In a move designed to continue to insulate the Canadian capital markets from any type of market structure snafu or problem, the nation’s leading regulator is publishing extensive guidance on using single stock circuit breakers (SSCBs.)
The Investment Industry Regulatory Organization of Canada (IIROC) has published its Final Guidance report that expands the SSCB program in the nation’s equity trading market.
The guidance, which takes effect on February 2, 2015, does several things to help stabilize and standardize the market. First, it expands the list of securities subject to SSCBs to include all securities that are considered “actively traded.” Secondly, it extends the times when SSCBs are active to include more core trading hours when all marketplaces are open. Lastly, it allows more than one SSCB to trigger for a particular security during the same trading day.
SSCBs are a tool to further mitigate market volatility. Together with other complementary IIROC initiatives, the expansion of SSCBs helps maintain fair and orderly markets, and fosters investor confidence.
As put forth by IIROC, an SSCB triggers-resulting in a five-minute trading halt-in situations when a covered security experiences a significant and unexplained short-term price movement.
Under the guidance, IIROC will produce and make available at www.iiroc.ca, a report listing all securities subject to SSCBs. The report will be updated monthly.
The introduction of SSCBs in February 2012 and their current expansion are part of a series of IIROC reforms implemented since the May 6th 2010 U.S. “Flash Crash.” Other measures the regulator has implemented are:
-controls at the participant level introduced through the electronic trading rules (March 2013) and third-party marketplace access rules (March 2014)
-a proposal for the introduction of marketplace thresholds
-IIROC’s February 2013 update to market-wide circuit breakers
-IIROC’s August 2012 clarification of its policies and procedures on erroneous and unreasonable trades.
