Submissions to Government

PMAC Submission – CSA Consultation Paper 25-403 – Activist Short Selling


PMAC generally favours principles-based regulation that recognizes differences in business models, sizes, and client types. We support the CSA’s decision to consult with stakeholders on the important issues raised in the Consultation. Given the fast pace of change in the industry, it is understandably difficult for regulation to predict or keep up with developments in the market and investor behaviour. For this reason, we believe it is important for regulatory bodies to hear from market participants in deciding whether regulatory intervention is required and if so, what form it should take.

PMAC members agree that any type of market manipulation or investor deception must be discouraged and prosecuted where warranted. In responding to any issues that are identified, we urge the CSA to rely on evidence and data, as opposed to sentiment and perception, to determine if activist short selling is an area of significant concern. As is further discussed below, there is a fear that over-regulation of activist short selling activity, and short selling activity more generally, could have negative consequences for market efficiency, because such restrictions can impede price discovery and curtail legitimate investing activity. In addition, short sale restrictions can be cumbersome and operationally difficult to implement for market participants, particularly when there is a patchwork of different rules and regulations enacted across jurisdictions.

Read the submission in full here.