(Italics mine)

Toronto Stock Exchange One of Many Facing Trading Snags, Delays

Toronto, March 11 (Bloomberg) -- When the Toronto Stock Exchange was forced to halt trading -- twice -- on Tuesday, many analysts and investors railed at the inadequacies of Canada's largest exchange.

Their troubles aren't nearly as exclusive as they think. Securities exchanges in the U.S., Australia, Switzerland, the U.K., Germany, Portugal, South Africa, Hungary, Italy and Greece have all reported trading glitches, halts, hiccups and delays over the past six months.

Unprecedented trading volume is the culprit. The number of shares changing hands daily on the TSE has more than doubled in the past five years to about 196 million shares, while the New York Stock Exchange, the world's largest, has seen volume triple amid a swelling appetite for technology-related stocks.

The TSE's problems ``are not unique,'' said Fred Ketchen, managing director of equities at Scotia McLeod Inc. in Toronto, who was formerly a TSE chairman. ``Many exchanges are suffering -- or enjoying -- substantially increased volumes.''

The TSE 300 Composite Index, the 148-year-old TSE's benchmark, has been a laggard in recent years compared with major indexes in Europe and the U.S. The index has finally met with success this year, boosted by soaring technology stocks such as Research In Motion Ltd. and Nortel Networks Corp.

In the rush to buy and sell the country's hottest stocks -- the TSE 300 is up 13 percent this year -- it's not surprising that traders and investors scream foul when they can't act on their decisions for even a fraction of the day. An average of 503,000 trades are made in a single minute on the TSE.

The breakdown earlier this week added to a litany of technical problems and regulatory complaints the exchange has faced in recent years as it struggles to maintain its position as the premier equity exchange in Canada and the market of choice for Canadian companies to list. The TSE is the world's 14th-largest exchange.

On Feb. 21, the TSE closed trading two minutes earlier than usual because of a problem with its trading system.

Southern Exposure

That problem came a day after the TSE said information on the status and confirmation of trades was delayed early in the day. The TSE attributed those delays to ``unprecedented volume at the market open.''

In the past five years, trading has been interrupted on the exchange at least eight times. In cases like Tuesday's, many traders simply go south to the U.S., where 19 of Canada's 20 biggest stocks are traded.

This week's troubles highlight the advantages of being listed on both sides of the border, Canadian executives said.

``It certainly makes the case for being dual-listed,'' said Jeff McMullen, chief financial officer of Jetform Corp., an Ottawa- based software company. ``Our shareholders need the liquidity and the certainty of knowing that there will be a market that's trading when they want to trade.''

Jetform, whose shares in Canada have more than doubled this year, is listed on the TSE and the Nasdaq. Still, McMullen said this week's problems ``aren't not enough to make us consider abandoning the TSE. Toronto is still the Canadian money center and a significant volume of trades in our stock is done in Toronto.''

Swiss Watch

Other exchanges haven't fared much better than the TSE in recent years. The Amsterdam stock exchange, which says it is the world's ninth-biggest, has had 15 shutdowns since the beginning of 1997.

The Swiss Exchange has had four trading interruptions in the past four years. Software problems caused Europe's fourth-largest exchange to close for a day and a half in November.

The London Stock Exchange hasn't faced trading delays since at least 1996, although technical problems caused trading on Connect, the electronic trading system of the London International Financial Futures and Options Exchange, to halt for about an hour earlier this month.

Friday, a computer problem halted the dissemination of prices for the Nasdaq Composite Index for 21 minutes, the second time in a month. Nasdaq has seen record trading this year, with the 10 most active days ever having occurred in 2000.

For the TSE, surging volume and stock prices come as the exchange transforms itself into a for-profit organization, and as it mulls plans to make an initial public offering in a year.

Existential Angst

With breakdowns like these, however, as well as the allure of soaring U.S. markets, some wonder whether the TSE should continue to exist at all.

``What's the real function of the TSE? That's something that I've questioned for quite a while,'' Reuben Brant, president of Brant Securities Ltd. and holder of the oldest member seat on the TSE, said in an interview Tuesday. ``The decreasing importance of the TSE is coming anyway, even if they don't have any problems.''

To combat the problems, the TSE is replacing its Computer Assisted Trading System, which has been processing trades since 1977, with a new trading platform that is expected to open by September. The move will enable its member firms to communicate prices, conduct and settle trades through one gateway, rather than the three systems they use now.

In the end, the TSE's very success this year is what has led it -- periodically -- to failure.

Mar/11/2000 12:57

Source: America Online News, no url available. Will TRY to find the article on Bloomberg. Help!

-- Lee Maloney (leemaloney@hotmail.com), March 11, 2000