(February 22) – “Trading on the Toronto Stock Exchange ground to an unanticipated halt yesterday two minutes before the scheduled 4 p.m. close. Technical gremlins were to blame,” writes Andrew Willis in this morning’s Globe and Mail.
“Now, two minutes isn’t much in most of our lives. We’ll line up that long for a decent cup of coffee this morning. But for many investors, including international participants in the Canadian market, the opening and closing prices on an exchange make up the most important information of the day. All sorts of trades get done at what’s known as an “end of session” or “last-trade” price.
“Yesterday, those transactions didn’t get done. Brokerage firms had no prior warning that the market would close early. As a result, the TSE’s credibility took another hit in the eyes of sophisticated investors. The computer problem responsible for the early closing resides in the TSE’s order management system, and last night the computer experts were scrambling to patch things up.
“In cosmic terms, yesterday’s events are more of an annoyance than a calamity. However, there’s a larger pattern of technical problems at the country’s premier stock exchange.
Early last Friday, with trading flows ripping along at near-record levels, the TSE confessed that some of its brokerage firm members faced delays in confirming their trades had gone through, and at what price the transactions were made. It’s fair to say this is fairly important information to most investors.
“The technical snafu responsible for this screw-up dwells in the feed that links the exchange to the dealers, and the TSE put out a news release stating that ‘resolving this issue is a priority for the exchange.’ The TSE has endured well-documented systems problems, and is currently moving to what’s billed as a state-of-the-art trading platform. The slow trading confirmations last week and yesterday’s premature halt to business are signs that the transformation of the TSE’s systems isn’t moving smoothly. That’s a real cause for concern.
In the not-too-distant future, the TSE is going to face its first real competitive threat. Alternative trading systems are going to be allowed by the Ontario Securities Commission and other market regulators. Some of those alternative systems, including Instinet Canada, are owned by foreign companies.