Now that it has implemented technology to allow it, the Toronto Stock Exchange will require both short sales that are exempt from the last sale rule, and short sales that are crosses to be designated as such on the entry of the order.

The former CATS system wasn’t able to mark short exempt orders. Short sales that were exempt from the last sale rule have been marked as a straight sell order. Although the short cross was a permitted order type, the former CATS system also did not have a function available to support the marking of short cross orders. Short sales that were crosses were marked as straight cross orders.

The TSE has gained the trading engine functionality to process short exempt sales through the use of a short exempt marker, and to process short cross sales through the use of a short cross marker. The trading engine will ensure that short cross orders comply with the last sale rule. The new requirement takes effect October 22.

The TSE says that brokerage firms should take the steps necessary to ensure that their trade stations have the facilities to mark short exempt sales and short cross orders. Both the short exempt marking and the short cross marking will be visible only to the brokers in question and to the Market Surveillance division of the TSE.