The Canadian Investment Regulatory Organization (CIRO) has issued proposed amendments that would introduce mandatory close-out requirements when an investment dealer experiences a prolonged settlement failure at a clearing agency, and is seeking stakeholder input on whether the changes would be helpful and how market participants would be affected. Under the proposal, an investment dealer that is a member of the clearing agency would be required to close a fail-to-deliver position by buying or borrowing shares within prescribed timelines; if it does not, it would become subject to pre-borrow requirements for the relevant security. The consultation also asks for feedback on 16 specific questions and follows the joint CIRO and Canadian Securities Administrators work on short selling reforms, including recommendations from Ontario’s Capital Markets Modernization Taskforce. Comments are requested by 10 April 2025.
Canadian Investment Regulatory Organization 2025-01-09
Canadian Investment Regulatory Organization consults on mandatory close-out requirements for prolonged settlement failures
The Canadian Investment Regulatory Organization (CIRO) has proposed amendments mandating close-out requirements for investment dealers facing prolonged settlement failures at clearing agencies. Dealers must close fail-to-deliver positions within set timelines or face pre-borrow requirements. The consultation seeks stakeholder feedback on 16 questions, aligning with ongoing short selling reforms.