CIRO Seeks Comments On Two Short Selling Proposals

Earlier this month, the Canadian Investment Regulatory Organization (CIRO) released proposed amendments to the Universal Market Integrity Rules relating to the reasonable expectation to settle a short sale (Proposed Amendments). UMIR 3.3 would require a seller to have a reasonable expectation to settle any resulting trade on the settlement date before entering an order for a short sale on a marketplace. In addition, the amendments would add supervisory and gatekeeper requirements relating to UMIR 3.3.

It is noted in the Proposed Amendments that CIRO and the Canadian Securities Administrators are continuing to review short sale regulations, including potentially mandatory close-out requirements. It is specifically noted that the fact a trade ultimately settles does not support a claim that a reasonable expectation to settle existed before the time of order entry. Factors impacting the ability to show a reasonable expectation would include a client history of prior