CIRO proposed amendments respecting reasonable expectation to settle a short sale.
Simultaneously publishing proposed guidance for comment, GN-URPart3-24-0001 that clarifies the current and proposed requirements related to short sales and failed trades
Follows C-IIROC Dec. 2022 request for input on short selling framework, see #156136.
Short Selling
Universal Market Integrity Rules (UMIR) 3.3 requires a reasonable expectation to settle on settlement day, order whose execution would be a short sale, prior to order entry.
Added supervisory and gatekeeper requirements for the aforementioned requirement.
Consolidated other current provisions related to short selling to a common location.
There will be at least 90-day implementation period after approval notice is published.
Proposed Guidance
CIRO proposed guidance on requirements re short selling and failed trades, so that participants and access persons understand/comply with new and existing obligations.
Clarify obligations before entering a marketplace order that would result in short sale.
Explain order marking requirements when entering a short sale order, define failed trades, obligations after extended failed trade reportable to CIRO under UMIR 7.10.
Consultation
Written comments on proposed amendments should be delivered by Apr. 12, 2024.
In Aug. 2024, CAN IIAC submitted comments on proposed amendments, #224860.
Dec. 2024 CIRO Final Rule Approval
On Dec. 5, 2024, CIRO reported approval of amendments to UMIR that support and clarify short selling framework; no changes to the proposed amendments were made.
Added clarifications to Proposed Guidance in response to comments, industry consult.
New positive requirement for reasonable expectation to settle not higher standard compared to prohibition against trading without reasonable expectation to settle.
Rule amendments do not mandate the use of easy-to-borrow lists (ETB lists).
Existence of failed trade does not, by itself, mean participant or access person did not have reasonable expectation to settle on settlement date prior to time of order entry.
Redline and clean versions of amendments to UMIR provided in Appendix A and Appendix B, respectively; also summary of comments and responses in Appendix C.
Concurrently issued final guidance, Bulletin GN-URPart3-24-0002, on short selling and failed trades, Guidance on UMIR Requirements Related to Short Selling, Failed Trades.
Amendments and guidance effective on Apr. 4, 2025, being 120 days after publication.
Dec. 5, 2024 CSA OSC Bulletin Publication
On Dec. 5, 2024, CSA OSC published approval of UMIR amendments in bulletin.
