CIRO and Canadian authorities align market rules with SEC to ensure competitiveness for cross-listed stocks
The Canadian Investment Regulatory Organization (CIRO) and securities regulatory authorities have provided an update on recent rule changes announced by the United States Securities and Exchange Commission (SEC).
The update includes contributions from regulators in Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Nunavut, Northwest Territories, and Yukon.
These changes follow SEC consultations launched on December 14, 2022, regarding four proposals to alter key elements of US market structure (SEC Proposed Amendments).
On September 18, the SEC revealed its final rules on two aspects of the SEC Proposed Amendments: (i) minimum pricing increments applicable to all trading and quoting of National Market System (NMS) stocks at or above US$1.00 per share, and (ii) reduced access fee caps for NMS stocks (collectively, SEC Final Rules).
The SEC also approved rules concerning transparency of certain odd-lot orders. The SEC Final Rules are scheduled to take effect on November 3, 2025.
Following the release of the SEC Proposed Amendments, the Canadian Securities Administrators (CSA) and CIRO initiated a process to evaluate their potential impact on the Canadian equity market structure.
In October 2023, they proactively sought feedback from stakeholders in joint CSA/CIRO Staff Notice 23-331. A total of twelve comment letters were submitted, and a summary of the comments has been made available.
Commenters on the SEC Final Rules generally agreed on the interconnected nature of the US and Canadian equity markets.
They noted that Canadian trading increments for inter-listed securities, as outlined in CIRO’s Universal Market Integrity Rules (UMIR), should align with the SEC’s finalized minimum pricing increments.
There was also support for harmonizing Canadian equity trading fee caps, specified in National Instrument 23-101 Trading Rules, with the finalized SEC fee caps.
The participating securities regulatory authorities and CIRO are currently finalizing their respective rule amendments and will publish them for public comment. This step aims to ensure that trading in Canadian inter-listed securities remains competitive following the SEC Final Rules.
Regarding the SEC Final Rules on the transparency of odd-lot orders, commenters did not advocate for similar changes in Canada, as such information is already deemed adequately available. Therefore, the CSA and CIRO are not currently considering any amendments to transparency rules.
The British Columbia Securities Commission did not participate in this media advisory due to publication restrictions linked to the upcoming BC provincial election.
The CSA, which co-ordinates and harmonizes regulation for Canada’s provincial and territorial securities regulators, oversees the country’s capital markets.
CIRO is the pan-Canadian self-regulatory body responsible for supervising investment dealers, mutual fund dealers, and trading activities in Canada’s debt and equity markets.
