On December 5, 2024, the Ontario Securities Commission approved the Canadian Investment Regulatory Organization (CIRO) Amendments to the Universal Market Integrity Rules (UMIR) Respecting the Reasonable Expectation to Settle a Short Sale.

The IIAC had opposed (April 12, 2024) the January 11, 2024 proposed CIRO amendments based on a low failed trade rate, the adequacy of the current framework and therefore an insufficient cost-benefit ratio.

In further consideration of the issues, the IIAC requested (August 30, 2024) revisions to the proposed guidance to address concerns and provide clarifications. With minor exception, the IIAC’s proposed revisions to the guidance were accepted as follows:

• The new requirement for a reasonable expectation to settle under UMIR 3.3 does not represent a higher standard when compared to the prohibition against trading without a reasonable expectation to settle under UMIR Policy 2.2.

• The Amendments do not mandate the use of easy-to-borrow lists. The use of borrow lists is one method for Participants or Access Persons to consider when determining the best method to achieve a reasonable expectation to settle.

• The existence of a failed trade does not, by itself, mean that a Participant or Access Person did not have a reasonable expectation to settle on settlement date prior to the time of order entry.

The IIAC had also asked that the proposals be suspended until at least 6 months after the transition to T+1 settlement, which the regulators agreed to with an effective date of April 4, 2025.