(September 22 – 15:40 ET) – The Ontario Securities Commission has approved the Toronto Stock Exchange’s proposed amendment to rule governing proprietary electronic trading systems, or PETS. The amendment allows a PETS to trade any order that need not be exposed in the book or traded on the exchange.
The amendment harmonizes the operation of the Order Exposure Rule and the PETS Rule such that orders which need not be exposed in the book or traded on the TSE may be traded through a PETS. This should pave the way to even greater competition from the upstairs market.
Previously, firms could only use PETS that were integrated with the TSE, and they were limited to handling orders for at least 10,000 securities with a value of at least $100,000. The Order Exposure Rule requires firms to immediately enter a client order to buy or sell 1,200 shares or less in the book on the TSE or on another stock exchange.
Debentures, preferred shares, limited partnership units and securities traded in U.S. funds are exempt from the rule. Orders for more than 1,200 preferred shares, limited partnership units or securities traded in U.S. funds are also eligible to be traded though a PETS.
In the amendment the TSE attempted to drop the acronym PETS in favour of the more commonly used ATS, “alternative trading systems”. But the OSC asked that it stick with PETS since the TSE’s definition is different from the one proposed by the Canadian Securities Administrators. The amendment was redrafted in accordance with the suggestions from the OSC.
The change was published for comment on June 16. No public comments were received. The amendment is effective as of September 5.
-IE Staff