System crash halts TSX, Venture exchange

STEVE LADURANTAYE

Globe and Mail Update

December 17, 2008 at 12:36 PM EST

Investors were handed something new to worry about Wednesday morning, as the Toronto Stock Exchange stopped trading in all issues after a computer crash.

“If this happened a year ago, everyone would just shrug their shoulders and wait for a fix,” said Sloan Levett, director of wealth management with Fuller Landau LLP in Toronto. “But with the tremendous amount of skepticism in the market, given everything that has happened in the last year, it will certainly make people feel uncomfortable.”

While offering no timeline on when stocks on the Toronto Stock Exchange and TSX Venture Exchange would start trading, the exchange said the markets will go into a “pre-open” mode once the technical glitches that have prevented trading Wednesday are resolved.

“We have halted all TSX and TSX Venture issues,” said Mark Jarrett, director of equity operations. “We will provide updates as they become available.”

A statement on the TSX website said that the exchange was experiencing a “service interruption” on the data feeds that provide real-time data for stocks on both exchanges, such as trade information, quotes, corporate actions and index information. The data produced by these feeds is also available on a time delay, and is often used on financial websites.

“Because the data feeds provide information to investors to guide their trading decisions, trading was halted to ensure market integrity,” said Carolyn Quick, director of corporate communications.

Regardless of what happened, Mr. Levett said it is essential the exchange deal with the problem with as much transparency as possible.

“People need to know that something like this can't happen again,” he said. “You can easily see this causing concern. We're living at a time when people are worried about having their money in chartered banks. Everyone is hypersensitive, and need to be comforted and reassured.”

Canadian stocks rose Tuesday on the strength of commodities and finance shares, which rallied after the U.S. Federal Reserve took its interest rate to zero. The S&P/TSX gained 3.1 per cent. While Toronto markets were closed, investors were still able to buy Canadian companies on U.S. exchanges, or through alternative trading systems such as Pure and Alpha.

On a typical day, Pure chief executive officer Ian Bandeen said the exchange would see 12 million shares traded on its system. Wednesday, 12.5 million shares had traded by noon.

“That's still a pittance compared to what the market should be doing as a whole,” he said, adding about 230 million shares a day can trade on a typical day on Canadian markets.

“I have a lot of empathy for the TSX, it's a delicate complicated system. Nobody benefits from this kind of thing. Yes, we'll have higher numbers than normally, but in the giant context of diminished volume it's just not worth it.”