Sprott is backing Save Canadian Mining, an advocacy group whose primary aim is to reinstate the “uptick rule” or “tick test.”
Canadian billionaire Eric Sprott is backing Save Canadian Mining, a new advocacy group whose primary aim is to reinstate a securities trading rule known as the “uptick rule” or “tick test.”
“I’ve done lots of short selling in my life because I recognize there’s anomalies in the market … but I’ve always worked under the premise of the uptick rule, and that means you can only short when a stock is trading up or flat,” said Sprott in an interview at the Sprott Mining office in Toronto.
“I’ve always understood as an investor why it was important, because it’s so easy for predators to create chaos in a stock,” he explained.
The uptick rule existed for 142 years before being removed in 2012 by the Investment Industry Regulatory Organization of Canada, better known as IIROC, and the Canadian Securities Administrators. According to Save Canadian Mining, in its absence junior miners have faced challenges in financing and in getting support from retail investors.
“I might even go so far as to say, you know, as an investor in junior mines I’ve actually probably gained by the uptick rule being gone because people are undervaluing stocks,” said Sprott. “But by the same token I want the retail investor to have a fair shot at this.
“And between the predatory short sellers, the frontrunners, the algos — it’s becoming a game that’s very, very difficult for the average investor to win. We’ve got to get the average investor back in the game.”
Sprott has been involved in a slew of financings in the junior resource space this year, putting money into companies such as Wallbridge Mining (TSX:WM), Continental Gold (TSX:CNL,OTCQX:CGOOF) and Silver One Resources (TSXV:SVE,OTCQB:SLVRF).
“I think anyone who watches these small-cap stocks can see it — you can see it in the market, you can see some shorter coming along right at the end of the day at 3:59:59 (p.m.) and knocking the stock down a little just for the sake of starting at a lower level. And let’s face it: short sellers, when it’s 100 percent of their business, are very predatory,” he noted.
Watch the interview above to learn how Save Canadian Mining plans to address these issues. You can also click here to visit the Save Canadian Mining website and learn how to get involved.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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