CSA, IIROC Unveil Dark Liquidity Framework

The Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada are looking to implement a new dark liquidity framework.

The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) are looking to implement a new dark liquidity framework. The structure will maintain a balance between recognizing the value of dark liquidity to industry participants and ensuring the continued protection of retail investors, pre-trade price discovery and the overall quality of the market, said Bill Rice, Chairman of the CSA and Chairman and CEO of the Alberta Securities Commission.

Through the new framework, IIROC will be able to set a minimum size threshold for dark orders, which are orders entered with no pre-trade transparency. The proposed framework will ensure that small orders that trade with dark liquidity obtain meaningful price improvement over liquidity offered in the transparent marketplaces. Institutional traders with large orders will continue to be able to manage market impact costs through the use of dark orders and dark pools.

Click here for the release from Investment Industry Regulatory Organization of Canada.