The Canadian Securities Administrators (CSA) published a staff notice on Thursday confirming that it’s proceeding with plans to have the Investment Industry Regulatory Organization of Canada (IIROC) serve as information processor for bond trading information and publicly disseminate those data, subject to reporting delays and volume caps.
The CSA sketched out these plans last year and issued a notice for public comments at that time. The CSA reports in its notice that it heard a diversity of opinions on the proposals: “Overall, in analyzing the comments received, we found that there was no clear consensus from the commenters.” For instance, some argued that the proposed reporting delays are too long while others maintain that they are too short and will harm liquidity in certain securities.
Given the lack of consensus, the CSA has decided that the proposed approach is likely striking a good balance between industry and investor positions on the issue. “We remain of the view that the transparency proposal constitutes a balanced approach to increase transparency while mitigating the potential negative impacts associated with this increase,” the CSA’s notice says.
As a result, the CSA has decided to go ahead with its original proposal. Under that plan, IIROC will be the information processor for corporate debt securities. By the end of the year, it will begin reporting post-trade information for all trades in certain securities and for retail trades in all other corporate debt securities, subject to a two-day delay after the trade takes place — and subject to the existing volume caps. In 2017, IIROC will start reporting post-trade information for all trades in all corporate debt securities, subject to a two-day delay.
The data that IIROC report will be available for free online and include certain information for each bond as well as details for each transaction.
Specific timelines for the new framework are being finalized and will be announced “in the coming months,” the CSA’s notice says. The CSA and IIROC also intend to review fixed-income trading activity, the reporting delay and the volume caps under the new system, “with a view to decreasing the dissemination delay from T+2 where appropriate.” Any changes would be subject to further public consultation.
In addition to implementing the new transparency system, the CSA says that it also intends to review dealers’ practices regarding new issue allocations “to determine what, if any, regulatory action is needed in this area.”
“The objectives of the CSA’s fixed-income regulation plan are to improve market integrity, facilitate more informed decision-making among market participants and evaluate access to the fixed income market,” said Louis Morisset, the CSA’s chairman and president and CEO of the Autorité des marchés financier, in a statement. “Increasing transparency in the corporate debt market is a key element of this plan, and the CSA is working with IIROC to achieve this goal.”
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