Amid ongoing regulatory scrutiny in the U.S. of payment for order flow, the Investment Industry Regulatory Organization of Canada (IIROC) on Wednesday issued guidance on the manipulative and deceptive activity of naked shorting.
While the practice is illegal in both the U.S. and Canada, naked shorting continued to take place in both countries through loopholes and trading discrepancies. Naked shorting is when shares that don’t exist are lent out by an agent or trustee for a short position.
