Interview with Terry Lynch, Co-Founder of Save Canadian Mining.

We've had several companies mention naked shorting on our show in the last few months, and all of them believe they are suffering as a consequence of it. They are also at odds with the Canadian government's approach to either ignore it, or refuse to accept it is happening. Canadian mining stalwart, Eric Sprott, has also complained about the predatory practice. Rick Rule disagrees though!

SaveCanadianMining.com is a movement to return market rules to the standards it held prior to the change in 2012.

In 2012, IIROC and CSA removed a trading rule known as the “tick test.” This restricted short selling to neutral or sales to positive price changes at the time of the sale.

Moreover, these changes were applied to the main listing venue of TSX-V Exchange and are equally applied across all 14 Canadian trading venues, reducing the TSX-V's ability to effect any change.

Since the removal of the tick test, Save Canadian Mining claims that the Canadian markets have evolved: there now exists a dynamic where short selling activities, high-frequency trading, and algorithms are exploiting the lack of a tick test to the detriment of Canada’s junior markets. Save Canadian Mining is calling on the CSA and IIROC to evaluate re-instituting the tick test. Lynch attributes this as a very big component behind why many junior mining companies have struggled to get funded in recent times. He states it would be a "hell of a lot easier to raise money in junior mining if the tick test existed."

Lynch claims that it's going to be an uphill battle against the big banks and lobbyists, but he claims all that he can do is "guerilla stuff." He's compiling a group of notable supporters like Eric Sprott and conducting events to bring exposure to the problem. He thinks this problem is benefiting offshore holding companies who don't pay taxes in Canada and this will help his cause.

Who needs to be punished for front-running and naked shorting? In the US, it is illegal. In Canada, Lynch argues it isn't 'technically' illegal. In Canada, you have 2-days to sell your stock. However, there is a +10-day exemption, creating a provision for clerical error. He claims if the Canadian government applied the rules, the problems would resolve themselves but they aren't. Stockbrokers are supposed to buy you in if you don't deliver your stock, so you have to foot the bill no matter what happens. Therefore, how is he hoping to capture the attention of the government? There are a number of huge names in the world of junior mining who are signed up, and Save Canadian Mining is trying to continue growing the cause by reaching out to other junior mining companies. Each company has put in around C$50,000 to help further the cause. He is aiming to raise around C$200,000 as a group, which will keep the group advocating until the end of the year. He wants to get Ontario on side, and he feels optimistic about this. If Ontario comes on side, Canada "will change." The primary argument appears to be regarding job security and the growth of junior mining companies in Canada.

Is there an argument for leaving things as they are? The primary argument is to "prevent fraud," but Lynch labels this PR piece as "complete bullsh*t!" He states the current Canadian government is pro-mining, despite having the most rigid environmental policies in the world.

Interview highlights:

  • Terminology: Shorting, Naked Shorting, The Uptick Rule & Algorithmic Trading
  • The Argument for The Uptick Rule
  • Decline in Junior Miners' Funding: Who Should Step in?
  • Chances of Winning: Politicians and Lobbyists Against The Uptick Rule
  • Illegal Front-running and Naked Shorting: Who Needs to be Penalised?
  • Getting Noticed: Getting the Government to Notice Save Canadian Mining
  • The Argument for Leaving Things Alone
  • Current Canadian Government: Pro Mining?

Company page: https://savecanadianmining.com/

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