CSA Revisit Short Selling In Canada

On December 8, 2022, the Canadian Securities Administrators (CSA) published CSA Staff Notice 25-306 Activist Short Selling Update (Staff Notice 25-306) and Joint CSA and IIROC Staff Notice 23-329 Short Selling in Canada (Staff Notice 23-329). The Staff Notices review the CSA's consultation on activist short selling and invite further feedback on short selling more broadly. The comment period ended on March 8, 2023.

Background

The Universal Market Integrity Rules (UMIR) of the New Self-Regulatory Organization of Canada (New SRO)¹ define a "short sale" as a sale of a security, other than a derivative, which the seller does not own either directly or through an agent or trustee. The security is sold at the current market price, with the expectation that the seller will be able to make a profit by purchasing the same or a related security later, at a lower price. While certain capital market participants have negative views on short selling, short selling is a