TORONTO (July 10, 2020) – Save Canadian Mining (SCM) today responded to the 47 policy proposals contained within the consultation report released by Ontario’s Capital Markets Modernization taskforce last week. The advocacy group, which includes many junior mining companies as well as mining associations and TSX Venture Exchange was pleased with the attention paid to predatory short selling, which they claim has disproportionately impacted the junior mining sector for years.
“We commend the work of the taskforce and are encouraged that our message on the need for more regulatory oversight of predatory short selling has been heard. We remain hopeful that the final recommendations will include an endorsement of the “tick test” and that the government decides to reinstate this critical safeguard,” said Terry Lynch, Executive Director of SCM.
SCM has been raising awareness for the importance of the tick test (among other regulatory and structural issues within Canada’s capital markets) since the advocacy group launched in November of last year. In March 2020 the group published research that revealed a link between the removal of the tick test by IIROC in 2012 and the decrease in valuations of junior mining companies. SCM has also drawn attention to the challenges of multiple marketplaces, of which there are 14 in Canada, and the negative effect that this continues to have on both small cap companies and investors.
“It’s not an accident that mining companies have suffered disproportionately since IIROC removed the highly successful 142-year-old tick test in 2012. While commodity values have remained steady, mining company valuations have plummeted. It has been very discouraging for mining juniors and their investors,” added Lynch.
Joining SCM in its response to the initial report was Eric Sprott of Eric Sprott Mining Inc., Garry Clark, Executive Director of the Ontario Prospectors Association (OPA) and Brady Fletcher, Managing Director & Head of TSX Venture Exchange (TSXV).
“The tick test is a proven safeguard for the junior mining sector. The research is there. I encourage the taskforce to continue its work on SCM’s proposal and to ultimately recommend reinstatement of this proven market regulation,” said Eric Sprott, CEO, Sprott Mining Inc.
“Junior miners in Northern Ontario and elsewhere are pleased with the work of the taskforce and the report issued yesterday. My members have raised predatory short selling as an issue for many years. The research done by Save Canadian Mining suggests that the tick test should be reinstated and we hope the taskforce goes further in their final report,” said Garry Clark, Executive Director of the Ontario Prospectors Association.
“TSXV supports Save Canadian Mining, a group who has given voice to the interests and concerns of an important segment of this country’s economy,” said Brady Fletcher, Managing Director & Head of the TSX Venture Exchange. “While short selling can play a positive role in maintaining efficient markets, predatory short selling unfairly disadvantages junior companies in all sectors. We applaud the efforts of the taskforce in identifying key structural issues with Canadian capital markets. We look forward to working with the taskforce and our broader stakeholder community as they refine their recommendations, including a thorough review of predatory short selling and an ongoing evaluation regarding the reinstatement of the tick test.”
SCM plans to continue to work with government, financial market regulators and the taskforce in the coming weeks.
About Save Canadian Mining
Save Canadian Mining is a not-for-profit, issue-based advocacy group representing the interests of Canada’s junior mining industry and the investment community. Founded in September 2019 by Terry Lynch, CEO of Chilean Metals Inc, Save Canadian Mining is committed to working with governments and agencies to amend regulations in capital markets to help generate investment in Canada’s junior mining industry. For more information visit savecanadianmining.com
About the tick test
The tick test or “uptick rule” refers to a regulatory restriction within capital markets that prevented investors from shorting a stock as it was on a downward trajectory. The regulation was in place in Canada’s capital markets for 142 years prior to its removal by IIROC in 2012. The regulation’s purpose was to prevent the artificial depreciation of a company’s stock.
Terry Lynch, CEO and Founder, Save Canadian Mining