The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) issued a joint statement on April 9th, 2020. According to the statement, IIROC’s market monitoring and surveillance functions remain robust, secure and resilient and that over the past several weeks, IIROC has managed four market-wide circuit breakers and an increased number of single-stock circuit breakers.

According to the statement, the CSA and IIROC will continue to monitor developments in other jurisdictions, including decisions by some countries to introduce short selling restrictions. IIROC’s data shows that short selling activity continues to represent a low percentage of total market activity and remains consistent with short selling activity prior to the pandemic. There is no evidence that short selling activity has been the driver of recent market declines.

According to the announcement, IIROC is monitoring short selling, and will intervene in instances involving abusive or manipulative trading. Under the market integrity rules and securities legislation, each short sale is required to be marked, and dealers and investors are prohibited from initiating a short sale without the expectation to settle the trade. Dealers must also report short positions and failed trades to IIROC. IIROC publishes a summary of reported short positions, as well as a summary of short sale activity, on its website on a bi-monthly basis. Additionally, IIROC has the ability to declare any security ineligible for short selling if circumstances warrant it.

If warranted based on either new information or from analysis, the CSA and IIROC will consider limiting short selling on particular securities.

For more details on the announcement please see:

For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.

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