IIROC releases two studies on marketplace trends related to short sales

    TORONTO, Feb. 4 /CNW/ - The Investment Industry Regulatory Organization
of Canada ("IIROC") released studies today examining recent trends in trading
activity of listed securities on Canadian equity marketplaces and the impact
of the prohibition on the short sale of inter-listed financial sector issuers.
    These two studies reflect IIROC's ongoing commitment to monitoring
trading on equity marketplaces in Canada, while ensuring that our rules for
market integrity are informed by relevant and timely data. "We constantly
monitor marketplace trends," said Susan Wolburgh Jenah, IIROC President and
CEO. "We responded to the recent market turmoil by heightening our
surveillance activities, with an emphasis on short selling."
    The first IIROC study, "<a href="http://docs.iiroc.ca/DisplayDocument.aspx?DocumentID=DE2E6F9F4AE442F5BC0AE75A9E812FE5&Language=en">Recent Trends in Trading Activity, Short Sales</a>
and Failed Trades," looks at the relation between short sales and failed
trades over a 17-month period in 2007 and 2008. The study shows that the
Canadian marketplace did not experience problems with abusive short selling
and naked short selling that the United States or other jurisdictions may have
    The second study, "<a href="http://docs.iiroc.ca/DisplayDocument.aspx?DocumentID=3B4FDC12E7AA4177890D0170914D5D7A&Language=en">Report on the Impact of the Prohibition on the Short</a>
Sale of Inter-listed Financial Sector Issuers," was undertaken at the request
of the Canadian Securities Administrators to examine the impact of the Ontario
Securities Commission Order prohibiting short sales of certain financial
sector issuers ("Restricted Financials") on trading activity. The Order,
issued on September 19, 2008, prohibited short sales of Restricted Financials
listed on the Toronto Stock Exchange that were also inter-listed with
exchanges in the United States. The IIROC study shows that, prior to the
introduction of the prohibition on short sales, short selling activity in
Restricted Financials was generally consistent with historic levels of short
selling for inter-listed securities.
    The IIROC study found that the Order appeared to have a significant
impact on market quality, including an increase in both volatility and the
"spread", which is the difference between the highest price bid to purchase
the security and the lowest price offered to sell the security. There was also
no appreciable difference between changes in prices of Restricted Financials
and those financial issuers for which short selling was permitted.
    "These studies provide data and analysis that are integral to our
effective policy-making," said Ms. Wolburgh Jenah.
    Both studies are available upon request, or on the IIROC website at

    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

For further information:

For further information: Connie Craddock, Vice-President, Public
Affairs, (416) 943-5870, ccraddock@iiroc.ca

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