CSA Staff Notice 23-333: Order Protection Rule Market Share Threshold Effective April 1, 2024

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CSA Staff Notice 23-333
Order Protection Rule: Market Share Threshold Effective as of April 1, 2024 February 29, 2024 Introduction On June 20, 2016, the Canadian Securities Administrators (the CSA or we) published a notice1 (the 2016 Notice) regarding the implementation of the market share threshold. This notice updates the list of protected and unprotected marketplaces published on February 23, 2023. The updated list will be in effect as of April 1, 2024, until a future notice is published. We note that the only changes relative to the last notice published are the addition of two new Alpha Exchange Inc. order books, specifically Alpha-X and Alpha DRK. There are no other notable changes. The text of this notice is available on the websites of the CSA jurisdictions, including:
www.lautorite.qc.ca www.asc.ca www.bcsc.bc.ca www.fcnb.ca nssc.novascotia.ca www.osc.ca www.fcaa.gov.sk.ca www.mbsecurities.ca Purpose The purpose of this notice is to provide the list of marketplaces that display protected orders (protected marketplaces) and marketplaces whose orders will not be protected (unprotected marketplaces) for the purposes of Regulation 23-101 respecting Trading Rules (Regulation 23-101) and the order protection rule (OPR) because they do not:
(i) provide automated trading functionality as they have an intentional order processing delay, or (ii) meet the market share threshold. The market share threshold has been set at 2.5%. 2 1 CSA Staff Notice 23-316 Order Protection Rule: Implementation of the Market Share Threshold and Amendments to Policy Statement to Regulation 23-101 respecting Trading Rules. 2 The 2016 Notice includes a description of the calculation of the market share threshold.

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OPR Requirements
Section 6.1 of Regulation 23-101 requires marketplaces to establish, maintain and
ensure compliance with policies and procedures that are reasonably designed to prevent trade-throughs of better priced protected bids and offers. Section 6.4 of Regulation 23-101 imposes the same requirement on marketplace participants that assume responsibility for compliance with OPR by entering directed-action orders.
Section 1.1 of Regulation 23-101 defines protected bids and offers as bids and offers
displayed on a marketplace offering automated trading functionality, and about which information is provided to an information processor.
Section 1.1.2.1 of Policy Statement to Regulation 23-101 respecting Trading Rules
outlines the circumstances in which a marketplace that introduced an intentional order processing delay would not be considered to be providing automated trading functionality. In those circumstances, the orders on that marketplace would not be protected. Orders on “dark” marketplaces are not protected as they are not displayed. Therefore, orders on ICX, LiquidNet, MATCHNow, NEO Exchange dark book (NEO-D), Nasdaq CXD and Alpha DRK are unprotected for the purposes of OPR. List of Protected and Unprotected Marketplaces Below is a summary of protected and unprotected marketplaces as of April 1, 2024. The orders displayed on the marketplaces listed below in Table 1 will be protected because either the marketplace meets the market share threshold and/or the orders are for securities that are listed by and traded on that marketplace:
Table 1 – Marketplaces that Display Protected Orders
Marketplace Market Share Status Reason Protected CSE 5.20% Protected Meets market share threshold Nasdaq CXC 11.11% Protected Meets market share threshold Nasdaq CX2 5.06% Protected Meets market share threshold NEO-L 7.33% Protected Meets market share threshold Omega 6.44% Protected Meets market share threshold TSX 44.04% Protected Meets market share threshold TSX Venture 8.23% Protected Meets market share threshold Orders displayed on the marketplaces listed below in Table 2 will be unprotected because either the marketplace does not provide automated trading functionality, does not meet the market share threshold or does not display orders:
Table 2 – Marketplaces whose Orders Are Unprotected
Marketplace Market Share Status Reason Unprotected Alpha 7.30% Unprotected Does not provide automated trading functionality Alpha-X 0.00% Unprotected Does not provide automated trading functionality

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PUBLIC NOTIFICATION
Please note that a notice providing a list of protected and unprotected marketplaces is not necessarily published annually but rather only when there are changes to the list of protected and/or unprotected marketplaces. QUESTIONS Please refer your questions to any of the following:
Roland Geiling
Derivatives Product Analyst
Oversight of Trading Activities
Autorité des marchés financiers
Roland.Geiling@lautorite.qc.ca
Alina Bazavan
Market Specialist, Market Regulation
Ontario Securities Commission abazavan@osc.gov.on.ca Alex Petro Senior Adviser, Market Regulation Ontario Securities Commission apetro@osc.gov.on.ca Michael Grecoff Securities Market Specialist, Legal Services British Columbia Securities Commission mgrecoff@bcsc.bc.ca Jesse Ahlan Senior Regulatory Analyst, Market Structure Alberta Securities Commission jesse.ahlan@asc.ca Marketplace Market Share Status Reason Unprotected Lynx 0.36% Unprotected Does not meet the market share threshold CSE2 0.25% Unprotected Does not meet the market share threshold NEO-N 4.66% Unprotected Does not provide automated trading functionality Alpha DRK Unprotected Does not display orders ICX Unprotected Does not display orders LiquidNet Unprotected Does not display orders Cboe MATCHNow Unprotected Does not display orders Nasdaq CXD Unprotected Does not display orders NEO-D Unprotected Does not display orders