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Stock market watchdog proposes to beef up surveillance of Canadian bond trade

TORONTO – The investment community is being asked to comment on a proposed market surveillance system for the trade of Canadian bonds and other debt securities.

The proposed rules were posted Wednesday by the Investment Industry Regulatory Organization of Canada (IIROC), a national body that monitors activities on Canada’s stock markets.

IIROC notes that about $10 trillion worth of domestic bonds were traded last year.

That’s more than five times the $1.9 trillion worth of equities traded on Canadian markets, such as the Toronto Stock Exchange.

However, the stock markets in Canada and other countries tend to get far more attention because trading information is readily available to retail and professional investors.

IIROC is proposing an enhanced monitoring system for debt securities trading that will enable it to enforce rules that are meant to protect investors.

Among other things, IIROC is seeking to ensure consistent and standardized reporting of transactions, create a database of transactions and develop tools for IIROC to query and analyze the transaction data.

“This proposal does not contemplate making data regarding individual transactions available to the public at this time; however, IIROC would continue to publish aggregate debt trading statistics consistent with our current practice,” IIROC says in its notice.

The proposed change, which is open for comment until May 22, would replace an existing system managed by IIROC and the Bank of Canada.

“We are moving forward with these important initiatives because we recognize that robust regulatory supervision and oversight of the debt markets are critical to enhancing market integrity and investor confidence,” said IIROC president and chief executive officer Susan Wolburgh Jenah.