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Canadian securities regulators publish trading fee rebate pilot study for comment

2018/92
December 18, 2018

Toronto - The Canadian Securities Administrators (CSA) today published for comment a notice outlining a proposed Trading Fee Rebate Pilot Study to examine the effects of a prohibition of rebate payments by Canadian marketplaces (Proposed Pilot). The predominant trading fee models that have emerged in the Canadian equities market are the “maker-taker” trading fee model and the “inverted maker-taker” fee model. Under both of these models, a marketplace charges a fee to one party of the trade and pays a rebate to the other party.

“The Proposed Pilot would provide valuable information regarding the impact of trading fees and rebates on the behaviour of market participants, and market quality in general,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

The Proposed Pilot would temporarily prohibit Canadian marketplaces, including exchanges and alternative trading systems, from paying trading fee rebates to dealers for executing orders for a sample set of equity securities. The sample securities would include both highly liquid and actively traded, medium liquidity securities.

Initially proposed in a 2014 notice, the study would allow the CSA to better understand and address potential issues associated with the payments of rebates. These issues include: conflicts of interest for dealer routing decisions; increased segmentation of order flow; and increased intermediation of actively traded securities.

It is intended that the Proposed Pilot will run concurrently with the United States Securities and Exchange Commission’s (SEC) Proposed Transaction Fee Pilot.

Designed by Katya Malinova, Andreas Park, and Andriy Shkilko, academics selected and previously announced by the CSA, the Proposed Pilot includes preliminary feedback from stakeholders on its design and scope. The CSA is now seeking further input on both the issues raised in the notice and the study’s design.

The full design report for the Proposed Pilot is included at Appendix A of the notice, which is available on the CSA members' websites. The comment period will close on February 1 , 2019.

The CSA, the council of the securities regulators of Canada's provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.

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For Investor inquiries, please refer to your respective securities regulator. You can contact them  here .

For media inquiries, please refer to the list of provincial and territorial representatives below or contact us at  media@acvm-csa.ca .

Kristen Rose
Ontario Securities Commission
416-593-2336

Sylvain Théberge
Autorité des marchés financiers
514-940-2176

Brian Kladko
British Columbia Securities Commission
(604) 899-6713

Hilary McMeekin
Alberta Securities Commission
403-592-8186

Jason (Jay) Booth
Manitoba Securities Commission
204-945-1660 

David Harrison
Nova Scotia Securities Commission
902-424-8586

 

Renée Dyer
Office of the Superintendent of Securities,
Newfoundland and Labrador
709-729-4909


Jeff Mason     
Nunavut Securities Office
867-975-6587


Shannon McMillan
Financial and Consumer Affairs
Authority of Saskatchewan
306-798-4160

 

Sara Wilson
Financial and Consumer Services Commission, New Brunswick
506-643-7045


Steve Dowling
Government of Prince Edward Island,
Superintendent of Securities
902-368-4550 

Rhonda Horte
Office of the Yukon Superintendent of Securities       
867-667-5466

Tom Hall
Office of the Superintendent of Securities
Northwest Territories
(867) 767-9305


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