• CIRO proposed rule amendments respecting mandatory close-out requirements.
• CSA OSC and CSA Que also published proposed amendments in respective Bulletins.
• Redline and clean versions of proposed amendments in Appendix 1 and Appendix 2.
• Follows related CIRO request for feedback on short selling framework.

Proposed Amendments

• Require investment dealer members to close out a fail-to-deliver position if settlement failure in listed security at recognized clearing agency by specified timelines.
• By buying or borrowing shares, pre-borrow affected security where there has been a failure to close out by specified timelines for all future short selling in security at issue.
• Required to close out fail-to-deliver position from sale, or sale marked as a short-marking exempt (SME) order, no later than trading day after settlement date (S+1).
• Pre-borrow restrictions continue for until closed out position by purchasing, borrowing shares such able to demonstrate have net long or net flat position on books, records.
• Must provide certain reporting and notifications for mandatory close-out requirements.
• Reasonable expectation settle on settlement date for investment dealer members.

Alternative Consideration

• Rejected consideration of structuring mandatory close-out provisions as type of conduct requirement rather than on fail-to-deliver positions at clearing agency.
• Conduct rule require investment dealer members close out each individual failed trade as executed on marketplace, no delivery of securities on expected settlement date.
• Regardless of whether results in settlement failure at the recognized clearing agency.

Consultation

• Comments on proposed amendments to mandatory close-outs due 10 April 2025.