The Investment Industry Regulatory Organization of Canada (IIROC) has proposed amendments to codify existing exemptions provided through exemptive relief applications that allow IIROC dealer participants to trade listed securities off-marketplace during a statutory resale restriction if a prospectus exemption is available. The participant would have to continue to ensure that trades comply with securities legislation, including any applicable insider reporting requirements. The exemption would not apply to securities that are subject to contractual (i.e. private agreement) resale restrictions. A second codified exemption would also be available to allow trading on a foreign organized market if there is a regulatory halt in Canada because a cease trade order (CTO) is in effect and the specified conditions in the CTO are met. Many of these CTOs require that investors must have acquired the position before the date of the CTO, and they can not be insiders of the issuer. Participants would still be required to determine whether the security is subject to a CTO issued by more than one Canadian jurisdiction, and determine whether or not a specific trade can thus be executed. For both exemptions, IIROC reminds dealers of their record keeping obligations to demonstrate compliance with CSA and IIROC requirements. IIROC notes that these two exemptions accounted for 95.97% of all UMIR exemptions granted by IIROC in 2021, and thus codifying the exemptive relief should reduce the number of UMIR discretionary exemptions sought dramatically. The comment period closes on July 13.
April 29, 2022