CSE Trade Cancellation and Correction Policy

The section outlines the trade cancellation and trade amendments policies for the CSE. Dealers may request trades be cancelled because of wash trading, dealer errors, system errors, suspected violations of the Guaranteed Fill requirements, or as a result of a ruling by the market regulator (IIROC). Generally, unless directed by IIROC, cancellations or corrections will only be done with the consent of both parties.

Wash Trading

An unintended wash trade can be cancelled at the sole request of the dealer. The CSE offers four options for a dealer to avoid wash trading but wash trades can still occur.

Self-Trade Prevention

• Cancel Oldest - This feature will prevent an incoming order from executing against a passive order from the same broker by cancelling the booked order.
• Cancel Newest - This feature will prevent two orders from the same firm to trade against each other by means of an order cancel.
• Reprice - This feature will prevent two orders from the same firm to trade against each other by means of an order reprice.
• Suppress Trade from Tape - Clients will have the option to receive fills for both orders without having a trade be reported to the public feed.

Dealer Error

Due to a manual entry error or dealer system error dealers may request a trade cancellation or correction. In the event of a dealer error a trade can be cancelled or corrected if both parties agree to the cancellation or correction. Market Operations will work with both sides of the trade and determine the best course of action that will satisfy both parties. If a resolution cannot be accommodated the trader can report the issue to IIROC for evaluation. If IIROC determines a trade cancellation or correction is deemed required the CSE can cancel or correct the trade. If a resolution is not found through IIROC or between the two parties the trade stands and cannot be cancelled or corrected.

System Error

System errors can occur and in the event of the system error by the CSE's matching engine dealers can request a trade cancellation or correction. In the event of a system error Market Operations will work with both parties of the trade to determine if a trade can be cancelled or corrected. If the parties don't agree on the corrective action Market Operations may request IIROC to determine if the trade can be cancelled or corrected. In the event that a resolution is not found then the trade stands and cannot be cancelled or corrected.

Market Regulation Enforcement

In order to maintain an orderly market IIROC may require a Trade Cancellation or Price Correction. Trades will be amended or cancelled upon receipt of the details of the trade cancellation or correction. IIROC is responsible for determining whether a trade price is unreasonable and, with the exception of odd lot trades, no trade will be cancelled for an unreasonable price without direction from IIROC .

Market Maker Request

Pursuant to Rule 4-107 (2), automatic fills triggered by the Guaranteed Fill Facility that are in violation of the eligibility requirements above may be cancelled at the request of the Market Maker. The Exchange may cancel or amend any trades deemed to be an improper use of the Guaranteed Fill Facility.

Routine monitoring of orders and trades on the Exchange can generate alerts that may indicate a violation of the Trading Rules of the Exchange. Specifically, Rule 4-107 (1) sets out the eligibility requirements for the Guaranteed Fill Facility. An account that is properly identified as a "Short Marking Exempt" account would not be eligible for a fill, therefore a fill generated for an order marked as eligible (GMF=Y) from a SME account would be a violation of the Rule, and be subject to cancellation at the Market Maker's request. Violations may result in enforcement action.