Canadian investors can continue to bet against stocks.
Canada's securities and markets regulators said it will continue to allow investors to take short positions on trades despite several European exchanges banning bets against stocks in an effort to steady market activity amid the COVID-19 pandemic.
The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) issued a joint statement to address recent volatile markets. The statement reaffirmed that Canada's capital markets continue to operate in a "fair and orderly fashion" despite the significant volume and volatility observed over the past several weeks as the coronavirus spreads.
The CSA and IIROC also stated that there are no plans to introduce short-selling restrictions, a move that has already taken place in France, Italy, Spain, Greece and Belgium to help stabilize financial markets.
The Canadian regulators said there's no evidence that short selling, where an investor profits as a stock price falls, is responsible for current volatile market conditions. The CSA and IIROC said they may, however, introduce limits on certain short-selling activities in the future if they determine the need to do so through new information or analysis.
"IIROC’s data shows that short-selling activity continues to represent a low percentage of total market activity and remains consistent with short selling activity prior to the pandemic," the regulators said in a written statement.
Last month, TMX Group Inc., which owns and operates the TSX and TSX Venture exchanges, issued a statement saying that it “feels strongly” that it’s in the best interest of publicly-listed companies, investors and other participants for markets to remain open and all trading, including short-selling, to continue as normal.
