CIRO Expands Trading Halt Policy for ETFs and CDRs

Insight and advices

CIRO Expands Trading Halt Policy for ETFs and CDRs

Jul. 13, 2025

The Canadian Investment Regulatory Organization (CIRO) is enhancing its regulatory oversight of investment products tied to foreign equities — notably Canadian depositary receipts (CDRs) and single-stock ETFs — by implementing new trading halt procedures to reflect foreign market pauses.

Why The Change?

As the popularity of foreign-linked investment vehicles grows in Canada, concerns have risen over continued trading in these products even when the underlying U.S. securities are halted for pending material disclosures.

Until now, Canadian exchanges lacked a mechanism to halt trading in CDRs or ETFs when the underlying stock was suspended on U.S. markets. This created potential risks for investors trading on incomplete information.

To address this, CIRO has introduced manual halt procedures that will suspend trading in Canada in response to U.S. halts triggered by material disclosures.

New Oversight for Material Disclosure Halts

CIRO will now manually halt trading in Canadian-listed CDRs and single-stock ETFs when:

The underlying U.S. stock is halted for the release of material information
CIRO identifies the halt through its surveillance operations
A matching manual halt is imposed on all Canadian marketplaces

CIRO emphasized that the process will not be automated and is subject to short implementation delays as it relies on human verification.

Once the U.S. markets resume trading, CIRO will manually lift the Canadian halt to maintain synchronization.

What’s Not Included?

CIRO clarified the following exceptions to its trading halt policy:

It will not mirror U.S. halts triggered solely by volatility controls
It will not halt trading in CDRs or ETFs that track stocks not listed in the U.S., due to lack of accessible monitoring tools

This narrow focus on material information events reflects CIRO’s goal of enhancing investor protection without overstepping regulatory scope or disrupting liquidity.

Regulatory Challenges for Non-Issuer Instruments

A key issue flagged by exchanges is that they have no direct relationship with the foreign companies behind these instruments. That limits their ability to obtain or verify material information, unlike traditional Canadian-listed securities where issuers must comply with local disclosure obligations.

CIRO’s approach helps bridge that regulatory gap by stepping in as the oversight body capable of monitoring cross-border risks and coordinating trading halts across platforms.

A Step Toward Stronger Investor Protection

The expanded halt policy signals CIRO’s commitment to safeguarding Canadian investors in a market increasingly exposed to global equity products. While these offerings improve access and diversification, they also introduce complexities tied to foreign disclosures and market behavior.

By aligning Canadian halt practices with those of major U.S. exchanges during material events, CIRO aims to reduce informational asymmetries, prevent speculative trading, and strengthen market integrity.

Conclusion: What Investors Should Expect

Investors holding CDRs or single-stock ETFs linked to U.S. equities should prepare for potential temporary trading halts in Canada during major disclosure events in the U.S. While these halts may cause brief interruptions, they are designed to protect investors and ensure trading reflects current, accurate information.

CIRO’s initiative marks a proactive move in adapting Canadian regulatory practices to the evolving landscape of cross-border investment products.

Learn more at aifinancial.ca