Canadian securities regulators are not planning any new measures at this point to address the transparency of short selling and failed trades.
Last year, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) published a joint notice on the issue, and in Thursday’s OSC Bulletin, the regulators address the comments received on that notice, which sought to explain the approach taken by a CSA/IIROC working group on these issues; review recent international regulatory developments; and, seek feedback on whether further measures are needed to enhance the regulatory reporting and transparency of short sales, or introduce some transparency of failed trades in Canadian markets.
In this new joint CSA/IIROC notice, the regulators report that there was no clear consensus among those commenting on the original notice about whether specific improvements were needed; and, that the majority of respondents believe that the current requirements are adequate (including IIROC’s new short-marking exempt order rule).
“After reviewing the comments, data on short sales and failed trades and recent international developments in the regulation of short sales and failed trades, the [CSA/IIROC] working group does not believe that additional measures are needed or desirable at this time,” it says.
The notice also notes that IIROC intends to update its empirical studies to determine the effect, if any, of trading rule amendments on trends in trading activity, short sales and failed trades. It says that the regulators’ working group is awaiting those results. And, it also promises to continue to monitor international developments in the regulation of short sales and failed trades, as well as other related issues.