compliance-regulation

The Investment Industry Regulatory Organization of Canada will review the reporting of short-selling activity after hearing concerns about small-cap issuers.

IIROC published the plans in a summary of comments received at a roundtable discussion of market structure issues affecting small-cap names.

The regulatory body said it will review the requirements and frequency of reporting of short-selling activity to determine whether transparency can be enhanced. IIROC currently publishes a bi-monthly short-sale trading statistics summary, which is available on its website.

Read: Watch out for short sellers

In addition, IIROC will refresh a 2007 study of failed trades with a focus on small-cap issuers, which may lead to further targeted work on short-selling.

Other themes raised at the roundtable include the need for securities regulations to reflect the trading differences between large-cap and small-cap securities, concerns about reduced liquidity in small-cap securities, and the perception of the negative impact of short-selling leading to less investor confidence and lower rates of participation in the small-cap market.

Read: Only 1 in 4 Canadian equity funds outperformed, says SPIVA

“IIROC recognizes the significance of the small-cap market. We listened carefully to our stakeholders and are taking a data-driven approach and concrete steps to address their concerns,” says Warren Funt, IIROC vice-president of Western Canada, in a release.

Also read: Ontario and N.B. have highest rates of outstanding IIROC fines

Originally published on Advisor.ca
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