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.
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.
“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.