The Universal Market Integrity Rule (UMIR) definition of “short-marking exempt order” will be broadened effective April 11, 2016 to include certain orders for an Exempt Exchange-traded Fund (Exempt ETF) or one of its underlying securities. More particularly, the order must be for the principal account of a “Participant” that either has: (i) “Marketplace Trading Obligations” for the Exempt ETF; or (ii) entered into an agreement for the continuous distribution of the Exempt ETF, and the account used for this purpose at the end of each trading day must have no more than a “minimal exposed risk”.
According to the Investment Industry Regulatory Organization of Canada (IIROC), the intent of the amendment is to simplify and promote uniform short-marking exempt order marking standards for ETF market makers, to preserve the integrity of short selling data for IIROC’s purposes and to avoid unnecessary administrative burden to the ETF market making function.
The amendments were approved by the OSC and several other provincial securities commissions on January 27, 2016. For further information, please see IIROC Notice 16-0028.