The Bourse de Montréal (MX) has adopted a new process for addressing compliance failings, and scrapped its mechanism for imposing fines for minor violations of the exchange’s rules.
The rule changes required to introduce the new remediation process formally took effect on March 12, following a public consultation that the MX’s regulatory division proposed last December.
Back in 2017, the MX launched a procedure that involved setting fines for modest breaches that don’t justify full-fledged enforcement action.
It’s now replacing that mechanism with a new remediation process that that exchange said, aims to “provide a more suitable and more flexible extrajudicial measure, enabling it to fully achieve the goals of efficiency and timeliness in the enforcement function that have been pursued since 2017.”
Instead of setting fines for relatively minor violations, the new process is intended to facilitate settlement agreements with regulated personnel that breach the rules.
“The process will target cases of alleged violations in which a [respondent] agrees to cooperate and negotiate in good faith with the division toward implementing rigorous corrective measures,” it said.
Unlike the previous mechanism, the new process won’t be limited to certain violations, or to the imposition of a maximum fine. It will also be more transparent than the minor fine program, which only published information about these actions on an anonymous basis. The new procedure will publish the details of alleged violations, the identity of the participant, and any sanctions that are imposed.
The shift to a more transparent procedure is intended to “ensure the essential deterrent effect” of the enforcement process, while also helping improve compliance in the rest of the industry, the exchange said.
Any monetary sanctions that are collected under the new procedure will be used to finance the costs of enforcement hearings and the self-regulatory advisory committee, with any excess to be used for training, research, or educational projects, subject to the approval of the MX’s self-regulatory oversight committee.