CIRO faults firm’s reliance on flawed “high/low closing report” in settlement
Haywood Securities Inc. has agreed to pay a $100,000 fine after admitting it failed for years to properly supervise trading in Canadian Securities Exchange (CSE) issuers, despite those names forming a significant part of its business.
On December 4, a hearing panel of the Canadian Investment Regulatory Organization held a settlement hearing under sections 8215 and 8428 of the Investment Dealer and Partially Consolidated Rules and accepted a Settlement Agreement, with sanctions, between Enforcement Staff and Haywood Securities Inc.
Haywood admitted that, from 2014 to October 2022, it did not adequately supervise end-of-day high/low close trades and high bid/low offer orders for issuers trading on the CSE, contrary to UMIR 7.1 and Policy 7.1.
During the Review Period of March 2021, April 2021 and June 2022, CSE issuers made up a large part of the firm’s business, with numerous CSE buy and sell trades in the last half hour of the trading day and large daily buy and sell volumes in March 2021.
The supervisory gap arose from the firm’s reliance on a “High/Low Closing Report” (the HiLo Report), supplied by a third party service provider, as its primary tool to identify potentially manipulative high closing activity.
The HiLo Report showed orders near market close that improved the market price of a symbol and included data such as closing prices and prior bid/ask spreads.
However, it only covered TMX exchanges (TSX, TSX‑V and Alpha) and had excluded all CSE data since 2014.
Haywood did not have systems to test for partial disruptions in third party data feeds, and its annual systems checks did not detect the missing CSE information.
The issue came to light only after CIRO’s Trade Review and Analysis department asked the firm in August 2022 for information about trading in a CSE issuer.
A subsequent review of trading by Staff and the firm found that Haywood had failed to supervise end-of-day high/low close trades and high bid/low offer orders in CSE‑listed issuers during the Review Period and failed to identify potentially manipulative trading in at least one queried issuer.
Between March 1, 2021 and April 23, 2021, a registrant at the firm executed 20 trades in a CSE issuer that resulted in an uptick 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 trading day.
Under the Settlement Agreement, Haywood agreed to pay a $100,000 fine and $5,000 in costs.
The firm is a CIRO Dealer Member with its head office in Vancouver, B.C., and is a Participant under UMIR.
The Settlement Agreement records that Haywood has no prior disciplinary history and told Staff its admitted conduct was inadvertent.
The document also sets out remedial steps.
By November 2022, Haywood updated its supervisory review and compliance matrix to ensure explicit review of CSE market data for high closing and changed its vendor reports to include CSE data for high close supervision.
Since June 2025, the firm has used Position Watch, alongside the HiLo Report and its Daily Orders and Trades Report, to identify potentially deceptive end-of-day trades, and it has implemented an annual internal audit, beginning in calendar Q4, to test for disruptions in data services.
In December 2022, Haywood imposed internal sanctions on one registrant, including a $5,000 fine, an internal reprimand and a requirement to successfully rewrite the Trader’s Training Course within six months, which was completed by June 2023.
