reasonable expectation to settle prior to the entry of an order for a short sale

3.4 Short Selling after a Reportable Extended Failed Trade

Part 4 - Frontrunning

4.1 Frontrunning

Part 5 - Best Execution Obligation

5.1 Best Execution of Client Orders – Repealed

5.2 Best Price Obligation – Repealed

5.3 Client Priority

Part 6 - Order Entry and Exposure

6.1 Entry of Orders to a Marketplace

6.2 Designation and Identifiers

6.3 Exposure of Client Orders

6.4 Trades to be on a Marketplace

6.5 Minimum Size Requirements of Certain Orders Entered on a Marketplace

6.6 Provision of Price Improvement by a Dark Order

Part 7 - Trading in a Marketplace

7.1 Trading Supervision Obligations

7.2 Proficiency Obligations

7.3 Liability for Bids, Offers and Trades

7.4 Contract Record and Official Transaction Record

7.5 Recorded Prices

7.6 Cancelled Trades

7.7 Trading During Certain Securities Transactions

7.8 Restrictions on Trading During a Securities Exchange Take‑over Bid – Repealed

7.9 Trading in Listed or Quoted Securities or Derivatives by a Derivatives Market Maker

7.10 Extended Failed Trades

7.11 Variation and Cancellation and Correction of Trades

7.12 Inability to Rely on Marketplace Functionality

7.13 Direct Electronic Access and Routing Arrangements

7.14 Position limits for listed derivatives

Part 8 - Principal Trading

8.1 Client-Principal Trading

Part 9 - Trading Halts, Delays and Suspensions

9.1 Regulatory Halts, Delays and Suspensions of Trading

Part 10 - Compliance

10.1 Compliance Requirement

10.2 Investigations – Repealed

10.3 Extension of Responsibility – Repealed

10.4 Extension of Restrictions

10.5 Suspension or Restriction of Access

10.6 Exercise of Authority – Repealed

10.7 Assessment of Expenses – Repealed

10.8 Practice and Procedure – Repealed

10.9 Power of Market Integrity Officials

10.10 Report of Short Positions

10.11 Audit Trail Requirements

10.12 Retention of Records and Instructions

10.13 Exchange and Provision of Information by Market Regulators

10.14 Synchronization of Clocks

10.15 Assignment of Identifiers and Symbols

10.16 Gatekeeper Obligations of Directors, Officers and Employees of Participants and Access Persons

10.17 Gatekeeper Obligations with Respect to Electronic Trading

10.18 Gatekeeper Obligations with Respect to Access to Marketplaces

10.19 Reporting limits for listed derivatives

Part 11 - Administration of UMIR

11.1 General Exemptive Relief

11.2 General Prescriptive Power

11.3 Review or Appeal of Market Regulator Decisions

11.4 Method of Giving Notice

11.5 Computation of Time

11.6 Waiver of Notice

11.7 Omissions or Errors in Giving Notice

11.8 Transitional Provisions – Repealed

11.9 Non-Application of UMIR

11.10 Indemnification and Limited Liability of the Market Regulator

11.11 Status of UMIR and Policies

Welcome to CIRO.ca!

You can find the Canadian Investment Regulatory Organization (CIRO) at CIRO.ca with our fresh look and feel.

The following sections of the legacy mfda.ca and iiroc.ca sites have been migrated to ciro.ca:

Enforcement
Hearings
Consultations
A unified member directory (Dealers We Regulate)
Advisor Report

We will continue moving items off MFDA and IIROC in 2024. Stay tuned for future updates.

Visit the Canadian Investment Regulatory Organization website