TORONTO, Feb. 25 /CNW/ - The Investment Industry Regulatory Organization of Canada (IIROC) today published for
comment proposed amendments to the Universal Market Integrity Rules
respecting the regulation of short sales and failed trades. In
particular, the proposed amendments would repeal the restrictions on
the price at which a short sale may be made on Canadian equity
IIROC also released two studies examining recent trends in trading
activity, short sales and failed trades for the period May 1, 2007 to
April 30, 2010. These two studies provide data and analysis that are
integral to effective policy making and reflect IIROC's ongoing
commitment to monitoring trading on equity marketplaces in Canada and
ensuring that our rules for market integrity are informed by relevant
and timely data.
The first study, "Trends in Trading Activity, Short Sales and Failed Trades for the period
May 2007 to April 30, 2010", looks at the relation between short sales and failed trades during a
time frame which includes the period of the greatest market turmoil in
generations, from October 1, 2008 to April 30, 2009. The study confirms
the findings of an earlier IIROC study ("Recent Trends in Trading
Activity, Short Sales and Failed Trades") which found no unusual
patterns of short selling or trade failure.
The second study "Price Movement and Short Sales Activity, the Case of the TSX Venture
Exchange for the period May 1, 2007 to April 30, 2010" looks at the relationship between price movement and short sale
activity during a period when all of the securities traded on the TSX
Venture were subject to price restrictions on short sales. These
restrictions (the "tick test") require that a short sale can only be
made a price which is not less than the last sale price of that
security on a marketplace. The study found that there were no
"systemic" problems in the working of the short sale regime and that
the tick test was not effective as a tool to restrict significant and
rapid systemic declines in prices.
Both the studies and the proposed amendments are available on the IIROC
web site at www.iiroc.ca.
IIROC encourages investors, marketplace participants and other
interested persons to provide comments by May 26, 2011 on the proposed
amendments. As part of the request for comments on the proposed
amendments, IIROC has also asked for responses on a number of specific
questions related to the regulation of short sales and failed trades.
The procedure for providing comments and responses is set out in the IIROC Notice.
* * *
IIROC is the national self-regulatory organization which oversees all
investment dealers and trading activity on debt and equity marketplaces
in Canada. Created in 2008 through the consolidation of the Investment
Dealers Association of Canada and Market Regulation Services Inc.,
IIROC sets high quality regulatory and investment industry standards,
protects investors and strengthens market integrity while maintaining
efficient and competitive capital markets.
IIROC carries out its regulatory responsibilities through setting and
enforcing rules regarding the proficiency, business and financial
conduct of dealer firms and their registered employees and through
setting and enforcing market integrity rules regarding trading activity
on Canadian equity marketplaces.
SOURCE Investment Industry Regulatory Organization of Canada (IIROC) - General News
For further information:
Vice President, Public Affairs