On November 13, 2017, Staff of the Ontario Securities Commission brought an application seeking a temporary order suspending the registration of Omega Securities Inc. (Omega) as well as trading in two alternative trading systems run by Omega called Omega ATS and Lynx ATS, pending the outcome of a hearing on the merits. Staff alleged that Omega ATS and Lynx ATS failed to comply with the marketplace rules set out in National Instrument 21-101 and associated regulations (NI 21-101), by disseminating inaccurate and misleading information about the time that certain trade activities occur and by disseminating trade data to certain subscribers prior to the TMX Information Processor (TMX IP).

On November 23, 2017, the Ontario Securities Commission (OSC) denied Staff’s request but imposed certain technical and reporting conditions on Omega.


Omega ATS began operations as a trading platform in 2007 and has a market share of approximately 5% of Canadian equities trading. Lynx ATS opened in 2014 and has a market share of approximately 0.50%. Omega provides its services to IIROC-registered dealers across Canada.

Staff’s allegations in this matter focus on technical problems with how Omega ATS and Lynx ATS record and report trading activity. In particular, Staff alleged that various aspects of the trade platforms are inconsistent with NI 21-101 marketplace rules:

  • The platforms do not record the time when unmatched orders (meaning trading orders that have not yet been paired with a corresponding buy or sell order) first enter the system. Marketplaces are required to record the date and time an order is “first originated or received” and provide accurate and timely information about orders.[1] Without accurate time stamps reflecting when the order enters the system, it is impossible for regulators to determine whether orders are being matched in the priority in which they are received, creating a possible fairness issue.
  • Two of the processes used to create time stamps were altering the time stamps on executed orders, meaning that time stamps reported were inaccurate, and in some cases, different for a single event (due to how quickly each process alters the time stamps). Marketplaces must record the date and time at which an order is executed, and provide accurate and timely information about trades.[2] Staff alleges that the protocols used by the platforms were overwriting time stamps created by the platforms’ matching engine (which automatically pairs unmatched buy and sell orders) with new time labels that obscure the time at which a transaction was actually matched. Further, IIROC Guidance on Time Synchronization requires participants to ensure that system clocks do not drift more than +/- 50 milliseconds from UTC, and to ensure that systems clocks are continuously synchronized and traceable to UTC during trading hours. Staff alleged that the processes used by the platforms were not always synchronized, allowing for different timestamps varying by more than 50 milliseconds.
  • The platforms made trade data available through a data feed to persons or companies before it was made available to the TMX through the TMX Information Processor. Marketplaces cannot make information regarding orders or trades available to any person or company before it is made available to their information processor.[3]

 In essence, these allegations boil down to a charge that technical problems with Omega ATS and Lynx ATS were leading to inaccurate recording of trading information and improper dissemination of that trading information.

OSC orders conditions

The OSC denied Staff’s application to temporarily suspend registration, instead electing to impose conditions on Omega’s continuing registration. Among other things, Omega was required to (a) disclose on its website that there may be discrepancies in timestamps recorded by its platforms’ protocols; (b) upgrade one of its protocols from version 3.0 to version 5.0 as expeditiously as possible; (c) apply a patch to one of its data feeds; and (d) retain at its own expense an independent systems reviewer, approved by Staff, to report on the effectiveness of the protocol upgrade and the feed patch on a quarterly basis, for a period of twelve months. The OSC’s temporary order has since been extended to January 29, 2018.

This case demonstrates the importance of complying with the technical requirements contained in the marketplace rules, particularly where those rules relate to the collection and dissemination of accurate information. It is clear that Staff views these rules as central to its role in protecting the public markets, and anyone operating an exchange should ensure that their systems are sufficiently modern and coordinated in order to comply.


The author would like to thank Blanchart Arun, articling student, for his contribution to this article.

[1] See “National Instrument 21-101 (Marketplace Operation)”, ss 7.1(1), 11.2(1)(c)(xi).

[2] See “National Instrument 21-101 (Marketplace Operation)”, ss 7.2(1), 11.2(1)(d)(iv).

[3] See “National Instrument 21-101 (Marketplace Operation)”, ss 7.1(3), 7.2(2).