@probability25 - This is why companies leave the TSX Venture A problem on the TSX venture.
I know the investors with warrant know this well.
This is why PHM needs to get off the exchange.
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Discontinuing Price Restrictions of Short Sell Orders (Tick Test)
Historically, you could only sell a stock short if the price is higher than the last different price; simply put, you can only short a stock as it was moving up.
However, this rule only works when there is a strict sequence of orders in the order execution book; when bid/ask orders are placed in line on a first-come first-serve basis. But with parallel trading systems, a definitive sequence of different prices can’t be established at any exact given point in time because one order book might show a down-tick, while the other an uptick.
As a result, it would be extremely difficult to enforce the uptick rule.
By allowing competing trading platforms and encouraging HFT (which was believed to create more liquidity), regulators had no choice but to remove the tick test rule. In the October 4th announcement, the rule was eliminated:
“TSX, TSX Venture Exchange (TSXV) and TMX Select will no longer constrain short sell orders to the last sale price. Short sell orders entered will be permitted to trade down to their limit price establishing a last sale price on a down tick. Short Crosses will no longer be constrained by the last sale price.”
This means we can now short a stock anytime we want. That’s great news for shorters, but for companies trying to raise money at higher prices to hire more staff or move their projects forward, this rule change can cripple them – especially under the liquidity constraints of the Canadian market.
It doesn’t take a lot of money to control a stock via short selling on the TSX Venture. As a matter of fact, institutions often hammer stocks via short selling and back up their shorts with warrants they obtained in a previous financing.They often force the price of a stock down to finance the same companies they’re shorting to get a better financing price; or to force a company into a financing arrangement.
Short selling isn’t the only thing destroying the TSX Venture. Another rule change is hurting the market and its one you would never expect.