Public Consultation on Activist Short Selling 

On December 3, 2020 the Canadian Securities Administrators (CSA) published Consultation Paper 25-403 – Activist Short Selling. The purpose of this consultation is to address concerns of issuers regarding activist short sellers in Canadian markets. 

Short selling activity is seen as an integral part of a healthy market, providing additional liquidity for smaller companies, and a means to effect normal price discovery. In contrast, “activist” short sellers telegraph market positions and can exploit inherent uncertainties to amplify short theses publicly, without being based on concrete facts. Therefore, the nature of activist short selling should be monitored and well understood to ensure market imbalances do not manifest.

PDAC Recommendations

PDAC has identified several issues for further investigation, and provided a number of regulatory and enforcement-related recommendations to CSA that aim to level playing field for all market participants. A key concern is potential market imbalances that could manifest  due to limitations of issuers, particularly small and medium-sized companies, to rebut data or information provided to the public by activist short sellers. Read our full response.