The Canadian Securities Exchange (CSE) issued Notice 2017-016 Amendments to Trading System Functionality and Features – Request for Comment on September 21, 2017. The Notice sets out proposed enhancements to the functionality and features of the CSE trading system, including new order types and additional options for existing order types. The enhancements respond to customer demand and will create greater consistency between the CSE and other Canadian marketplaces.

The Proposed Changes

The changes include a number of new order types as well as some changes to the pegged order mechanisms that already exist, as follows:

  • “Primary Price Improvement” pegged orders
  • “Seek Dark Liquidity Only” orders
  • “Minimum Quantity” orders
  • “Fade to Dark” orders
  • “Step Limit” orders
  • “Post Only” and “Minimum Quantity” options for pegged orders
  • Pegged orders will no longer be cancelled when the limit moves outside the NBBO (best bid/offer).

The Notice provides considerable additional detail on the nature and purposes of the new order types and options. For example, the Step Limit and Fade to Dark orders simply automate functions that some smaller customers have had to perform manually due to technology limitations, while the Minimum Quantity Order restores a functionality that had ceased to exist for technical reasons after the emergence of multiple markets in Canada.

Next Steps: Comment Period and Implementation

The Notice states that these proposals, which are slated for implementation in Q1 of 2018, follow consultations with a number of stakeholders and are consistent with practices already implemented by other exchanges. Comments may be submitted to the OSC Market Regulation Branch and to the CSE’s parent, CNSX Markets Inc., no later than October 16, 2017.