TSX Compliance Alerts Reporting System (CARS)

Toronto Stock Exchange (TSX) has developed a system that produces daily reports that enable the compliance office of a Participating Organization or Member (PO) to monitor and track trading infractions and alerts on a post-trade basis. TSX Compliance Alerts Reporting System (CARS) is an invaluable tool for the discerning compliance officer who can use the tool to monitor the trading activity of the firm and to assist in developing strategic action items to deal with the findings. CARS will also demonstrate the firm's proactive stance on compliance to regulators and auditors from other firms.

Benefits

CARS can provide additional and more granular surveillance support for existing compliance processes and systems for Participating Organizations and Members that supervise retail and institutional trading activity. CARS subscribers can realize the following benefits from the system:

• The ability to set up and modify defined filter parameters for existing rule-based alert monitors, allowing compliance officers to focus trade surveillance processes within specific alert-rule ranges;
• Reports that draw attention to possible trade anomalies not easily identified by the more general trade surveillance rules;
• Reports that contain all market details required for a comprehensive evaluation of the trade activity;
• Trade surveillance alert rules that are applied against TMX Group data sources;
• Facilitates regulatory compliance with specific Universal Market Integrity Rules (UMIR).

Product features

CARS allows subscribers to select a maximum of seven unique alert monitors and to input their own specific parameter ranges. Subscribers can select from the following alert monitors:

• JTNY (Jitney) - The system will provide a potential front-running alert to find instances within a PO when an order marked "jitney" has traded just ahead of an order marked "client" and the "jitney" order received a better fill price.
• ANON (Anonymous) - The system will provide a potential front-running alert to find instances within a PO when an order marked "anonymous" has traded just ahead of an order marked "client" and the anonymous order received a better fill price.
• CPT (Client Principal Trade) - The system will provide a potential customer/principal trading rule alert to find instances where a "pro" (i.e. Non Client, Specialist, Inventory) trades against a client within a PO without improving the fill price to their client based on the current bid/offer price.
• Restricted Stock - The system will provide restricted stock alerts to detect all trades for restricted stock symbols specified by the PO.
• APTC (Alerts Prior To Close) - The system will provide alerts to detect patterns of potential price manipulation at market close.
• Daily Cross Report - The system will provide a cross report to filter various types of crosses that occurred at either the bid or ask price.
• Daily Close Report - The system will provide a daily closing report to indicate which stock prices the PO has moved up or down at the end of the day.

Reports

Each day, the CARS application creates reports that are pushed to the subscriber's site using the File Transfer Protocol (FTP). This FTP file contains the subscriber's alerts as defined by that subscriber for the prior business day.

Reports are generated in CSV file format which allows subscribers to customize the data using various software programs. Reports for Toronto Stock Exchange and TSX Venture Exchange are created and saved as separate files.

Security

Alert/Report parameters will be entered using a secured web browser interface. Output files will be sent to subscribers using Secure File. All CARS data is secured from external parties and access within TSX will be restricted to defined personnel.