PODCAST: Miners fight back against the algos
Low liquidity mining stocks are falling prey to short selling from high frequency trading and algorithms, which is harming overall investor interest in the market, said Terry Lynch, CEO of Chilean Metals.
Lynch spoke to Kitco earlier this month. He founded the group Save Canadian Mining to advocate for rules to stop the practise. He has been joined by other mining luminaries, such as heavyweight mining investor Eric Sprott.
The group said the problem arose with algos and short selling after a deregulation push earlier this decade.
"In 2012 IIROC and CSA removed a trading rule known as the 'tick test', which restricted short selling to neutral or sales to positive price changes at the time of the sale," writes the group Save Canadian Mining.
"Since removal of the tick test, the Canadian markets have evolved, and 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. We call on CSA and IIROC to evaluate re-instituting the tick test."
Listen to our conversation with Terry Lynch.