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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (90077)	1/26/2005 1:56:59 PM
From: kknightmcc	Read Replies (1) \| Respond to of 122087

Naked shorting is not fully legal in Canada, read this: Any broker-dealer using the United States jurisdictional means to effect short sales in securities traded in the United States would be subject to Regulation SHO, regardless of whether the broker-dealer is registered with the Commission or relying on an exemption from registration. In addition, Commission staff members have engaged in discussions with staff of The Investment Dealers Association of Canada ("IDA"), who have confirmed that the IDA intends to issue an interpretation that failure of IDA members to comply with the requirements of Regulation SHO may be considered a breach of IDA rules. This would be consistent with an interpretation that the IDA recently issued regarding an amendment to NASD Rule 3370, noting that IDA members would be required to make an affirmative determination that the member will receive delivery of the security from its customer or that the member can borrow the security on behalf of the customer by settlement date. It was stated that failure of IDA members to make such an affirmative determination may be considered a breach of IDA rules. Investment Dealers Association of Canada Member Regulation Notice MR0282 (April 13, 2004). The NASD amendment had extended the affirmative determination requirements to short sale orders that NASD members receive from non-member broker-dealers. Securities Exchange Act Release No. 48788 (November 14, 2003), 68 FR 65978 (November 24, 2003); NASD Notice to Members 04-03 (January, 2004); NASD Notice to Members 04-21. Investment Dealers Association of Canada Member Regulation Notice MR0282 April 13, 2004 Positive Affirmation Rule This notice is being issued to inform IDA Member firms (Members) of the amendments recently made to NASD Rule 3370 - Prompt Receipt and Delivery of Securities, effective April 1, 2004. The amendments are specific to the “affirmative determination” rule that applies to short sales as set out in Rules 3370(b)(2) and 3370(b)(4). The amendments expand the scope of the affirmative determination requirement to include orders received from non-NASD member broker/dealers (including Members) where the orders do not relate to bona fide market making transactions, or do not result in bona fide fully hedged or arbitraged positions. For further details refer to the NASD Notice to Members at the following URL link: nasdr.com The effect of this rule change on Members is that no Member or person associated with a Member shall effect a short sale order for any Member or customer account (subject to permitted market marker and hedge position exceptions) in any security traded on a NASD regulated market unless the Member or person associated with the Member makes an affirmative determination that the Member will receive delivery of the security from the customer or that the Member can borrow the security on behalf of the customer by settlement date. It is our expectation that Members trading directly or indirectly on NASD regulated markets will adjust their trading practices to comply with this rule. Failure by a Member to comply with this rule may be considered to be engaging in a “conduct or practice that is unbecoming or detrimental to the public interest” and therefore a breach of IDA By-law 29.1. ida.ca