On May 1, 2007 the Ontario Securities Commission approved amendments to CNQ's order entry rules.  The proposed amendments were published February 16, 2007 in CNQ Notice 2007-002. 

CNQ received two formal comments on the proposed amendments, both of which fully supported the changes which would allow more direct access to the market, resulting in better order management options that would ultimately benefit investors.

The rule amendments are effective Friday, May 4, 2007.  The full text of the amended rules is attached as Appendix “A”.

Impact of Rule Change
The changes to the order entry rules remove the requirement for dealers to direct orders to a Market Maker if the order would improve the market.  As a result, approved traders at all CNQ Dealers may directly enter orders and crosses on all securities for client and non-client accounts of their firms.

Jitneys
The changes also impose a restriction in that only a Designated Market Maker, i.e., a CNQ Dealer acting as a Market Maker on a specific security, may enter orders on behalf of another participant on that security, regardless of whether the originating dealer is a CNQ Dealer or not.   For further clarification, this restriction is not intended to capture the order execution services of  carrying brokers.  Therefore a carrying broker will not be restricted from entering orders or crosses on any security on behalf of its introducing brokers, nor will the carrying broker be required to act as Market Maker.

All orders entered on behalf of another participant, including those entered by a carrying broker or a Designated Market Maker, must be properly identified as a jitney order on behalf of the originating participant.  For further clarification on the UMIR requirements, see Market Regulation Services' Market Integrity Notice 2007-004   Marking Orders From Other Dealers which was published February 28, 2007. 

For further information please contact:

Mark Faulkner, Director, Listings & Regulation
416.572.2000 x2305 or
Mark.Faulkner@thecse.com

Appendix A

Amended Rules

Rule 4-106 Entry of Orders for CNQ-Listed Securities
(1) Subject to Rule 4-107, any CNQ Dealer may enter
     (a) orders and
     (b) crosses at any price between the bid and offer

into the CNQ System for a CNQ-listed security.

(2) Orders (other than special terms orders and crosses) may be entered on a fully-disclosed or partially disclosed basis.

(3) Orders entered on a partially-disclosed basis must disclose at least 50% of the total volume on entry and must be at least 5 Board Lots in size.

Rule 4-107 Entry of Orders for Market Maker Securities
(1) Only a Designated Market Maker may enter
     (a) orders and
     (b) crosses at any price between the bid and offer

into the CNQ System on behalf of another participant for a Market Maker security.

4-111 Trading After the Opening
(1) A tradeable order for a CNQ-listed security shall be allocated among offsetting orders on the bid or offer (as the case may be) individually by time priority.

1-101 Definitions
(2) In these Rules, unless the subject matter or context otherwise requires;
"Client Matching Order" [deleted]