Securities regulators are proposing rule amendments that would confirm that dark orders don't have to ensure better prices when they are executing against odd-lot orders.
The Investment Industry Regulatory Organization of Canada (IIROC) Thursday proposed amendments to the trading rules that would confirm that an odd-lot order (an order for less than one standard trading unit) is not required to receive a better price when trading against a dark order.
"The proposed amendments would add consistency to the treatment of odd-lot order execution across all marketplaces and support liquidity provision to facilitate the execution of such orders which is beneficial to investors, including retail investors," IIROC says in a notice setting out the proposed amendments.
The notice indicates that the provision of odd-lot liquidity is critical to ensure that odd-lots are able to execute, particularly as they can't execute against displayed liquidity. "IIROC believes that a requirement to provide a ‘better price' when executing against an active odd-lot order is not balanced with the contribution that passive liquidity facilitating the execution of odd-lot orders brings to investors," it says.
Comments on the proposals are due by April 13.