Canadian regulators update on SEC trading rule changes, Sept 2024

On September 20, 2024, Canadian securities regulators and the Canadian Investment Regulatory Organization (CIRO) provided an update regarding recent amendments made by the U.S. Securities and Exchange Commission (SEC). These amendments, announced on September 18, 2024, pertain to minimum pricing increments for National Market System (NMS) stocks and reduced access fee caps, set to take effect on November 3, 2025. The SEC's changes follow consultations that began in December 2022, aimed at revising fundamental aspects of U.S. market structure. In response to the SEC's proposed amendments, the Canadian Securities Administrators (CSA) and CIRO initiated a review to assess the implications for the Canadian equity market. They sought stakeholder feedback in October 2023, receiving twelve comment letters that highlighted the interconnectedness of U.S. and Canadian markets. Many commenters advocated for harmonizing Canadian trading increments and fee caps with the SEC's finalized rules to maintain competitiveness in trading inter-listed securities. While there was general support for aligning trading increments and fee caps, the feedback regarding transparency for odd-lot orders was less favorable. Commenters indicated that the current availability of such information in Canada is adequate, leading the CSA and CIRO to decide against implementing similar transparency changes. The British Columbia Securities Commission did not participate in this advisory due to restrictions related to the upcoming provincial election. The CSA and CIRO are now finalizing their rule amendments and will publish them for public comment to ensure a competitive trading environment in light of the SEC's new regulations.