Adding to Stephen Masson’s commentary, “How to revive exploration in Manitoba,” (T.N.M., Dec. 28, 2015–Jan. 3, 2016), I believe the loss of the boutique broker dealers that once supported our junior market has been an unintended consequence of flash trading. How many retail brokers have closed? How many closed last week? How many more are stressed?
If any of the Canadian stock exchanges would set a market cap cut-off, I believe delistings would slow, and retail trading and liquidity would return.
A realistic market cap cut-off would do two things. First, it would protect the retail market from the liquidity-seeking algorithm traders during a flash crash, or even from the liquidity created by a news release. Market-cap protection would allow the value-added principle of the news release to come back into play. Successful explorers could trade up to a point where institutions would come back into worthy projects and companies. Second, a market cap cut-off would encourage management to keep discipline to the float of a junior and help the share price appreciate without danger from unintended raids, and assist in financing worthy projects without excess dilution.
I think a $200- to $400-million market cap cut-off would help Canada regrow a vital part of the resource sector again.
Arthur Esian
Via the Internet
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