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A P R I L / M A Y 2 0 1 6 www.resourceworld.com 17 broker to profile his/her client and judge the suitability of each investment for that client," explains Kaiser. "What this amounts to is a war on single company security ownership in favour of structural products where risk is diversified across a large number of securities. These can be mutual funds, index fund and ETFs. The key is to avoid the catastrophic risk associ- ated with each corporation." Kaiser notes that the financial establish- ment treats resource juniors as not suitable for clients over 55, although these are the people that actually understand the junior resource sector best. Despite the risks and challenges beyond company control – commodity prices, hos- tile environments, civil unrest – it is these very junior explorers that provide the spark that has built Canada's mining indus- try and has brought untold employment and generated wealth for under-developed countries. It is like the sports industry in that only a few athletes are successful in making it to the big time. Thousands of young men would love to play pro; how- ever, only a small number make it to the big leagues; yet the big leagues generate huge revenues. The US Small Business Administration has stated that half of all new business establishments survive five years or less and about one-third survive 10 years or longer. The success rate is even lower for venture-backed start-ups with three out of four failing to return investors' money. Obviously, there is risk in starting any kind of business. "The suitability bludgeon of the cli- ent relationship model is destroying the smaller brokerage firms that specialized in venture capital," explains Kaiser, "which is wiping out the financial sector as a gate- way for capital. Then bigger brokerage firms will still be able to finance juniors, but only through their institutional clients for whom juniors need to have a certain minimum market capitalization and an advanced project." Kaiser says one might speculate that since we are in a multi-year downturn in junior miners, perhaps the brokerage industry will rediscover the juniors when the bull market returns. "But that argu- ment overlooks the bigger trend which is the emergence of robo-advisory accounts where a computer algorithm manages a client portfolio based on the client profile and a pool of pre-approved and risk clas- sified investment products, many of them created by the financial establishment which collects a 'royalty' or fee on those products." The way buy and sell orders are han- dled by the Venture Exchange is also a concern for Kaiser. "By routing an order through a thicket of competing platforms based on obscure and arbitrary process- ing costs, the brokerage firm cannot serve the 'first come-first serve' principle," says Kaiser. "This undermines the market as a price discovery mechanism." Yet another concern for Kaiser is the abandonment of the uptick rule for short- selling. This rule dictated that if you wanted to sell stock short, it had to be at a price higher than the last different price. "A short seller who leans into the order book, selling stock he does not own, trig- gers similar selling behaviors by 'longs' who see the value of their position vanish- ing," says Kaiser. "When somebody can sell stock they do not own on an unlimited basis at whatever bid proffers itself, the structure becomes asymmetrical, thereby creating a downward bias." And there is more. "In practical terms, the resource juniors are burdened by a monstrous load of regulatory paperwork that seems exclusively designed to prevent litigation on the basis of failure to follow a endless maze of disclosure rules that do little to edify the public about what has happened and what might still happen," says Kaiser. The TSX Venture Exchange recognizes that its exchange has problems. That's why on December 15, 2015, the TMX Group released a white paper that detailed three Lesedi La Rona 1,100+ carat Type IIa diamond WHERE BIGGER IS TM lucaradiamond.com TSX, BSE, OMX: LUC Historic Botswana Diamond Made and mined in Beautiful Botswana