Regulator's fine over missed high-close alerts puts third-party data controls under the microscope
A long‑running gap in Haywood Securities Inc.’s trade‑supervision systems has cost the Vancouver dealer $105,000 in sanctions and put a spotlight on how firms oversee third‑party data feeds for high‑risk trading activity.
A Canadian Investment Regulatory Organization (CIRO) hearing panel found that, from 2014 to October 2022, Haywood failed to adequately supervise end‑of‑day high/low close trades and high bid/low offer orders for issuers trading on the Canadian Securities Exchange (CSE), contrary to UMIR 7.1 and Policy 7.1.
The firm is a CIRO Dealer Member and UMIR Participant, with its head office in Vancouver.
The panel accepted a settlement under which Haywood will pay a $100,000 fine and $5,000 in costs, following a settlement hearing on December 4, 2025 and written reasons released on December 9, 2025 in Re Haywood Securities Inc., 2025 CIRO 58.
The sanctions are payable immediately upon acceptance, unless Enforcement Counsel and the firm agree otherwise.
At the core of the case was Haywood’s reliance on a High/Low Closing Report (HiLo Report), supplied by a third‑party vendor and treated as the primary tool to flag potentially manipulative high‑closing activity near the market close.
The report showed orders entered near the close that improved the market price and included data such as closing prices and prior bid/ask spreads.
However, the HiLo Report had not captured any data for CSE‑listed securities since 2014. For about eight years, it only covered TMX venues (TSX, TSX‑V and Alpha), and Haywood had no system to test for partial data disruptions from its vendor.
Its annual systems checks also failed to detect the missing CSE data.
The problem surfaced only in August 2022, when CIRO’s Trade Review and Analysis department asked the firm for information about trading in a CSE issuer.
CIRO Staff and the firm then reviewed activity in March 2021, April 2021 and June 2022 (the Review Period).
They found that CSE issuers made up a large part of Haywood’s business during that time and that there were numerous CSE buys and sells in the last half hour of trading, including large daily volumes in March 2021.
In one CSE issuer between March 1 and April 23, 2021, a Haywood registrant executed 20 trades that all resulted in upticks against the last board‑lot trade price.
Most orders were for 500 shares, and four orders were entered in the last half hour of the session.
CIRO and the firm concluded that Haywood failed to supervise end‑of‑day high/low close trades and high bid/low offer orders in CSE issuers during the Review Period and did not identify potentially manipulative trading in at least one queried issuer.
The firm and Enforcement Counsel told the panel there was no evidence from CIRO Staff’s investigation that the conduct was anything other than inadvertent, and Haywood advised that its admitted conduct was inadvertent.
Haywood has no prior disciplinary history.
In December 2022, it fined one registrant $5,000, issued an internal reprimand and required a successful rewrite of the Trader’s Training Course within six months; the registrant completed that requirement by June 2023.
Haywood has since made several changes to its controls.
By November 2022, it revised its supervisory review and compliance matrix to explicitly include CSE market data in high‑close reviews and changed vendor reports to ensure CSE coverage.
Since June 2025, it has used “Position Watch” together with the HiLo Report and a Daily Orders and Trades Report to spot potentially deceptive end‑of‑day trades, and it has introduced an annual internal audit, starting in calendar Q4, to test for disruptions in data services.
In its reasons, the panel described the supervisory failure over the 2014–2022 period as serious misconduct but accepted that Haywood admitted the breach, applied remedial measures and imposed internal discipline.
The panel stressed the obligation of registrants to closely supervise all third‑party contractors and delegated functions, maintain robust internal audit and follow‑up procedures and provide supervisory staff training, with regular reviews to ensure firms meet their gatekeeper responsibilities.
