Becoming a Regulated Marketplace

CIRO is a self-regulatory organization recognized by Canadian securities laws. These laws also require a marketplace to have a self-regulatory organization such as CIRO monitor its trading. CIRO will require the marketplace to become a CIRO marketplace member and/or a dealer member.

Regulated Marketplaces in Canada

In National Instruments 21-101 and 23-101 and their Companion Policies, the Canadian Securities Administrators (CSA) set out certain requirements for marketplaces in Canada. The National Instruments may require marketplaces such as alternative trading systems (ATSs) and exchanges to be regulated by a self-regulatory organization such as CIRO.

Membership and Fees

An ATS must be a CIRO Dealer Member. There is no requirement for an Exchange to be a CIRO Dealer Member.

A new marketplace (ATS or Exchange) must be a CIRO Marketplace Member if CIRO will oversee trading on the marketplace. Marketplaces become CIRO Marketplace Members when they enter into a Regulation Services Agreement (“RSA”) with CIRO.

Regulation Services Agreement and Fees

RSAs require CIRO Board approval. CIRO charges all prospective Marketplace Members a minimum RSA fee of $25,000. CIRO staff will track its time spent on the RSA drafting and negotiations. If staff’s time cost is greater than $25,000, CIRO will bill the marketplace for the remainder.

Information Technology Connectivity and Testing and Fees

CIRO requires a new marketplace (ATS or Exchange) to connect to and test with the CIRO surveillance systems. This process generally takes a minimum of 65 work days. CIRO’s availability for testing is often dependent upon third parties. Testing windows may not be available until 90-180 days after a request for testing is made. CIRO charges a minimum connectivity and testing fee of $66,500. CIRO staff will track its time spent on the connectivity and testing process. If the time cost spent is greater than $66,500, CIRO will bill the marketplace for the remainder.

Information Technology Development and Fees

CIRO requires all new marketplaces to provide a detailed written description of the proposed marketplace model. If the model contains new functionality for the CIRO surveillance systems, CIRO will require IT development and testing. Marketplaces are responsible for all costs of IT development, including any third-party costs. CIRO may require a deposit before any development work begins and CIRO will bill the marketplace for the remainder upon completion. All new functionality must be tested. CIRO’s availability for development and testing is often dependent upon third parties. Development and testing windows may not be available until 90-180 days after CIRO receives a request for development or testing.

The Marketplace Member Application Process

Phase 1:

• Applicant and CIRO initial meeting.
• CIRO will deliver a letter requesting a detailed written description of the marketplace model and a $45,000 deposit ($10,000 non-refundable new Dealer Member deposit (not applicable to Exchanges), plus non-refundable $10,000 IT fee deposit, plus non-refundable $25,000 RSA fee).

Phase 2:

• CIRO receives the deposit and a written description of the marketplace model, including copies of any forms, filings and final technology specifications required by the CSA and the National Instruments.
• CIRO provides IT build documentation.

Phase 3:

• CIRO reviews the marketplace model and application and provides written comments.
• CIRO identifies whether marketplace model requires new surveillance functionality, including estimated costs and timeline.
• CIRO provides Applicant with testing window availability.
• CIRO provides the first draft of RSA.

Phase 4:

• CIRO receives the Applicant’s written responses to CIRO comments and draft RSA.

Phase 5:

• CIRO receives the Applicant’s written confirmation that the CSA is in final review of its forms, filings and technology specifications.
• CIRO receives written authorization from Applicant to proceed with build for new surveillance functionality, if necessary, based on costs/time estimates received from CIRO.
• CIRO receives the non-refundable $56,500 IT fee, plus additional funds for development of new surveillance functionality.
• CIRO schedules testing.
• CIRO commences development of new surveillance functionality. 

Phase 6:

• CIRO receives Applicant’s written confirmation of CSA publication for comment.
• Applicant delivers to CIRO copies of comment letters.

Phase 7:

• Applicant provides CIRO with written confirmation of CSA notice of completion of review.
• Surveillance system testing completed.
• Applicant pays remaining fees and costs, over any deposit payments.
• CIRO Board approves draft RSA and, if required, Dealer Member application.

Phase 8:

• Applicant and CIRO agree on proposed launch date.
• CIRO and Applicant sign RSA.
• CIRO issues Market Policy notice and, if required, new Dealer Member Notice.
• Applicant and CIRO coordinate launch.