No trade executed on a marketplace shall, subsequent to the execution of the trade, be:

1. cancelled; or
2. varied or corrected with respect to:
   1. the price of the trade,
   2. the volume of the trade, or
   3. the date for settlement of the trade,
3. except:
4. by the Market Regulator in accordance with UMIR; or
5. with the prior consent of the Market Regulator, if the variation, cancellation or correction would be necessary to correct an error caused by a system or technological malfunction of the marketplace’s systems or equipment or caused by an individual acting on behalf of the marketplace; or
6. with notice to the Market Regulator immediately following the variation, cancellation or correction of the trade in such form and manner as may be required by the Market Regulator and such notice shall be given, if the variation, cancellation or correction is made:
   1. prior to the settlement of the trade, by:
      1.  the marketplace on which the trade was executed at the request of a party to the trade and with the consent of each Participant and Access Person that is a party to the trade, or
      2. the clearing agency through which the trade is or was to be cleared and settled, and
   2. after the settlement of the trade, by each Participant and Access Person that is a party to the trade.

1. If within ten trading days following the date for settlement contemplated on the execution of a failed trade, the account:
   1. in the case of a sale, other than a short sale, that failed to make available securities in such number and form;
   2. in the case of a short sale, that failed to make: 
      1. available securities in such number and form, or
      2. arrangements with the Participant or Access Person to borrow securities in such number and form; and
   3. in the case of a purchase, that failed to make available monies in such amount,
2. as to permit the settlement of the trade at the time on the date contemplated on the execution of the trade has not made available such securities or monies or has not made arrangements for the borrowing of the securities, as the case may be, the Participant or Access Person that entered the order on a marketplace shall give notice to the Market Regulator at such time and in such form and manner and containing such information as may be required by the Market Regulator.
3. If a Participant or Access Person is required to provide notice of a failed trade to the Market Regulator in accordance with subsection (1), the Participant or Access Person shall, upon the account making available the applicable securities or monies or making arrangement for the borrowing of the applicable securities, give notice to the Market Regulator at such time and in such form and manner and containing such information as may be required by the Market Regulator.

A Participant who is a derivatives market maker shall comply when trading on any marketplace with such additional requirements as may be required by:

1. an Exchange when trading on that Exchange in listed securities or derivatives; and
2. a QTRS when trading on that QTRS in quoted securities.

1. Prohibitions - Except as permitted, a dealer‑restricted person shall not at any time during the restricted period:
   1. bid for or purchase a restricted security for an account:
      1. of a dealer-restricted person, or
      2. over which the dealer‑restricted person exercises direction or control; or
   2. attempt to induce or cause any person to purchase a restricted security.
2. Prohibitions on Acting for Issuer-Restricted Persons - Except as permitted, if a dealer‑restricted person knows or ought reasonably to know that a person is an issuer‑restricted person, the dealer‑restricted person shall not at any time during the restricted period applicable to a particular issuer-restricted person bid for or purchase a restricted security for the account of that issuer-restricted person or an account over which that issuer-restricted person exercises direction or control.
3. Deemed Recommencement of a Restricted Period - If a Participant appointed to be an underwriter in a prospectus distribution or a restricted private placement receives a notice or notices of the exercise of statutory rights of withdrawal or rights of rescission from purchasers of, in the aggregate, not less than 5% of the offered securities allotted to or acquired by the Participant in connection with the prospectus distribution or the restricted private placement then a restricted period shall be deemed to have commenced upon receipt of such notice or notices and shall be deemed to have ended at the time the Participant has distributed its participation, including the securities that were the subject of the notice or notices of the exercise of statutory rights of withdrawal or rights of rescission.
4. Exemptions - Subsection (1) does not apply to a dealer‑restricted person in connection with:
   1. market stabilization or market balancing activities where the bid for or purchase of a restricted security is for the purpose of maintaining a fair and orderly market in the offered security by reducing the price volatility of or addressing imbalances in buying and selling interests for the restricted security provided that the bid or purchase is at a price which does not exceed:
      1. in the case of an offered security, the least of:
         1. the price at which the offered security will be issued in a prospectus distribution or restricted private placement, if that price has been determined,
         2. the best independent bid price at the commencement of the restricted period if the price at which the offered security will be issued in a prospectus distribution or restricted private placement has not been determined or if the offered security will be issued pursuant to a securities exchange take‑over bid, an issuer bid or an amalgamation, arrangement, capital reorganization or similar transaction, and
         3. the best independent bid price at the time of the entry on a marketplace of the order to purchase,
      2. in the case of a connected security, the lesser of:
         1. the best independent bid price at the commencement of the restricted period, and
         2. the best independent bid price at the time of the entry on a marketplace of the order to purchase,
      3. provided that if the restricted security has not previously traded on a marketplace, the price also does not exceed the price of the last trade of the security executed on a foreign organized regulated market other than a trade that the dealer‑restricted person knows or ought reasonably to know has been entered by or on behalf of a person that is a dealer-restricted person or an issuer‑restricted person;
   2. a restricted security that is:
      1. a highly-liquid security, 
      2. a unit of an Exempt Exchange‑traded Fund, or
      3. a connected security of a security referred to in subclause (i) or (ii);
   3. a bid or purchase by a dealer‑restricted person on behalf of a client, other than a client that the dealer‑restricted person knows or ought reasonably to know is an issuer-restricted person provided that:
      1. the client order has not been solicited by the dealer‑restricted person, or
      2. if the client order was solicited, the solicitation by the dealer‑restricted person occurred prior to the commencement of the restricted period;
   4. the exercise of an option, right, warrant or a similar contractual arrangement held or entered into by the dealer‑restricted person prior to the commencement of the restricted period; 
   5. a bid for or purchase of a restricted security is made pursuant to a Small Securityholder Selling and Purchase Arrangement undertaken in accordance with National Instrument 32‑101 or similar rules applicable to any marketplace on which the bid or purchase is entered or executed;
   6. the solicitation of a tender of securities to a securities exchange take‑over bid or issuer bid;
   7. a subscription for or purchase of an offered security pursuant to a prospectus distribution or restricted private placement;
   8. a bid or purchase of a restricted security to cover a short position entered into prior to the commencement of the restricted period;
   9. a bid or purchase of a restricted security is solely for the purpose of rebalancing a portfolio, the composition of which is based on an index as designated by the Market Regulator, to reflect an adjustment made in the composition of the index;
   10. a purchase that is or a bid that on execution would be:
       1. a basket trade, or
       2. a Program Trade; or
   11. a bid for a purchase of a restricted security for an arbitrage account and the dealer‑restricted person knows or has reasonable grounds to believe that a bid enabling the dealer‑restricted person to cover the purchase is then available and the dealer-restricted person intends to accept such bid immediately.
5. Exemptions on Acting for an Issuer-restricted Person - Subsection (2) does not apply to a dealer‑restricted person in connection with:
   1. the exercise by an issuer‑restricted person of an option, right, warrant, or a similar contractual arrangement held or entered into by the issuer-restricted person prior to the commencement of the restricted period;
   2. a bid or purchase by an issuer‑restricted person of a restricted security pursuant to a Small Securityholder Selling and Purchase Arrangement made in accordance with National Instrument 32-101 or similar rules applicable to any marketplace on which the bid or purchase is entered or executed;
   3. an issuer bid described in clauses 93(3)(a) through (d) of the Securities Act (Ontario) or similar provisions of applicable securities legislation if the issuer did not solicit the sale of the securities sold under those provisions;
   4. the solicitation of the tender of securities to a securities exchange take‑over bid or issuer bid; or
   5. a subscription for or purchase of an offered security pursuant to a prospectus distribution or a restricted private placement.
6. Compilations and Industry Research - Despite subsection (1), a dealer‑restricted person may, if permitted under applicable securities legislation, publish or disseminate any information, opinion or recommendation relating to the issuer of a restricted security, if the information, opinion or recommendation is in a publication that is disseminated with reasonable regularity in the normal course of business of the dealer-restricted person and:
   1. the restricted security is a highly‑liquid security; or
   2. the publication:
      1. includes similar coverage in the form of information, opinions or recommendations with respect to a substantial number of issuers in the issuer’s industry or contains a comprehensive list of securities currently recommended by the dealer-restricted person, and
      2. gives no materially greater space or prominence to the information, opinion or recommendation related to the restricted security or the issuer of the restricted security than that given to other securities or issuers.
7. Transactions by Person with Marketplace Trading Obligations - Despite subsection (1), a dealer-restricted person with Marketplace Trading Obligations for a restricted security may, for their trading account in respect of such Marketplace Trading Obligations:
   1. with the prior approval of a Market Integrity Official, enter a bid to move the calculated opening price of a restricted security to a more reasonable level;
   2. purchase a restricted security pursuant to their Marketplace Trading Obligations; and
   3. bid for or purchase a restricted security:
      1. that is traded on another marketplace or foreign organized regulated market for the purpose of matching a higher-priced bid posted on such marketplace or foreign organized regulated market,
      2. that is convertible, exchangeable or exercisable into another listed security for the purpose of maintaining an appropriate conversion, exchange or exercise ratio, and
      3. to cover a short position resulting from sales made under their Marketplace Trading Obligations.
8. Transactions by the Derivatives Market Maker – Despite subsection (1), a dealer-restricted person who is a derivatives market maker with responsibility for a derivative security the underlying interest of which is a restricted security may, for their derivatives market making trading account, bid for or purchase a restricted security if:
   1. the restricted security is the underlying security of the option for which the person is the specialist;
   2. there is not otherwise a suitable derivative hedge available; and
   3. such bid or purchase is:
      1. for the purpose of hedging a pre-existing options position,
      2. reasonably contemporaneous with the trade in the option, and
      3. consistent with normal market-making practice.
9. Application of Exemptions to a Dealer-Restricted Person and Issuer-Restricted Person – Where a dealer-restricted person is also an issuer-restricted person the exemptions in subsections (4), (6), (7) and (8) continue to be available to the dealer-restricted person.

POLICY 7.7 – TRADING DURING CERTAIN SECURITIES TRANSACTIONS

Part 1 – Manipulative or Deceptive Activity

Provisions prohibiting manipulative or deceptive activities, including activities that may create misleading pricing or trading activity that is detrimental to investors and the integrity of the markets, are contained in Rule 2.2. Rule 7.7 generally prohibits purchases of or bids for restricted securities in circumstances where there is heightened concern over the possibility of manipulation by those with an interest in the outcome of the distribution or transaction. Rule 7.7 also provides certain exemptions to permit purchases and bids in situations where there is no, or a very low possibility of manipulation. However, the Market Regulator is of the view that notwithstanding that certain trading activities are permitted under Rule 7.7, these activities continue to be subject to the general provisions relating to manipulative or deceptive activities in Rule 2.2 and the provisions on manipulation and fraud found in applicable securities legislation such that any activities carried out in accordance with Rule 7.7 must still meet the spirit of the general anti-manipulation provisions.

Part 2 – Market Stabilization and Market Balancing 

Rule 7.7(4)(a) provides a dealer-restricted person with an exemption from the prohibitions in subsection (1) for market stabilization and market balancing activities subject to price limitations. Market stabilization and market balancing activities should be engaged in for the purpose of maintaining a fair and orderly market in the offered security by reducing the price volatility of or addressing imbalances in buying and selling interests for the restricted security.

The Market Regulator considers it to be inappropriate for a dealer to engage in market stabilization activities in circumstances where dealer knows or should reasonably know that the market price is not fairly and properly determined by supply and demand.  This might exist where, for example, the dealer is aware that the market price is a result of inappropriate activity by a market participant or that there is undisclosed material information regarding the issuer.

Market balancing activities should contribute to a fair and orderly market by contributing to price continuity and depth and by minimizing supply-demand disparity. Market balancing does not seek to prevent or unduly retard any price movements, but merely to prevent erratic or disorderly changes in price.

Part 3 – Short Position Exemption

Rule 7.7(4)(h) provides an exemption from the prohibitions in subsection (1) for a dealer-restricted person in connection with a bid for or purchase to cover a short position provided that short position was entered into before the commencement of the restricted period. Short positions entered into during the restricted period may be covered by purchases made in reliance upon the market stabilization exemption in Rule 7.7(4)(a), subject to the price limits set out in that exemption. (See “Part 5 – Trading Pursuant to Marketplace Trading Obligations” for a discussion of the ability of persons with Marketplace Trading Obligations to cover short positions arising during the restricted period pursuant to their Marketplace Trading Obligations.)

Part 4 – Research

The Market Regulator is of the view that although sections 4.1 and 4.2 of OSC Rule 48-501 do permit a dealer-restricted person to disseminate research reports, this dissemination continues to be subject to the usual restrictions that are applicable to a dealer-restricted person in possession of material information regarding the issuer that has not been generally disclosed.

Rule 7.7(6) provides circumstances where a dealer-restricted person may publish or disseminate information, an opinion, or a recommendation relating to the issuer of a restricted security.  The Rule requires that the information, opinion or recommendation is contained in a publication which is disseminated with reasonable regularity in the normal course of business of the dealer-restricted person. The Market Regulator considers that it is a question of fact whether a publication was disseminated “with reasonable regularity” and whether it was in the “normal course of business”. A research publication would not likely be considered to have been published with reasonable regularity if it had not been published within the previous twelve month period or there had been no coverage of the issuer within the previous twelve month period. The nature and extent of the published information should also be consistent with prior publications and the dealer should not undertake new initiatives in the context of the distribution. For example, the inclusion of projections of issuers’ earnings and revenues would likely only be permitted if they had previously been included on a regular basis. The Market Regulator may consider the distribution channels for the dissemination of the publication when considering whether a publication was “in the normal course of business”. The research should be distributed through the dealer-restricted person’s usual research distribution channels and should not be targeted or distributed specifically to prospective investors in the distribution as part of a marketing effort.  However, the research may be distributed to a prospective investor if that investor was previously on the mailing list for the research publication.

Rule 7.7(6)(b) requires that the information, opinion or recommendation includes similar coverage in the form of information, opinions or recommendations with respect to a substantial number of issuers in the issuer’s industry. In this context, reference should be made to the relevant industry when determining what constitutes a “substantial number of issuers”. Generally, the Market Regulator would consider a minimum of six issuers to be a sufficient number. However, where there are less than six issuers in an industry, then all issuers should be included in the research report, and in any event the number of issuers should not be less than three.

Part 5 – Trading Pursuant to Marketplace Trading Obligations

Under Rule 7.7(7)(b), a dealer-restricted person with Marketplace Trading Obligations for a restricted security may, for their trading account in connection with such Marketplace Trading Obligations, purchase a restricted security pursuant to their Marketplace Trading Obligations. Not every purchase of a restricted security by a person with Marketplace Trading Obligations will be considered to be undertaken pursuant to their Marketplace Trading Obligations. For example, if a market making system of an Exchange or QTRS permits a market maker to voluntarily participate in trades that participation may only result in purchases that are:

• made at prices which are permitted by Rule 7.7(4)(a); or
• to cover a short position resulting from sales made under their Marketplace Trading Obligations.

Use of a voluntary participation feature in other circumstances, may result in the market maker not complying with the prohibitions or restrictions on trading under Rule 7.7.

If a trade is cancelled, a subsequent trade on any marketplace which was:

1. executed as a result of the price of the cancelled trade; or
2. permitted only as a result of the price of the cancelled trade, 

shall stand unless cancelled by the consent of the buyer and the seller or by a Market Integrity Official who is of the opinion that the cancellation of the subsequent trade is appropriate under the circumstances.

1. No Participant acting as agent shall execute a transaction through a marketplace in which the price recorded on the marketplace is:
   1. in the case of a purchase by a client, higher than the net cost to the client; or
   2. in the case of a sale by a client, lower than the net proceeds to the client.
2. No Participant acting as principal shall execute a transaction through a marketplace in which the price recorded on the marketplace is:
   1. in the case of a sale to a client, 
      1. higher than the net cost to the client, or
      2. lower than the net cost to the client by more than the usual agency commission that would be charged by that Participant to that client for an order of the same size; and
   2. in the case of a purchase from a client, 
      1. lower than the net proceeds to the client, or
      2. higher than the net proceeds to the client by more than the usual agency commission that would be charged by that Participant to that client for an order of the same size.

POLICY 7.5 – RECORDED PRICES

If the price of:

• an internal cross or intentional cross to be recorded on a marketplace; or
• a trade that has been executed outside of Canada that is to be reported to a marketplace in accordance with clause (e) of Rule 6.4,

has been agreed to in a foreign currency and the trade is to be recorded or reported in Canadian currency, the price in foreign currency shall be converted to Canadian dollars using the exchange rate the Participant would have applied in respect of a trade of similar size on a foreign organized regulated market at the time of the internal cross, intentional cross or execution of the trade outside of Canada. If the trade price converted into Canadian currency falls between two trading increments for the marketplace on which the cross is to be entered or the trade reported, the price shall be rounded to the nearest trading increment. A Participant shall maintain with the record of the order the exchange rate used for the purpose of entering the internal cross or intentional cross or reporting the foreign trade and such information shall be provided to the Market Regulator upon request in such form and manner as may be reasonably required by the Market Regulator in accordance with Rule 10.11(3).

1. The electronic record of an order or a trade in a security or a derivative as provided by a marketplace to an information processor or an information vendor in accordance with the Marketplace Operation Instrument is the official transaction record for the purpose of determining:
   1. best ask price;
   2. best bid price; and
   3. last sale price.
2. Despite subsection (1), the electronic record of a trade in a security or a derivative as maintained by the marketplace on which the trade occurred shall be the record of the contract made on that trade and in the event of a dispute between parties to the contract or discrepancy with the records of the clearing agency effect shall be given to the record of the marketplace.
3. Each marketplace shall provide to the information processor or information vendor information respecting each cancellation, variation or correction of a trade as soon as practicable after the cancellation, variation or correction has been made to the record of the contract as maintained by the marketplace and the information processor or information vendor shall amend the transaction record accordingly.

1. A Participant shall retain:
   1. the record of each order as required by Rule 10.11; and 

   2. sufficient information to identify the beneficial owner of each account for which a record of an order is retained,

      for a period of not less than seven years from the creation of the record of the order, and for the first two years, such record and information shall be kept in a readily accessible location.

2. An Access Person shall keep information respecting an order on the marketplace:
   1. of which the Access Person is a subscriber; or

   2. on which the order of the Access Person was executed,

      during the period of not less than seven years from the date of the origination of the order, and for the first two years, such information shall be kept in a readily accessible location.

1. All bids and offers for securities or derivatives made and accepted on a marketplace shall be binding and all contracts thereby effected shall be subject to the exercise by the marketplace on which the trade is executed of the powers vested in the marketplace and the Market Regulator of that marketplace.
2. A Participant shall be responsible for all bids and offers that are entered into, or arise by operation of the trading system of a marketplace and that originate from any terminal or computer system allowing access to trading on the marketplace that is operated by or is under the control of that Participant whether or not the Participant has authorized the entry of the order.
3. Subject to the obligation of an Access Person for compliance with applicable provisions of UMIR and the Policies, an ATS shall be responsible for all bids and offers that are entered into, or arise by operation of the trading system of the ATS and that originate from any terminal or computer system allowing access to trading on the ATS that is operated by or is under the control of the Access Person of that ATS whether or not the Access Person has authorized the entry of the order.