Avoiding Rough Waters: OSC Consultation On Short Selling Restrictions

The Ontario Securities Commission released Proposed Amendments to OSC Rule 48-501Trading during Distributions, Formal Bids and Share Exchange Transactions (Rule) on June 5, 2025. The proposed amendments would apply to distributions made by issuers who are reporting issuers in Ontario. The amendments would prohibit anyone who short sells a security starting five business days before the pricing of a prospectus or private placement offering of the same class of securities from buying securities in the offering, unless one of the limited exemptions is available. The prohibition will apply regardless of whether the short seller had any prior knowledge of the offering, whether the offering amounts to a material fact or change for the issuer, or whether the short sale had any impact on the market price of the securities being sold.