The Investment Industry Regulatory Organization of Canada (IIROC) has issued for comment a proposed rule, as well as a plan to create a system for enhanced oversight of Canadian debt market activity.
In recent years, trading in debt securities has increased significantly. For example, the value of secondary domestic bond market trading was approximately $10 trillion in 2012, compared to equity markets representing about $1.9 trillion in the same period.
Money market activity accounted for an additional $6.7 trillion.
“We are moving forward with these important initiatives because we recognize that robust regulatory supervision and oversight of the debt markets are critical to enhancing market integrity and investor confidence,” says IIROC president and CEO Susan Wolburgh Jenah.
IIROC’s proposed plan to replace the existing Market Trade Reporting System (MTRS) will facilitate the collection of detailed transaction data related to all debt trading by Canadian dealers and affiliates.
As a result, regulators will be able to monitor and enforce compliance more effectively. MTRS is a co-operative effort between IIROC and the Bank of Canada.
IIROC’s compliance program requires that its regulated firms conduct appropriate levels of internal supervision of debt securities trading.
Further, it introduced a Fair Pricing Rule in 2011 that requires they ensure clients receive fair prices on debt transactions. Other IIROC investor protection and market integrity rules applicable to the debt market include those addressing manipulation, client priority and suitability.
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