The TSE - Despite U.S. events, exchange opens on time, shuts down hour later
By ANGELA BARNES, The Globe and Mail
Wednesday, September 12, 2001
Despite the horrific events in New York Tuesday morning, the Toronto Stock Exchange opened on time at 9:30 a.m., but then closed just over an hour later. But by that time, the TSE 300-stock composite index had plummeted more than 4 per cent to its lowest level since late October, 1999, in very erratic, volatile and heavy trading.
It remains to be seen whether the exchange will reopen Wednesday. TSE management were to meet this morning at 6:30 a.m. to decide, according to exchange spokesman Steve Kee. He told the Dow Jones news service that officials will factor into their decision how overseas markets perform overnight, whether they were orderly, how U.S. stocks fare and when U.S. markets reopen, among other things. Late Tuesday afternoon, the New York Stock Exchange announced that U.S. financial markets would remain closed Wednesday. The NYSE statement said that after further consultation with the U.S. Securities and Exchange Commission, it will be announced Wednesday when the U.S. stock markets will reopen.
As of 6 p.m. Tuesday, the TSE meeting this morning was still on, another exchange official indicated. In other fallout from Tuesday's catastrophe, the Investment Funds Institute of Canada, the body representing mutual fund companies, said that all trading in funds has been suspended until further notice. "We are continuing to monitor the situation and trading will resume at the earliest possible convenience," said Tom Hockin, IFIC president. The Canadian Securities Administrators, which represents the 13 provincial and territorial securities commissions, said it fully supports the decision by IFIC to stop trading in mutual funds, the move by the Investment Dealers Association of Canada to close the domestic bond and money markets and the decision by the Canadian stock exchanges to stop trading.
The CSA said it is monitoring the situation, but that "it is expected the disruption in markets will be temporary and that trading will resume as soon as practicable." Tuesday, even though the first details of the attacks on the World Trade Center were already known, the TSE composite opened down just 28.5 points. But as the terrible story unfolded, investors scrambled to sell, dropping the TSE 300-stock composite 295.9 points to 7,048.8 by the time trading was halted at 10:40 a.m. Investors sold bank stocks, conglomerates, consumer products, transportation issues, utilities and pipelines. Conglomerates took the biggest hit, down 9.41 per cent with heavyweight, Canadian Pacific Ltd. off $5.84 at $53. Only gold and oil stocks escaped the wave of selling. The oil and gas sector climbed 2.03 per cent, as the price of crude oil rose. And the gold and precious minerals group surged 7 per cent as the price of bullion soared $14.40 (U.S.) to $286 an ounce. The greatly shortened session was marked by a withdrawal of a lot of buyers from the market, said Fred Ketchen, the head of equity trading for Scotia Capital in Toronto. Many buy orders in the trading system were cancelled, he said.
The decision to go ahead and open the exchange has raised some eyebrows on Bay Street. TSE president Barbara Stymiest said at the time the TSE began trading, most of the other major markets in the world were open. "We were monitoring the situation constantly throughout the piece and it made sense to us at the time," she said. "We were in constant contact with all of the broker-dealers who were obviously in contact with their institutional and retail investors." But Mr. Ketchen said the New York Stock Exchange had indicated before the normal 9:30 a.m. opening of the markets that it wouldn't be operating. Mr. Ketchen described the move to open the TSE for trading as wrong and unfortunate. "They probably had their reasons, but I just think under these circumstances those reasons were probably invalid." "I wish they hadn't [opened]; I think they probably wish they hadn't," he said. As for the subsequent decision to cease operations for the day, "I wish they hadn't been so long in doing it," he said. Ms. Stymiest said the market was closed when it became apparent that the situation had caused "difficulties within our own markets here in Canada." When asked what she meant, she replied, "You have seen that downtown Toronto is empty; people wanted to go home."