Canadian regulators are taking action to curtail the number of stock trades that are sent to the U.S.
South of the border, alternative trading venues have boosted their profiles through “payment for order flow,” a process in which they effectively buy orders from brokers. In Canada, such payments are prohibited, but there are growing worries that brokers here are sending trades to the U.S. to skirt the rules.
“It has come to the attention of the [Canadian Securities Administrators] that a number of Canadian investment dealers have entered into, or are considering entering into, arrangements to route Canadian retail investor orders on a broad basis to U.S. dealers for execution,” provincial regulators wrote in a joint statement Monday…
…for now, the Investment Industry Regulatory Organization of Canada, which oversees trading activity, is just clarifying the guidelines. The group published guidance to clarify the broad standards, as well as a technical note to lay out precisely what traders can or can’t do.
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Tim Kiladze – Globe and Mail – December 15, 2014.
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