Part 3 - Short Selling

3.4 Short Selling after a Reportable Extended Failed Trade

    Rule
    1. A Participant acting as principal or an Access Person shall not enter an order on a marketplace for a particular security that on execution would be a short sale if the Participant or Access Person has previously executed a sale in that security that became a failed trade in respect of which notice to the Market Regulator was required pursuant to Rule 7.10 unless:
      1. the Participant or Access Person has made arrangements for the borrowing of the securities necessary to settle any resulting trade prior to the entry of the order; or
      2. the Market Regulator has consented to the entry of such order or orders.
    2. A Participant acting as agent shall not enter a client order or a non-client order on a marketplace that on execution would be a short sale if the client or non-client has previously executed a sale of any listed security that became a failed trade in respect of which notice to the Market Regulator was required pursuant to Rule 7.10 unless:
      1. the Participant has made arrangements for the borrowing of the securities necessary to settle any resulting trade prior to the entry of the order; or
      2. the Participant is satisfied, after reasonable inquiry, that the reason for any prior failed trade was not as a result of any intentional or negligent act of the client or non-client.

    Defined Terms:

    NI 21-101 section 1.1 – “order”

    NI 21-101 section 1.4 – Interpretation -- “security”

    UMIR section 1.1 – “Access Person”, “failed trade”, “listed security”, “Market Regulator”, “marketplace”, “non-client”, “Participant”, “Policy”, and “short sale”.

    UMIR section 1.2(2) – “trade”

    Bulletins
    Rule History

    On November 15, 2024, the applicable securities commissions approved amendments to UMIR to consolidate provisions related to short selling to a common location within UMIR. See CIRO Bulletin 24-0349 – “Amendments Respecting the Reasonable Expectation to Settle a Short Sale” (December 5, 2024).

    Disciplinary History
    Part 1 - Definitions and Interpretation
    1.1 Definitions
    1.2 Interpretation
    1.3 Transitional Provision
    Part 2 - Abusive Trading
    2.1 Specific Unacceptable Activities
    2.2 Manipulative and Deceptive Activities
    2.3 Improper Orders and Trades
    Part 3 - Short Selling
    3.1 Restrictions on Short Selling – Repealed
    3.2 Prohibition on the Entry of Orders
    3.3 Reasonable expectation to settle prior to the entry of an order for a short sale
    3.4 Short Selling after a Reportable Extended Failed Trade
    Part 4 - Frontrunning
    4.1 Frontrunning
    Part 5 - Best Execution Obligation
    5.1 Best Execution of Client Orders – Repealed
    5.2 Best Price Obligation – Repealed
    5.3 Client Priority
    Part 6 - Order Entry and Exposure
    6.1 Entry of Orders to a Marketplace
    6.2 Designation and Identifiers
    6.3 Exposure of Client Orders
    6.4 Trades to be on a Marketplace
    6.5 Minimum Size Requirements of Certain Orders Entered on a Marketplace
    6.6 Provision of Price Improvement by a Dark Order
    Part 7 - Trading in a Marketplace
    7.1 Trading Supervision Obligations
    7.2 Proficiency Obligations
    7.3 Liability for Bids, Offers and Trades
    7.4 Contract Record and Official Transaction Record
    7.5 Recorded Prices
    7.6 Cancelled Trades
    7.7 Trading During Certain Securities Transactions
    7.8 Restrictions on Trading During a Securities Exchange Take‑over Bid – Repealed
    7.9 Trading in Listed or Quoted Securities or Derivatives by a Derivatives Market Maker
    7.10 Extended Failed Trades
    7.11 Variation and Cancellation and Correction of Trades
    7.12 Inability to Rely on Marketplace Functionality
    7.13 Direct Electronic Access and Routing Arrangements
    7.14 Position limits for listed derivatives
    Part 8 - Principal Trading
    8.1 Client-Principal Trading
    Part 9 - Trading Halts, Delays and Suspensions
    9.1 Regulatory Halts, Delays and Suspensions of Trading
    Part 10 - Compliance
    10.1 Compliance Requirement
    10.2 Investigations – Repealed
    10.3 Extension of Responsibility – Repealed
    10.4 Extension of Restrictions
    10.5 Suspension or Restriction of Access
    10.6 Exercise of Authority – Repealed
    10.7 Assessment of Expenses – Repealed
    10.8 Practice and Procedure – Repealed
    10.9 Power of Market Integrity Officials
    10.10 Report of Short Positions
    10.11 Audit Trail Requirements
    10.12 Retention of Records and Instructions
    10.13 Exchange and Provision of Information by Market Regulators
    10.14 Synchronization of Clocks
    10.15 Assignment of Identifiers and Symbols
    10.16 Gatekeeper Obligations of Directors, Officers and Employees of Participants and Access Persons
    10.17 Gatekeeper Obligations with Respect to Electronic Trading
    10.18 Gatekeeper Obligations with Respect to Access to Marketplaces
    10.19 Reporting limits for listed derivatives
    Part 11 - Administration of UMIR
    11.1 General Exemptive Relief
    11.2 General Prescriptive Power
    11.3 Review or Appeal of Market Regulator Decisions
    11.4 Method of Giving Notice
    11.5 Computation of Time
    11.6 Waiver of Notice
    11.7 Omissions or Errors in Giving Notice
    11.8 Transitional Provisions – Repealed
    11.9 Non-Application of UMIR
    11.10 Indemnification and Limited Liability of the Market Regulator
    11.11 Status of UMIR and Policies

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