The Investment Industry Regulatory Organization of Canada is planning to ease short selling rules in falling markets by terminating the tick test, Securities Lending Times reports. The regulator released two studies that look at the trends of short selling in the last three years. The first study reviewed the relation between short sales and failed trades during Oct. 1, 2008 to April 30, 2009. The second assessed 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. It found that there were no “systemic” problems in the working of the short sale regime and the tick test was not effective as a tool to restrict systemic drops in prices.
Click here for the story from Securities Lending Times.
Click here for additional coverage from The Globe and Mail.