Investment Industry Regulatory Organization of Canada (IIROC)
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, CHAPTER S.5, AS AMENDED (THE ACT) AND IN THE MATTER OF THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA
ORDER (Section 21.2.3 of the Act)
WHEREAS Part 8 of National Instrument 21-101 Marketplace Operation (NI 21-101) requires persons or companies to provide to an information processor (IP) accurate and timely information regarding trades in corporate and government debt securities (together Unlisted Debt Securities) executed by or through the person or company, as required by the IP;
AND WHEREAS The terms used in this order are defined in the Securities Act (Ontario) and/or NI 21-101, as the case may be;
AND WHEREAS The Investment Industry Regulatory Organization of Canada (IIROC or the Applicant) has filed an application dated June 24, 2020 (Application) with the Ontario Securities Commission (Commission) requesting an order pursuant to subsection 21.2.3(1) of the Act designating IIROC as an IP for Unlisted Debt Securities;
AND WHEREAS the Applicant is currently the IP for corporate debt securities as permitted by a letter dated July 4, 2016 and has operated in compliance with the undertakings (Undertakings) contained in that letter;
AND WHEREAS the Applicant has filed Form 21-101F5 with respect to Unlisted Debt Securities;
AND WHEREAS subsection 21.2.3 of the Act allows the Commission to designate a person or company as an IP if the Commission considers it to be in the public interest;
AND WHEREAS the Applicant has represented to the Commission that:
1. The Applicant has the necessary systems in place to collect and disseminate information regarding trades in Unlisted Debt Securities;
2. The Applicant currently disseminates information regarding trades in corporate debt securities in a manner approved by the Canadian Securities Administrators (CSA);
3. The Applicant has sufficient financial and human resources to comply with the requirements applicable to an IP to collect and disseminate consolidated information regarding trades in Unlisted Debt Securities;
4. The Applicant will make available comprehensive information regarding trades in Unlisted Debt Securities to all market participants, including investors, at no cost; and
5. The Applicant has an appropriate governance structure and conflicts of interest policies and procedures in place;
AND WHEREAS, based on the Application, the Commission has determined that it is in the public interest to designate the Applicant as an IP for Unlisted Debt Securities;
IT IS ORDERED by the Commission that, pursuant to section 21.2.3 of the Act, the Applicant is designated as an IP for Unlisted Debt Securities, effective August 31, 2020,
PROVIDED THAT the Applicant complies with the terms and conditions contained in Schedule A.
DATED August 24, 2020
"Mary Anne De Monte-Whelan"
TERMS AND CONDITIONS APPLICABLE TO THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA AS AN INFORMATION PROCESSOR FOR UNLISTED DEBT SECURITIES
1. DEFINITIONS AND INTERPRETATION
"Bank" means a bank listed in Schedule I, II or III of the Bank Act (Canada);
"Data Contributor" means an IIROC Dealer Member that reports trades in debt securities to IIROC under IIROC Dealer Member Rule 2800C and a Bank;
"IIROC" means The Investment Industry Regulatory Organization of Canada;
"IIROC IP" means IIROC acting as an information processor;
2. PUBLIC INTEREST RESPONSIBILITIES
(a) IIROC IP must conduct the business and operations of the designated IP for Unlisted Debt Securities in a manner that is consistent with the public interest.
(b) IIROC IP must provide a written report to the Commission, as required by the Commission, describing how, as the designated IP for Unlisted Debt Securities, it is meeting its regulatory and public interest functions.
3. CHANGES TO FORM F5
(a) As required by section 14.2 of NI 21-101, IIROC IP must file with the Commission amendments to the information provided in Form F5. IIROC IP must not implement a significant change to the information in its Form F5 without the prior approval of the Commission.
(b) IIROC IP must file with Commission Staff all material contracts related to the IP services.
(a) IIROC IP must maintain sufficient financial resources to ensure its ability to conduct its operations.
(b) IIROC IP must ensure that sufficient human resources are available and appropriately trained to enable IIROC IP to properly perform its functions, including monitoring the timeliness and accuracy of data concerning Unlisted Debt Securities reported to IIROC and displayed by IIROC IP.
5. PROVISION OF TRADE INFORMATION
(a) IIROC IP must receive information from Data Contributors regarding trades executed by or through the Data Contributors no later than 10:00 p.m. on the same business day the trades were executed and in accordance with its Form F5.
6. FAIR AND REASONABLE TERMS
(a) IIROC IP must ensure that all persons and companies are given access to IIROC IP on fair and reasonable terms.
7. FEES, FEE STRUCTURE AND REVENUE SHARING
(a) IIROC IP must make available, on its website, the fee schedule for the dissemination of Unlisted Debt Securities.
(b) IIROC IP must make available, on its website, any payment arrangements with Data Contributors.
8. DATA REPORTED TO AND DISSEMINATED BY IIROC IP
(a) IIROC IP staff must monitor the timeliness and accuracy of information received by and disseminated by the IP on an ongoing basis and take adequate measures to resolve any data integrity issues on a timely basis.
(b) Within 45 days from the end of each quarter, IIROC must provide Commission Staff quarterly reports on the timeliness and integrity of the information reported to and disseminated by IIROC IP, highlighting significant issues and proposed steps for resolution. These reports must include significant data integrity issues identified in the field examinations of Data Contributors conducted by IIROC.
9. REVIEW OF THE DISSEMINATION MODEL
(a) On request by the Commission, IIROC IP must
(i) review the continuing adequacy of the publication delay for the Unlisted Debt Securities trade data made available by IIROC IP (T+1 5:00 pm ET), and
(ii) review the continuing adequacy of the volume caps applied to trade data in Unlisted Debt Securities by IIROC IP.
(b) No later than 30 days following completion of the review, IIROC IP must file with the Commission the results of the review and any recommendations for changes to the publication delay or the volume caps.