Eric Sprott says the tick test is a proven safeguard for the junior mining sector.
Advocacy group Save Canadian Mining (SCM) remains hopeful that the “tick test” – a regulatory restriction that prevents investors from shorting a stock as it is on a downward trajectory – will be reinstated.
In its response to 47 policy proposals contained in a consultation report released by Ontario’s capital market modernisation taskforce last week, SCM says it is pleased with the attention paid to predatory short selling.
The group, which includes several junior mining companies, as well as mining associations and the TSX-V, claims that predatory short selling has disproportionately impacted on 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," says SCM executive director Terry Lynch.
SCM has been raising awareness about the importance of the tick test since the advocacy group launched in November last year.
In March, 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," adds Lynch.
Eric Sprott of Eric Sprott Mining says 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," he says.