For Thursday, August 24, 2000 Trading glitches cost investors But critics pan survey By GARRY MARR

The Financial Post Almost a quarter of Canadians feel that computer glitches at discount brokers are costing them money, according to a new study.

The study found 44% of discount customers surveyed had to deal with some delay. Of that number, 56% said the delay cost them money because it did not allow them to trade when they wanted.

"In a slow-moving market a computer system delay is annoying. But in a fast-moving market when prices are changing, a system delay costs investors money and that's when people become annoyed," said Douglas Hart, president of Hart & Associates Management Consultants Ltd., which conducted the survey.

But critics of the study were quick to point out the survey was completed in March at a time when trading was peaking, making the results no longer valid. Mr. Hart said the numbers concerning computer glitches were released for the first time yesterday.

"It was done in March at the height of the problem," said Mike Bastian, president of Royal Bank's Action Direct.

"If you were to do the same study today, ... the numbers would be far better," Mr. Bastian said.

For the survey, 1,000 discount and full-service broker customers were interviewed. The margin of error was 2.4%, 19 times out of 20. Respondents were asked to rate on a scale of one to 10 how serious they thought computer trading problems were, with 10 extremely serious and one not serious at all. The number was 7.4.

"This number indicates that there is a fairly high degree of investor concern over the reliability of trading systems," said Mr. Hart.

The survey came out a day after the Toronto Stock Exchange was shut for 55 minutes because of human error affecting its computers. The Canadian Venture Exchange shut for more than half of its Tuesday session after a power failure .

"If you are day trader, it may cost you money. But how does anyone know the stock five minutes from now will be higher or lower? No one has that crystal ball," said John Bart, president of the Canadian Shareowners Association. "For the long-term investor, it should make no difference." He said some people may actually have saved money because they were prevented from making a trade.

"As a percentage of trades in last year, the number affected by computer delays is infinitesimal. There are hundred of millions of trades in the course of a year. That's not to say the delays are not important. It's like the post office. If half a per cent of mail is not delivered [properly] it's no big deal, unless you are that half per cent."

http://www.canoe.ca/FP/aug24_glitches.html

-- Martin Thompson (mthom1927@aol.com), August 24, 2000