Market Policy Notice. General LAUNCH DATE FOR TRADING LISTED SECURITIES ON OMEGA ATS. November 23, 2007 No

Transcription

1 Market Policy Notice General November 23, 2007 No Suggested Routing Trading Legal and Compliance Key Topics Omega ATS Continuous Auction Market Multiple Marketplaces Best Price Obligation Short Sales Exchange-traded Funds Market Integrity Notices Referenced Market Integrity Notice Guidance Securities Trading on Multiple Marketplaces (September 1, 2006) Market Integrity Notice Guidance Compliance Requirements For Trading On Multiple Marketplaces (October 30, 2006) Market Integrity Notice Guidance Exemption Of Certain Inter-Listed Securities From Price Restrictions On Short Sales (July 6, 2007) Market Integrity Notice Guidance Specific Questions Related to Trading on Multiple Marketplaces (August 10, 2007) Market Integrity Notice Guidance Expectations Regarding Best Price Obligations (October 24, 2007) LAUNCH DATE FOR TRADING LISTED SECURITIES ON OMEGA ATS Summary Omega ATS announced on November 8, 2007 that continuous auction trading will launch on Omega ATS on Thursday, December 6, Omega ATS will initially only support trading in those securities which qualify for an exemption from the restriction on the price of a short sale pursuant to Rule 3.1 of UMIR. Trading in 10 exempt securities will begin on launch on Thursday, December 6, Trading in an additional 15 exempt securities may commence on December 13, Omega ATS has indicated that additional exempt securities will be added for trading as market conditions warrant. Additional information, including information regarding connectivity, testing and data dissemination, is available through Omega ATS. Questions / Further Information For further information or questions concerning this notice contact: Karen Green Senior Legal Counsel Telephone: Fax: karen.green@rs.ca

2 LAUNCH DATE FOR TRADING LISTED SECURITIES ON OMEGA ATS Summary Omega ATS announced on November 8, 2007 that continuous auction trading will launch on Omega ATS on Thursday, December 6, Omega ATS will initially only support trading in those securities which qualify for an exemption from the restriction on the price of a short sale pursuant to Rule 3.1 of the Universal Market Integrity Rules ( UMIR ). Trading in 10 exempt securities will begin on launch on Thursday, December 6, Trading in an additional 15 exempt securities may commence on December 13, Omega ATS has indicated that additional exempt securities will be added for trading as market conditions warrant. Additional information, including information regarding connectivity, testing and data dissemination, is available through Omega ATS. Launch Information On Thursday, December 6, 2007, Omega ATS will launch continuous auction trading in 10 securities. Trading in an additional 15 securities may commence on December 13, Omega ATS has indicated that additional securities will be added for trading as market conditions warrant. Omega ATS will initially only support trading in those securities which qualify for the exemption from the restriction on the price of a short sale pursuant to Rule 3.1 of UMIR. (See Conducting Short Sales on Omega below.) Omega ATS has announced that it will not conduct any industry-wide connectivity tests or multiparty capacity stress tests in advance of launch. Omega ATS s hours of operation will be from 9:30 a.m. until 4:00 p.m. (Toronto time). For more information regarding Omega ATS, including information regarding connectivity, testing and data dissemination, enquiries should be directed to Chris Jackson of Omega ATS at ext. 400 or cjackson@omegaats.com. RS will add Omega ATS to its Summary Comparison of Current Equity Marketplaces, available on the RS website: Guidance on Application of UMIR Application of UMIR to Trading on Multiple Marketplaces RS has previously issued guidance on the application of UMIR to the trading by Participants of securities that trade on multiple marketplaces. In particular, reference should be made to: Market Integrity Notice Guidance Securities Trading on Multiple Marketplaces (September 1, 2006); Market Integrity Notice Guidance Compliance Requirements For Trading On Multiple Marketplaces (October 30, 2006); Market Policy Notice General Launch Date for Trading Listed Securities on Omega ATS 2

3 Market Integrity Notice Guidance Specific Questions Related to Trading on Multiple Marketplaces (August 10, 2007); and Market Integrity Notice Guidance Expectations Regarding Best Price Obligations (October 24, 2007). None of National Instrument Marketplace Operation, National Instrument Trading Rules (together the CSA Trading Rules ) or UMIR requires a Participant to maintain direct trading access to every Canadian marketplace on which a security may trade or to have real-time data feeds from each marketplace. The CSA Trading Rules do, however, contain the requirement that each Participant should take into account order and trade information from all marketplaces that trade the same securities when discharging their best execution obligations. Expectations Regarding Best Price Obligations to Orders on Omega Under Rule 5.2 of UMIR, a Participant has an obligation to make reasonable efforts to fill better-priced orders on a marketplace before executing a trade at an inferior price on another marketplace or a foreign market. A Participant must take appropriate steps to access orders on any marketplace in order to undertake reasonable efforts to trade at the best price. These steps may include the Participant making arrangements with another Participant (who is a member, user or subscriber of the particular marketplace) to handle the order as a jitney on behalf of the Participant who is not a member, user or subscriber of the particular marketplace. In order for a Participant to demonstrate that it had made reasonable efforts to execute an order at the best price, RS expects the Participant will deal with better-priced orders on another marketplace if that marketplace: disseminates order data in real-time and electronically through one or more information vendors; permits dealers to have access to trading in the capacity as agent; provides fully-automated electronic order entry; and provides fully-automated order matching and trade execution. Omega ATS has represented to RS that Omega ATS will meet these four requirements and, as such, in the view of RS, a Participant must undertake reasonable efforts to execute as against better-priced orders on Omega ATS either concurrent with, or immediately following, the execution of a trade at an inferior price on another marketplace in Canada or an organized regulated market outside of Canada. RS does not provide a grace period in order to adjust to compliance with best price obligations on new marketplaces that meet the four criteria listed above. RS recognizes that the launch of continuous auction trading on Omega ATS is imminent and that many Participants and/or service providers have not been able to implement the systems changes (including the introduction of smart order router capacity) or procedures that are necessary to ensure compliance with the best price obligation to visible orders on TSX, Pure and Omega ATS. Market Policy Notice General Launch Date for Trading Listed Securities on Omega ATS 3

4 Each Participant is expected to implement reasonable interim measures in a reasonable effort to comply with its best price obligations. The interim measures adopted by a Participant must be adequate for the Participant s business, taking into account the size and type of order flow of the Participant. The interim measures may involve routing orders for securities which trade on more than one transparent marketplace for special handling and entry on the appropriate marketplace or directing order flow to another Participant that has fully implemented a systems solution for entry on a jitney basis on the appropriate marketplace. RS acknowledges that the interim measures adopted by a Participant may nonetheless result in a number of unintentional or isolated trade-throughs. During this transition period and provided reasonable interim measures are applied, RS will not consider unintentional or isolated tradethroughs to be violations of UMIR requirements. As with the launch of other marketplaces, RS will maintain reasonable expectations regarding the timing of the implementation of both reasonable interim measures and permanent systems changes. As stated above, Omega ATS has announced that it will not conduct any industry-wide connectivity tests or multi-party capacity stress tests in advance of launch. RS will be reasonable in its expectations for compliance with best price obligations in the event that such compliance is affected by marketplace connectivity or capacity failures. Conducting Short Sales on Omega In Market Integrity Notice Guidance Exemption Of Certain Inter-Listed Securities From Price Restrictions On Short Sales (July 6, 2007), RS published notice of an exemption from the price restrictions on a short sale under Rule 3.1 of UMIR in respect of Exchange-listed securities which are inter-listed on an exchange in the United States. Securities which trade on an ECN in the United States but are not otherwise listed on an exchange in the United States 1 do not qualify for the exemption. In addition, any security which has been designated by RS as an Exchange-traded Fund is exempt from the price restrictions on a short sale under Rule 3.1. As long as Omega ATS only trades securities that qualify for an exemption from the restrictions on the price of a short sale, a short sale of a security on Omega ATS may be entered on Omega ATS using the short exempt marker (as Omega ATS will not, at least initially, support the short sale marker). 1 An exchange is a market that is registered as an exchange under the Exchange Act of 1933 (United States). In particular, it should be noted that an ECN, the Bulletin Board and the Pink Sheets are NOT an exchange. Market Policy Notice General Launch Date for Trading Listed Securities on Omega ATS 4

5 Questions / Further Information For further information or questions concerning this notice contact: Karen Green, Senior Legal Counsel, Market Policy and General Counsel s Office, Market Regulation Services Inc., Suite 900, 145 King Street West, Toronto, Ontario. M5H 1J8 Telephone: Fax: karen.green@rs.ca ROSEMARY CHAN, VICE PRESIDENT, MARKET POLICY AND GENERAL COUNSEL Market Policy Notice General Launch Date for Trading Listed Securities on Omega ATS 5