CSA and IIROC last week announced that changes to the Universal Market Integrity Rules to address dark liquidity on Canadian equity marketplaces will be effective October 10, 2012. The amendments take into account comments received by the regulators in response to proposed amendments published in July 2011.
Ultimately, the amendments provide that (i) visible orders will have execution priority over dark orders on the same marketplace at the same price; (ii) in order to trade with a dark order, smaller orders must receive a minimum level of price improvement; and (iii) IIROC will have the ability to designate a minimum size for dark orders.
Publication of the notice represents the culmination of a process that began with the release of Joint CSA/IIROC Consultation Paper 23-404 in 2009. That paper considered a number of issues surrounding dark pools and orders, and was followed by a consultation forum and a position paper on dark liquidity published in November 2010. IIROC published proposed amendments to UMIR to address the regulation of dark liquidity in July 2011.
As we've previously discussed, the CSA adopted amendments to NI 21-101 and NI 23-101 last month. In doing so, the CSA noted the importance of establishing a framework that permitted the CSA and IIROC to introduce a size threshold for exemption from the transparency requirements in NI 21-101. While IIROC will now have the authority to designate a minimum size for dark orders, no such threshold has yet been set.
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