New pre-trade risk rules coming into force in Canada next month have spurred a growth in technology offerings designed to meet the stringent new criteria.
The new rules require Canadian market participants to automate pre-trade risk calculations with capital and order size limits and also supply real-time information for compliance officers. The new regulations apply to all asset classes and also require brokers to have the ability to immediately disable automated order systems to avoid adversely affecting market participants.
Although the Investment Industry Regulatory Organisation of Canada (IIROC) rules will enforce the rules from 1 March, exemptions have been made for firms still struggling to implement and test new technology until 31 May.
One firm offering increased pre-trade risk capabilities is technology provider ACTIV Financial, which has extended the coverage of its TradeDeck product to all Canadian exchanges for equities, options and futures.
Will Kennedy, executive vice president, global strategy and business development for ACTIV Financial, believes the stricter rules would benefit the industry overall. TradeDeck’s pre-trade controls include intraday margin calculations and limits to notional value, buying power and concentrated positions.
“By extending TradeDeck beyond the border to Canada to help our clients comply with Canadian IIROC and Canadian Securities Administrators, TradeDeck provides complete North American coverage, offering a full suite of market data and managed services for our customers in the region,” Kennedy said.
The US’ Securities and Exchange Commission introduced a rule in July 2011 that requires all orders submitted by brokers to exchange to be subjected to pre-trade risk checks before they hit the market.