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

To: Patchie who wrote (99027)	4/14/2007 4:14:51 PM
From: StockDung	Respond to of 122088

Canada Repudiates Baloney garyweiss.blogspot.com Saturday, April 14, 2007 Canada Repudiates Baloney Canadian market authorities issued a report docs.rs.ca on Friday, authored by Canada's Market Regulation Services, rs.ca describing the extent of Canada's "fails to deliver" problem -- the subject of hysteria by the crackpot Baloney Brigade anti-short-selling movement and its corporate sponsors. The conclusion: fails are a de minimus issue, and are only rarely a result of the "naked short-selling" bugaboo. Here's an article investmentexecutive.com on the study in a Canadian business newspaper. It has otherwise received no coverage of which I am aware, and was brought to my attention by a reader. The study found no evidence of excessive or prolonged “fails” on Canadian marketplaces. Only 0.27% of trades by study participants failed to settle. The predominant cause of failed trades was administrative delay or error accounting for almost 51% of “fails”; less than 6% of fails resulting from the sale of a security involved short sales; fails involving short sales are projected to account for only 0.07% of total short sales; the more “junior” the marketplace in terms of the type of security traded, the higher the incidence of failed trades; special settlement trades experienced a significantly higher rate of failure; and, approximately 88% of failed trades settled within five days after the “expected” settlement date, with 98% settling within 15 days after the “expected” settlement date. The shame is that Canadian officials were forced to divert time from pursuit of real stock fraud in chasing down this non-issue. It's even more unfortunate that the U.S. Securities and Exchange Commission continues to waste valuable resources in pursuit of this mirage. The current SEC chairman and commissioners are even more craven on this issue than their predecessors. This report has been met with stunned silence from the Baloney Brigade's wack-a-doo websites and the blame-shifting corporate hacks who fund this fraudulent campaign. I am sure that they'll be cranking out the usual conspiracy theories, spin, lies, distortions, and personal attacks on the study's authors -- all to perpetuate this flagrant waste of regulatory resources. © 2007 Gary Weiss. All rights reserved. ----------- Wall Street Versus America was published by Penguin USA on April 6. Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com. Labels: Canada, naked short-selling posted by Gary Weiss @ 11:54 AM Comment (0) \| Trackback (0) links to this post

To: Patchie who wrote (99027)	4/14/2007 4:37:48 PM
From: StockDung	Respond to of 122088

No evidence of excessive failed trades on Canadian marketplaces: study RS considering several recommendations regarding short sale and failed trade regulation in Canada Friday, April 13, 2007 By James Langton Market Regulation Services Inc. has published a statistical survey of failed trades. The study found that such trades are not a big problem in the Canadian market. The purpose of the study was to provide empirical data on the prevalence of failed trades, including the role of short sales in the occurrence of failed trades. It notes that RS staff are participating in an informal working group comprised of staff from the Investment Dealers Association, the Canadian Depositary for Securities Limited and the Canadian Securities Administrators that is currently examining issues relating to failed trades and short sales, including the role that short sales play in the occurrence of failed trades. “Recent changes to the short selling regime in the United States, have prompted discussion amongst various Canadian market participants as to whether importing a U.S.-style approach to regulating short sales and failed trades would be appropriate for the Canadian equities market,” it notes. The study found no evidence of excessive or prolonged “fails” on Canadian marketplaces. Only 0.27% of trades by study participants failed to settle. The predominant cause of failed trades was administrative delay or error accounting for almost 51% of “fails”; less than 6% of fails resulting from the sale of a security involved short sales; fails involving short sales are projected to account for only 0.07% of total short sales; the more “junior” the marketplace in terms of the type of security traded, the higher the incidence of failed trades; special settlement trades experienced a significantly higher rate of failure; and, approximately 88% of failed trades settled within five days after the “expected” settlement date, with 98% settling within 15 days after the “expected” settlement date. RS says it is considering several recommendations regarding short sale and failed trade regulation in Canada. These recommendations include analyzing possible amendments to the existing trading rules. “The concept of short sale regulation and failed trade regulation are distinct and measures adopted to address failed trades should be broad enough to encourage timely settlement of trades in all circumstances and not just trades involving short sales,” it says. RS says that any proposed amendments to the rules should be part of a coordinated and comprehensive response by the self-regulatory organizations and securities regulatory authorities to the issues of short sales and failed trades.

To: Patchie who wrote (99027)	4/14/2007 4:41:37 PM
From: StockDung	Respond to of 122088

Market Policy Notice 2007-003 – General – Results of the Statistical Study of Failed Trades on Canadian Marketplaces 2 RESULTS OF THE STATISTICAL STUDY OF FAILED TRADES ON CANADIAN MARKETPLACES docs.rs.ca Summary On July 14, 2006, Market Regulation Services Inc. (“RS”) initiated a statistical study of failed trades on Canadian marketplaces (the “Statistical Study”) with the publication of Market Policy Notice 2006-002 – General – Statistical Study of Failed Trades on Canadian Marketplaces. The purpose of the Statistical Study was to provide empirical data on the prevalence of failed trades, including the role of short sales in the occurrence of failed trades. This Market Policy Notice provides a summary of some of the key findings of the Statistical Study. The report of the statistical study is available through the RS website at www.rs.ca under the heading “Market Policy”. RS would like to thank all the individuals and firms who participated in the Statistical Study. Their effort and co-operation is greatly appreciated and has directly contributed to a better understanding of the relationship between short sales and failed trades on Canadian marketplaces. Background RS staff are participating in an informal working group comprised of staff from the Investment Dealers Association, the Canadian Depositary for Securities Limited and the Canadian Securities Administrators (the “Working Group”) that is currently examining issues relating to failed trades and short sales, including the role that short sales play in the occurrence of failed trades. Recent changes to the short selling regime in the United States, namely the adoption of Regulation SHO of the Securities Exchange Act of 1934, have prompted discussion amongst various Canadian market participants as to whether importing a U.S.-style approach to regulating short sales and failed trades would be appropriate for the Canadian equities market. In order to facilitate a more fulsome analysis of the appropriate regulatory response to failed trades on Canadian marketplace, including the relationship between short sales and failed trades, RS conducted the Statistical Study to compile empirical evidence on the nature, scope and causes of failed trades in the Canadian equities market. Study Participants RS staff chose 25 Participants to participate as subjects in the Statistical Study (“Study Participants”)1. Based on monthly metrics collected by RS, trading by the Study Participants in 1 Study Participants include the six Participants owned by the major Canadian chartered banks as well as a sample of non-bankowned dealers selected to represent Participants of varying sizes, types of business and varied geographic head office locations. Market Policy Notice 2007-003 – General – Results of the Statistical Study of Failed Trades on Canadian Marketplaces 3 August 2006 (the Statistical Study involved five business days between August 4, 2006 and August 11, 2006) represented a substantial majority of trading activity on those Canadian marketplaces trading listed or quoted securities that permit dealers to have access to their trading systems. Methodology Each of the Study Participants was randomly assigned one of five business days between August 4, 2006 and August 11, 2006 (the “Study Settlement Dates”) for which they were asked to provide information. Each of the Study Participants was asked to provide to RS the following information: • a list of all trades executed by the Study Participant on a marketplace monitored by RS that were expected to settle on the Study Settlement Date but failed to do so; • a list identifying which of the Study Failed Trades had been executed as “regular” settlement trades and which had been executed as special terms trades with settlement terms other than T+3; and • a detailed analysis of a random sample of 5% of the Study Failed Trades (not less than 25 failed trades or the number of failed trades) including for each sampled Study Failed Trade: o the reason for the failure to settle the trade, and o details of any action taken to “close out” the position including the date of the final settlement and particulars of any “buy-ins” issued. Key Findings of the Statistical Study The Statistical Study found no evidence of excessive or prolonged “fails” on Canadian marketplaces. In particular, failed trades by Study Participants were found to be a rare occurrence, with only 0.27% of trades by Study Participants failing to settle. Some of the other key findings of the Statistical Study include: • the predominant cause of failed trades as cited by Study Participants was administrative delay or error (i.e. inadvertent delays related to obtaining physical securities, custodian lack of instructions or discrepancies related to price/quantity of securities), which accounted for almost 51% of “fails”; • less than 6% of fails resulting from the sale of a security involved short sales; • fails involving short sales are projected to account for only 0.07% of total short sales by Study Participants; • failed trades as a percentage of total trades by bank-owned Participants and non-bankowned Participants were relatively comparable; Market Policy Notice 2007-003 – General – Results of the Statistical Study of Failed Trades on Canadian Marketplaces 4 • in relation to total trades by account type, failed trades were distributed proportionately across retail client account, institutional accounts (including Direct Market Access accounts) and “pro” and inventory accounts in accordance with overall trading activity; • the more “junior” the marketplace in terms of the type of security traded, the higher the incidence of failed trades; • special settlement trades experienced a significantly higher rate of failure (6.15% of trades compared to 0.26% for regular settlement trades); and • approximately 88% of failed trades settled within 5 days after the “expected” settlement date, with 98% settling within 15 days after the “expected” settlement date. Next Steps The results of the Statistical Study supports the conclusion that failed trades, and failed trades resulting from short sales, are not a widespread phenomenon on Canadian marketplaces. In light of the results of the Statistical Study, RS is considering several recommendations regarding short sale and failed trade regulation in Canada. These recommendations include analyzing possible amendments to the existing provisions of the Universal Market Integrity Rules (“UMIR”) which might include the: • elimination or amendment of the requirements under Rule 10.10 of UMIR for Participants to file short position reports (to be replaced with summary periodic information on short sales conducted on marketplaces); • introduction of a “failed trade report” (if an account fails to deliver securities sold by the account within a specified period following the settlement date of the trade); • introduction of provisions for a regulation services provider to approve post-trade cancellations and variations; • introduction of a “highly-liquid security” exemption from the price restrictions on short sales under Rule 3.1 of UMIR (and provision to further expand the category of exemptions which would facilitate co-ordination with the requirements in the United States if proposed amendments to eliminate price restrictions on short sales are pursued under Regulation SHO); and • introduction of provisions for the cancellation of a failed trade if “buy-in” procedures are not initiated within a specified period of time. The concept of short sale regulation and failed trade regulation are distinct and measures adopted to address failed trades should be broad enough to encourage timely settlement of trades in all circumstances and not just trades involving short sales. RS believes that amendments to UMIR such as those set out above would facilitate the timely settlement of trades in all circumstances, including trades involving short sales, without imposing an administrative burden on Participants or marketplaces. RS will be reviewing the proposed amendments to UMIR with the Working Group. The Working Group is monitoring developments in the U.S., including the Pilot Project on the efficacy of price Market Policy Notice 2007-003 – General – Results of the Statistical Study of Failed Trades on Canadian Marketplaces 5 restrictions on short sales and proposals by the Securities and Exchange Commission to change Regulation SHO. RS intends that any proposed amendments to UMIR be part of a coordinated and comprehensive response by the self-regulatory organizations and securities regulatory authorities to the issues of short sales and failed trades. Questions / Further Information For further information or questions concerning this notice contact: Felix Mazer, Counsel, Market Policy and General Counsel’s Office, Market Regulation Services Inc., Suite 900, 145 King Street West, Toronto, Ontario. M5H 1J8 Telephone: 416.646.7280 Fax: 416.646.7265 e-mail: felix.mazer@rs.ca ROSEMARY CHAN, VICE PRESIDENT, MARKET POLICY AND GENERAL COUNSEL