Disciplinary Processes

Procedure

Upon receipt of an investigation report recommending that procedures of a disciplinary nature be undertaken, the Exchange may serve an originating notice to an approved participant or an approved person.

The respondent must file a reply, in accordance with article 4.252 (former article 4152) of the Rules of the Exchange, within ten (10) business days following the date on which the originating notice was served.

In accordance with articles 4.301 to 4.307 (former articles 4201 to 4207) of the Rules of the Exchange, a settlement offer may also be presented at any time by the respondent. Unless the imposed sanction consists of a reprimand, a fine not exceeding $5,000, the requirement to retake one or more courses given by the CSI Global Education Inc. or any other course deemed to be appropriate, or a combination of these three sanctions, the offer must be approved by the Disciplinary Committee, failing which the file shall be subject to a hearing.

In accordance with articles 4.351 (former article 4251) and following of the Rules of the Exchange, a decision rendered by the Disciplinary Committee of the Exchange may be appealed to the Special Committee — Regulatory Division within ten (10) business days from the date the decision was served.

Any decision rendered on this instance by the Special Committee of the Regulatory Division may be appealed to the Financial Markets Administrative Tribunal, within thirty (30) days.

Equally, any final decision rendered by the Financial Markets Administrative Tribunal, may be appealed to the Court of Québec, if a notice to this effect has been filed within thirty (30) days from the date on which the decision was rendered.

Disciplinary Committee

The Disciplinary Committee hears complaints brought pursuant to article 4.201 (former article 4101).

In accordance to articles 4.202 and 4.203 (former articles 4102 and 4103) of the Rules of the Exchange, the Disciplinary Committee is comprised of three (3) persons, named by the Vice-President, Legal Affairs (Derivatives):

  • two (2) persons who are either directors, officers or partners of approved participants; or who are retired from the securities industry and who were previously directors, officers or partners of an approved participant; or members of the Special Committee of the Regulatory Division
  • one (1) person who is related neither to an approved participant, nor to the Exchange.

Fines for Minor Violations Process

On May 10, 2017, the Montréal Exchange self-certified a regulatory amendment setting up a process to impose fines for minor violations. This process, introduced by Articles 4.308 to 4.312 (former articles 4220 to 4224) of the Rules of the Exchange, is an alternative enforcement process.

This process does not qualify any violation as "minor". Only the circumstances leading to the commission of a violation as listed in Article 4.308 (former article 4220) can be considered as "minor" and, as such, justify a decision from the Vice-President of the Regulatory Division to opt for the imposition of a fine instead of the filing of a disciplinary complaint.

The violations that may be considered for this process are as follows:

  • Incomplete or inaccurate report pertaining to the accumulation of positions for derivative instruments - article 6.500 (former article 14102(1))
  • Exceeding position limits – article 6.310/6.311 (former article 14157)
  • Non-compliance with the time limit for reporting an exchange for physical transaction, or an exchange for risk (EFP/EFRP) ) – article 6.208 (former articles 6815 h) and 6815A j))
  • Non-compliance with the time of market exposure – article 6.3 (former article 6380)
  • Failure to send a notice of noncompliance or a notice of exceeding position limits, within the prescribed time – articles 3.105 and 6.500 (former article 4002 and 14102(7))
  • Prohibited use of the “hidden liquidity” functionality – article 6.3 (former article 6380)
  • Granting unauthorized access to the automated system – articles 3.4 et 3.400 (former articles 6366 A) and 7403)

The fines for each of these violations are provided in the List of Fines for Minor Violations.