The Ontario Securities Commission (OSC) recently completed a compliance review of marketplaces and found that marketplaces were generally compliant with their obligations under National Instrument 23-103 Electronic Trading and Direct Access to Marketplaces (NI 23-103). The results of that compliance review are published in OSC Staff Notice 23-704 Compliance with National Instrument 23-103 Electronic Trading and Direct Access to Marketplaces (OSC Staff Notice 23-704).
The objectives of the compliance review were two-fold. First, the OSC sought to assess compliance with NI 23-103. Second, the OSC sought to determine marketplaces’ readiness for compliance with price thresholds as set out in IIROC Notice 15-0186 Guidance on Marketplace Thresholds, which is also a requirement under NI 23-103. The OSC found that marketplaces were generally compliant with most of the requirements of NI 23-103. Notably, marketplaces had the ability and authority to provide their marketplace participants with access to their order and trade information and to cancel, vary or correct trades. Marketplaces were also generally able to terminate marketplace participant access. The OSC noted, however, that not all marketplaces could prove that they conducted regular assessments of whether they need risk management and supervisory controls, policies and procedures in addition to what is normally required. OSC Staff Notice 23-704 did not address readiness for compliance with price thresholds.
OSC Staff Notice 23-704 does not specify which marketplaces were the subject to the compliance review. However, National Instrument 21-101 Marketplace Operation (and in Ontario, the Securities Act) define a “marketplace” as including an exchange and a quotation and trade reporting system.
The OSC noted that they will conduct compliance reviews of marketplaces on a regular basis to assess compliance with NI 23-103.