Do single‐stock circuit breakers provide a safety net for Canadian investors?

This study looks at the market impact of recent regulatory changes in Canada that provide for trading halts on individual stocks that experience large upside or downside movements. The focus is on all stocks traded on the Toronto Stock Exchange since the inception of the single‐stock circuit breaker rule (SSCB) in February 2012, to replace the short‐sale uptick rule. The results support pricing efficiency: material information that caused the circuit breaker is incorporated in stock prices on the day of the halt (neither overreaction nor underreaction), with no decline in market liquidity. Using trade‐by‐trade data constructed on five‐minute trading intervals, we refine the daily results, and show that shocks in realized volatility are focused in the 10‐minute trading interval surrounding the halts. While circuit breakers provide a limited safety net for investors when their stocks are subject to severe volatility, they do not allow for a quick turnaround for stocks experiencing severe price decline events.     

Environmental Stewardship and Technical Efficiency in Canadian Prairie Canola Production

This study examines beneficial management practice (BMP) adoption and technical efficiency for canola producers in the Canadian Prairie Provinces. A Just‐Pope stochastic frontier production function is estimated using data from a survey of canola producers. Yield is modeled as a function of nutrients and precipitation. A linear inefficiency function includes farm specific variables and a set of binary variables representing BMP adoption. BMP variables for nutrient management planning and precision farming are positively related to technical efficiency while results for the other BMP indicators are mixed. Model estimates appear to be significantly influenced by moisture problems that occurred through the Prairie region during the 2011 cropping year. The study results suggest that for Western Canadian canola producers, there is potential complementarity for some BMPs in terms of improving technical efficiency while simultaneously advancing environmental stewardship.