Reddit revolution leaves market regulators with limited playbook — but Canadian watchdogs may have an edge
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Nevertheless, tries to close down discount rate brokerages or online forums that belong to the current market phenomenon are filled due to issues over limiting trading in currently unpredictable markets and cutting liberty of expression.
“Any country that embraces free speech cannot have its securities regulator restricting the right of expression,” stated Jacob Frenkel, a previous senior enforcement legal representative at the U.S. Securities and Exchange Commission now in personal practice in Washington, D.C.
“Nevertheless,” he stated, “the use of social media for fraudulent purposes, that is to manipulate stocks, or to circumvent strict disclosure and investor communications rules, should be enforced strictly.”
Staley, the Bennett Jones legal representative, prompted regulators to be mindful, especially due to the fact that the phenomenon might end up being “a herd effect and not manipulation or misrepresentation by people seeking to make a buck.”
He alerted that “ad hoc solutions may cause more harm than they solve” in regards to systemic threat.
“This (phenomenon) is in considerable measure a reaction to large short positions, where people can make money squeezing the shorts if enough people jump in,” Staley stated. “There’s no easy solution, especially as shorting serves a valuable commercial purpose.”
I am most concerned about individuals utilizing alternatives and margin when they don’t comprehend it
Maureen Jensen, previous chair of the Ontario Securities Commission
Jensen stated her view is that neither financiers nor the trading platforms seem doing anything unlawful or incorrect.
“But they are taking large risks, some of (them) don’t understand that they are,” the previous regulator stated.
Jobber Wiki author Frank Long contributed to this report.