Liquidnet Canada fined C$600,000 by OSC over client data visibility breaches

Liquidnet Canada Inc. has agreed to pay a C$600,000 administrative penalty to resolve Ontario Securities Commission (OSC) allegations that employees of its US and UK affiliates could see confidential order and trade information belonging to Canadian marketplace participants.

The Capital Markets Tribunal approved the settlement, which also requires the TP ICAP subsidiary to pay C$75,000 toward the cost of the OSC's investigation, undergo a review by an independent consultant, and accept an oral reprimand from one of its current officers. The Toronto-based investment dealer admitted it breached confidentiality requirements under National Instrument 21-101, the rulebook governing Canadian marketplaces.

Liquidnet Canada operates alternative trading systems (ATSs) that allow institutional investors to match large orders away from public exchanges, similar in design to dark pool venues operated by other agency brokers. The visibility issues first emerged on its fixed income ATS in mid-2023 and reappeared on its equities ATS more than a year later.

By June 30, 2023, Liquidnet's Canadian operations had identified problems with its shared technology stack. Fixed income staff in Canada could potentially see certain order and trade information belonging to clients of US sister company Liquidnet, Inc., and employees at foreign affiliates could see information relating to participants on Liquidnet Canada's own marketplace.

The firm suspended trading in Canadian debt securities on August 29, 2023, and notified the OSC the following day. In its initial incident report, Liquidnet described the shutdown as a routine suspension to complete system enhancements and stated there was no underlying incident. However, during the fall of 2023, OSC staff requested more detail on system segregation, and at a November 1, 2023 quarterly meeting Liquidnet Canada disclosed that the suspension had been prompted by foreign affiliate visibility into Canadian client data. The settlement notes that the firm should have advised the Commission of the issue earlier.

In October 2024, Liquidnet identified a similar visibility problem on its equities ATS, where order and trade information of Canadian equities participants had been visible to certain employees of US affiliate Liquidnet, Inc. This time, the firm reported the matter to the OSC promptly. The OSC stated that indications of interest used by the matching engine on both venues remained shielded and that investigators found no evidence affiliate employees actually accessed the data or that it leaked to third parties.

The settlement focuses on the breach of the confidentiality framework rather than any proven misuse of information. National Instrument 21-101 requires marketplace operators to restrict access to participants' order and trade data to individuals who need it to provide the service, and to obtain consent before sharing it more broadly.

The penalty comes against the backdrop of strong financial results for parent TP ICAP, which reported record annual revenue of $3.15 billion for 2025. Its Liquidnet multi-asset agency execution division contributed $489 million of that total, up 4% at constant currency, and TP ICAP announced a $107 million share buyback in March. TP ICAP acquired Liquidnet from founder Seth Merrin in 2021 in a deal valued between $575 million and $700 million depending on performance milestones, and has since integrated the business into its broader electronic trading and agency execution stack.

The Canadian settlement was signed by Soshi Sankat, Head of Canada at Liquidnet Canada. The agreement states that the firm fully co-operated with the OSC investigation, which was treated as a mitigating factor. Liquidnet Canada continues to operate its equities ATS in Canada, while trading in Canadian debt securities on its fixed income ATS has remained suspended since the August 2023 voluntary shutdown.