Canadian exchanges to open
Thursday, September 13, 2001
By RICHARD BLACKWELL
Canada's equity markets will reopen this morning after a day when the brokerage community sat on its hands even though most companies' trading systems were capable of full operations.
Early Wednesday morning, the Toronto Stock Exchange announced it would close for the day to allow "our market participants to assess their damage," according to a statement from TSE president Barbara Stymiest.
The TSE opened Tuesday morning, not long after the terrorist attacks on the World Trade Centre in New York, but then shut down at about 10:40 a.m. (EST).
TSE spokesman Steve Kee said the decision was made to close Wednesday because many TSE members have offices in the United States, and there were still "communications, infrastructure and staffing concerns" at those companies.
The Canadian Venture Exchange was also closed Wednesday, but both the junior and senior markets are set to reopen this morning.
One source in the regulatory community said the TSE was overwhelmed with calls from individual investors supporting its decision to remain closed Wednesday.
Canadian firms contacted said they would have been capable of functioning, but most supported the decision to hold off on reopening the market.
Paul Bates, chief executive officer at broker Charles Schwab Canada, said Wednesday that he agreed with the TSE's decision to close down, even though his firm was able to process trades in a normal fashion.
"When we have extraordinary circumstances - and this is far and away the most extraordinary we've ever witnessed - there will be a large swell of activity driven either through a degree of fear or a degree of greed," Mr. Bates said.
In that atmosphere, the best way to handle the situation is through "an integrated and co-ordinated reopening process," he said.
Schwab used the down day Wednesday to review its investment recommendations for clients, and to contact customers who had long-term open orders in place and might have wanted to make changes.
The brokers also contacted clients who had borrowed on margin, if they were concentrated in specific sectors or securities, Mr. Bates said.
Mr. Bates said his firm's U.S. parent had about five people in a branch in the World Trade Centre, and all have been accounted for.
When the brokerage community was canvassed by the TSE about whether to open Wednesday, there were strong arguments on both sides of the issue, said one senior brokerage source with close ties to the TSE.
Some industry executives thought investors needed more time to assess the situation before trading, and also felt the markets should have a period of mourning.
Others felt the market's job is to provide liquidity, and if there's no technical reason to close, the exchanges should open. The feeling was "the best way to deal with terrorism is not to let it affect you," the executive said.
The Ontario Securities Commission, which regulates the TSE, said it supported the exchange's decision. "There was a feeling that under the circumstances, perhaps it's prudent to take a breath, look at the situation south of the border, and show some respect for what had happened," OSC spokesman Frank Switzer said.
While they couldn't execute trades, most brokerages appeared to have most of their staff back in place Wednesday after having sent them home on Tuesday.
TD Waterhouse Group Inc. spokeswoman Jessica Mossman said her firm had people in place to take orders from clients for future trades. "It's business as usual, except of course that they can't trade," she said.
Colleen Moorehead, president of discount brokerage E*Trade Canada, said the company was "fully staffed and open" Wednesday, and it was taking orders from clients for when the markets open.
While E*Trade Canada would have been ready for business if the TSE had opened Wednesday, "we all need to support our regulators and the people making these difficult decisions," Ms. Moorehead said.
The New York operation of E*Trade's U.S. parent - located in midtown Manhattan away from the World Trade Centre - was closed Wednesday, but will reopen Thursday, Ms. Moorehead said.
RBC Dominion Securities Inc.'s brokerage and investment banking operations are also "geared up and ready to go when the markets open" in both Canada and the United States, spokesman Paul Wilson said.