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2021 | OriginalPaper | Buchkapitel

3. The View from Here

verfasst von : Kevan Cowan

Erschienen in: Equity Trading Round-Up

Verlag: Springer International Publishing

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Abstract

COWAN: When I read the title of this conference, “Equity Trading Roundup: Proposals for Strengthening the Markets,” I immediately thought of corrals and horses, and I wondered if I had stepped into the wrong city, if I was travelling in the wrong direction by coming here to New York instead of to somewhere in the West! [laughter.] Of course, thankfully, that is not the case.

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Vorheriges Kapitel Coping with Liquidity Provision

Nächstes Kapitel Coping with the Dynamics of a Continuous Market

TMX Group. https://www.tmx.com/

CDS Clearing and Depository Services Inc. (CDS) https://www.cds.ca/cds-products

See ICE completes Trayport sale, acquires NGX and Shorcan Energy. Automated Trader. December 15, 2017 http://www.automatedtrader.net/news/at/158519/ice-completes-trayport-sale--acquires-ngx-and-shorcan-energy.

The Canada-US Free Trade Agreement enacted on January 1, 1989, was replaced in 1994 by NAFTA, or the North American Free Trade Agreement, which includes Mexico.

See Fragmentation in Canadian Equity Markets Corey Garriott, Anna Pomeranets, Joshua Slive and Thomas Thorn, Financial Markets Department. Markets Bank of Canada Review. Autumn 2013

https://www.bankofcanada.ca/wp-content/uploads/2013/11/boc-review-autumn13-garriott.pdf

“The Securities Act of 1933 was the first major legislation regarding the sale of securities. Prior to this legislation, the sales of securities were primarily governed by state laws. The legislation addressed the need for better disclosure by requiring companies to register with the Securities and Exchange Commission. Registration ensures companies provide the SEC and potential investors with all relevant information by means of the prospectus and registration statement.”

Amendments passed in 1934 and subsequent years.

Source: Investopedia

Each province in Canada has its own securities regulator. The two national self-regulatory organizations, the IIROC, Investment Industry Regulatory Organization of Canada, and the MFDA, Mutual Fund Dealers Association, play a key role for most of the regulation of these organizations’ member firms and their employees.

Investment Industry Regulatory Organization of Canada. http://www.iiroc.ca/Pages/default.aspx

FINRA. http://www.finra.org/

See TSX Venture Exchange. https://www.tsx.com/?lang=en

The Canadian Venture Exchange was formed in Canada on November 29, 1999, following an agreement among the Vancouver, Alberta, Toronto and Montreal exchanges to realign the Canadian capital markets. The Canadian Venture Exchange - now known as the TMX Group - renamed it the TSX Venture Exchange.

In law, proportionality is a measure of fairness, especially in constitutional law, to assist in striking the right balance between the restriction imposed by a corrective measure, and the seriousness of the prohibited act.

“The Sarbanes-Oxley Act of 2002 (SOX) is an act passed by US Congress on July 30, 2002, to protect investors from the possibility of fraudulent accounting activities by corporations. The Sarbanes-Oxley Act of 2002, also known as the Corporate Responsibility Act of 2002, mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.

The Act was created in response to accounting malpractice in the early 2000s, when public scandals such as Enron Corporation, Tyco International plc., and WorldCom, shook investor confidence in financial statements and demanded an overhaul of regulatory standards.”

Source: Investopedia

“There are two key provisions of the Sarbanes-Oxley Act of 2002, Section 302 and Section 404. Section 302 of the Sarbanes-Oxley Act of 2002 is a mandate that requires senior management to certify the accuracy of the reported financial statement.”

“Section 404 of the Sarbanes-Oxley Act of 2002 is a requirement that management and auditors establish internal controls and reporting methods on the adequacy of those controls. Section 404 has very costly implications for publicly traded companies as it is expensive to establish and maintain the required internal controls.”

Source: Investopedia

“For a stock to qualify for trading on the NYSE, it must meet certain criteria, such as a minimum price and minimum company value. Occasionally, a stock will trade on the NYSE for less than $1, but if it remains at that level for too long, it can eventually be delisted, or removed, from the exchange. If you find a stock for that price, it might be a risky investment.” Source: Zack Research

Structural Differences Between Canadian and US Equity Markets Have Different Implications for Market Fairness. Investment Industry Association of Canada. http://iiac.ca/wp-content/uploads/HFTs-and-the-Structural-Differences-Between-Canadian-and-U-S-Equity-Markets1.pdf

See OTC Markets. https://www.otcmarkets.com/

See London Stock Exchange. https://www.londonstockexchange.com/home/homepage.htm

See the chapter, Coping with Liquidity Provision Chap. 2.

For perspective on this two-sided debate, see High-frequency trading corrupts markets: Our view. USA Today. April 1, 2014. https://www.usatoday.com/story/opinion/2014/04/01/high-frequency-trading-michael-lewis-stocks-editorials-debates/7180003/

Jumpstart Our Business Startups (JOBS) Act is a US law. https://www.sec.gov/spotlight/jobs-act.shtml

Whatever Happened to Promoting Small Business Capital Formation? Commissioner Daniel M. Gallagher, Securities and Exchange Commission. Washington, D.C.

Sept. 17, 2014 https://www.sec.gov/news/speech/2014-spch091714dmg

Referring to a proposed pilot program for trading small-cap stocks in wider minimum increments. The pilot eventually was approved by the Securities and Exchange Commission. See SEC Approves Pilot Program to Assess Tick Size Impact for Smaller Companies. Center for Financial Stability, May 7, 2015. http://centerforfinancialstability.org/wp/?p=5987

The pilot eventually was approved by the Securities and Exchange Commission. See SEC Approves Pilot Program to Assess Tick Size Impact for Smaller Companies. Press Release. Securities and Exchange Commission. May 6, 2015. https://www.sec.gov/news/pressrelease/2015-82.html

See also SEC Approves Pilot Program to Assess Tick Size Impact for Smaller Companies. Center for Financial Stability, May 7, 2015. http://centerforfinancialstability.org/wp/?p=5987

See IPO Capital Raising in the Global Economy panel, moderated by David Weild, Grant Thornton. Zicklin School of Business Conference, October 4, 2011. The Economic Function of a Stock Exchange. Springer, November 2014.

See TSX Private Markets. https://www.tsxprivatemarkets.com/en/

See footnote 5

Dark pools arrive in Canada. Financial Post. Barbara Shecter. April 13, 2012. https://business.financialpost.com/news/fp-street/dark-pool-rules-arrive-in-canada

Canada reviews order protection rule. Markets Media. Terry Flanagan. July 21, 2014. https://www.marketsmedia.com/canada-reviews-order-protection-rule/

Payment for Order Flow Spurs Canadian Regs. Markets

Media. Terry Flanagan. March 27, 2017. https://www.marketsmedia.com/payment-for-order-flow-spurs-canadian-regs/

“The Order Exposure Rule was created to make sure smaller orders were given the same priority as larger ones. Here, 50 standard trading units or fewer (about 5,000 shares) have to be immediately entered on a marketplace. Brokers can’t fill their larger orders first.” Source: Day Trading for Canadians. For Dummies. Ann C. Logue, MBA and Bryan Borzykowski. John Wiley & Sibs, Canada, 2011.

See, footnote 25.

About the time of this conference, participants in the US markets had been lobbying the Securities and Exchange Commission to introduce a rule, referred to as the Trade-At rule, forcing equities transactions onto lit exchanges unless dark pools, or internalizing matching engines operated by brokers, could demonstrate meaningful price improvement had been offered.

See footnote 26.

See CSA Amendments to NI 23-101 Trading Rules. Wildeboer Dellelce LLP

July 6, 2016 https://wildlaw.ca/resource-centre/legal-updates/2016/csa-amendments-to-ni-23-101-trading-rules/

See footnote 27.

In the USA, maker-taker fees provide a transaction rebate to trading participants who provide liquidity, while at the same time charging customers who take liquidity.

See footnote 20.

See TMX Group bows to pressure and lowers controversial “maker-taker” rebates

The pricing changes announced Monday should reduce fees for dealers and lower revenues and profits for high frequency electronic traders. Barbara Shecter. Financial Post. May 04, 2015. https://business.financialpost.com/news/fp-street/tmx-group-bows-to-pressure-by-lowering-controversial-maker-taker-fees

See footnote 27.

Flash Boys: A Wall Street Revolt. Michael Lewis (2015, WW Norton & Company, LLC.)

Quote stuffing is the practice of submitting an excessive amount of larger orders to buy or sell stocks in fractions of a second and then canceling the orders almost immediately.

“One of the reasons why dark pool volumes in Canada are so low is the existence of broker preferencing. Broker preferencing is an internalization practice that allows incoming orders to a trading venue to match with other orders from the same dealer ahead of similarly priced orders from other dealers, without concern for time priority.

“’Broker preferencing in Canada gives enough functionality of dark pools that brokers will stay in the lit market,’” said Jeff Drew, liquidity center program director at NYSE Technologies, the technology arm of transatlantic exchange operator NYSE Euronext.”

From: Dark Trading Gets Lighter in Canada. Terry Flanagan. Markets Media. September 11, 2012. https://www.marketsmedia.com/dark-gets-lighter-in-canada/

IEX. https://iextrading.com/about/

Bre-X Minerals Ltd., part of Bre-X based in Calgary, was implicated in a major gold mining scandal when it reported it was sitting atop a huge gold deposit at Busang, Indonesia. Though originally a penny stock, its stock price soared to CAD $286.50 (split adjusted) in May 1996 on the Toronto Stock Exchange. In 1997, Bre-X Minerals collapsed after the gold samples were discovered to be a hoax.

The Enron scandal broke in the summer of 2001. Scandal-plagued WorldCom filed for bankruptcy in 2012.

The Mining Standards Task Force was created in July, 1997, as a joint arrangement of the Ontario Securities Commission and the Toronto Stock Exchange.

Titel: The View from Here
verfasst von: Kevan Cowan
Verlag: Springer International Publishing
Buch: Equity Trading Round-Up
Print ISBN: 978-3-030-51014-5

Electronic ISBN: 978-3-030-51015-2

Copyright-Jahr: 2021
DOI: https://doi.org/10.1007/978-3-030-51015-2_3

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