Universal Market Integrity Rules (UMIR)

Overview

Universal Market Integrity Rules (UMIR) are a national set of trading rules that govern market conduct on Canadian marketplaces. Administered by the Investment Industry Regulatory Organization of Canada (IIROC), UMIR promotes fair, equitable, and efficient trading by creating consistent standards across exchanges rather than leaving rules to each individual marketplace.

Role of IIROC

IIROC is a national self-regulatory organization that:
* Drafts and enforces UMIR and other industry standards.
* Oversees investment dealers and trading on Canadian equity and debt marketplaces.
* Screens and supervises approved advisors, enforces suitability and know-your-client requirements.
* Reviews firms’ financial compliance and sets minimum capital requirements to limit excessive leverage and reduce the risk of firm failures.

Compliance Reviews

IIROC conducts compliance reviews to ensure firms and registered advisors:
* Properly supervise client accounts and that advice and transactions match clients’ needs and instructions.
* Follow suitability and know-your-client rules (financial situation, objectives, experience, and risk tolerance).
* Maintain trade-desk procedures that comply with UMIR and applicable provincial securities laws.

Market Surveillance and Enforcement

IIROC continuously monitors market activity to detect misconduct by dealers, firms, approved persons, and other participants. Enforcement actions can include fines, suspensions, permanent bans, and firm-level sanctions. Funds collected from fines and settlements are placed in a restricted fund used for regulatory capital expenditures, investor and industry education, and other approved regulatory purposes.

Amendments and Notable Issues

UMIR is periodically updated to reflect market developments and regulatory coordination. For example, IIROC reviewed rule changes following a proposal that orders implementing systematic processing delays (so-called “speed bumps”) might not qualify as protected orders under order protection rules. Such revisions clarify how modern order-handling features interact with investor protection obligations.

Access to Exchanges

Membership and access rules vary by marketplace. For instance, traders who are IIROC members with a positive track record and who are registered with the appropriate Canadian securities regulator may apply to trade on the Canadian Securities Exchange (CSE) and similar venues.

Key Takeaways

• UMIR standardizes market conduct rules across Canadian exchanges to promote fairness and investor confidence.
• IIROC administers UMIR, conducts compliance reviews, and performs market surveillance and enforcement.
• The rules evolve to address market-structure changes (e.g., order processing delays) and to ensure consistent protection for investors.
• Enforcement proceeds fund regulatory and educational activities.