An Ontario Securities Commission (OSC) review echoes the conclusion of an earlier report on the introduction of trading speed bumps on the TSX Alpha Exchange, finding that although they have impacted the market in various ways, further regulatory action is not required.
An OSC staff notice published Tuesday reaches conclusions similar to a report published last month by the Investment Industry Regulatory Organization of Canada and the Bank of Canada, which also looked at the introduction of speed bumps.
The introduction of the speed bumps, “has certainly introduced additional complexity” into the Canadian trading market, the OSC notice says, but changes to the order protection rule have provided “flexibility to manage this complexity”. It adds that regulators, “have seen evidence that routing practices have been modified to adapt to the changes.”
Overall, the market changes that have resulted from the introduction of the speed bump are mixed. The changes, “have been welcomed by some marketplace participants,” the staff notice says, but they, “may have proved more challenging for others.”
Ultimately though, the OSC doesn’t see the need for further regulatory action.
“Although individual impacts may differ, based on the research and data reviewed and based on the information we obtained from market participants, we are unable to conclude that the Alpha amendments have negatively impacted market quality such that regulatory changes need to be made,” the staff notice says.