Tips for TradersAugust 16, 2019

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• Alex Taylor – Vice-President, Surveillance

• Wade Cox – Vice-President, Trading Review and Analysis

• Kevin McCoy – Vice-President, Market Policy and Trading Conduct Compliance

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Agenda

• New SMARTS Surveillance System

• Internalization

• Trading 101

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New SMARTS Surveillance System

• Efficiency

• Adding metrics, classifications

• Optimize existing alerts

• Modify existing alerts

• Next generation alerts

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Internalization

• 21 comment letters were received

• No overall consensus

• Next steps

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Trading 101 201

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Question 1

Your client shorted and failed to settle a trade in Smelly Cannabis Corp. within 10 trading days post settlement. A failed trade was reported to IIROC. A month later, the same client places an order with you to short sell Consolidated Potluck Resources Inc.

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What should you do?

A. Different security so free to enter order

B. Client has account at another firm so suggest they place their order there

C. Make arrangement to borrow the security prior to entering the order

D. Client is restricted from short selling any security after the EFTR filing, so do not place the order

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Question 2

There continues to be significant conversation around the removal of the price restriction (last sale) for short selling in Canada which came into effect in 2012. From a traders perspective on Venture Securities, has the price test removal been an overall Positive Negative or Neutral change?

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Has the change been….

A. Positive

B. Negative

C. Neutral

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Question 3

IIROC has halted the trading of Go For It Inc. pending news. The security is also traded in the US on the OTC market. A client contacts you to sell their position in the US.

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What do I do?

A. Contact IIROC for an exemption from the trading restrictions

B. Don’t trade as the security may not be traded anywhere during a regulatory halt

C. Trade the security as the trade will be done outside of Canada

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Question 4

ZZX listed on the TSX closed yesterday on the TSX at .90. The stock is currently quoted 1.05-1.06. You have client order to buy 5500 share @ mkt and you want to take the other side of the trade as pro.

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Question

A. You need to provide the client a “better price”

B. You can cross at the current offer (1.06)

C. You cannot cross as you are not permitted to take the other side of a client trade

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Question 5

You have a client order to sell 15000 shares of All Right Now Company. You decide to jitney the trade through another Participant.

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Question

A. As the order will be executed by another IIROC Participant, you do not have a Best Execution obligation

B. You have a Best Execution obligation despite the trade being executed through another IIROC Participant

C. The order may only be jitneyed if the client is provided a “better price”

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Question 6

Every order entered on a marketplace is required to have certain designators and identifiers. Some are disclosed on a consolidated market display (public) and some are not (private).

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Is the designator for an intentional or internal cross public or private?

A. Public

B. Private

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Question 7

Certain marketplace are considered “unprotected” under the order protection rule and do not contribute to the National Protected Quote.

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Do I need to consider unprotected venues for order routing?

A. Always

B. Never

C. Sometimes

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Question 8

Your trader intended to cross to client orders at 1:30pm but due to a trader error the cross was not printed at all. Your trader only notices this 5 minutes later and by that time the price has moved to the point where that cross cannot be entered without causing a trade through. What should your trader do?

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A. It is too late to print the cross but you can still move the position between the two clients as long as you retain the complete evidence of your audit trail

B. Go ahead and just put the cross up as “internal” to avoid interference… if IIROC calls you about a trade through you can explain

C. Wait for the price to come back in line since IIROC would prefer to see your trader re-enter the cross. Call IIROC after the close if the price doesn’t come back in line and you were unable to cross

D. Call surveillance asap for permission to print the cross “as-of”

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