Globe & Mail ( Canada )
Foul-up delays TD unit's TSE debut
Printer error holds up Waterhouse trading
SUSANNE CRAIG
Financial Services Reporter; With files from reporter Andrew Willis.
Thursday, June 24, 1999
The Toronto Stock Exchange almost missed out on this year's biggest stock market debut yesterday after a printing foul-up sent would-be investors to New York to trade TD Waterhouse Group Inc.
The stock climbed $1.62 (U.S.) or $611-million to close at $25.62 yesterday on the New York Stock Exchange. It was the second most actively traded stock in the United States with 27.5 million shares changing hands.
Shares of the company began trading at the opening bell yesterday in New York, almost four hours before the first trade even registered in Toronto.
The TSE was cut out of the action for the better part of the day because the printing company TD Waterhouse parent Toronto-Dominion Bank hired to prepare the prospectus for the Ontario Securities Commission handed it to the regulator in a format the OSC could not read.
The printing company, a TD Bank source said, had to reformat the document and then resubmit it to the OSC, causing the frustrating delay.
"Even after 12 p.m. we still hadn't received the final papers," said Ontario Securities Commission spokesman Frank Switzer.
"We were ready to go and I think they thought they were going to have their stuff ready but you would really have to call them."
In a statement issued late yesterday, the OSC said the TD Waterhouse prospectus was given a status of "ready for final receipt" Tuesday but the final receipt could not be issued until the supporting documents were filed with them.
Those documents did not arrive at the OSC until 12:16 p.m. yesterday and the OSC says it turned around the final receipt in 51 minutes.
TD Bank spokeswoman Jessica Mossman wouldn't comment on whether there was a problem with the printer, saying only that the bank was dealing with two different regulatory environments.
"It was simply a matter of difference in mechanics, there were just more layers to go through in Canada and the OSC obviously turned it around as fast as they could," she said. "There may well have been some glitches but we worked as hard as we could to get things done."
In the end only 1.46 million TD Waterhouse shares were traded on the Toronto Stock Exchange, just 6 per cent of the combined volume of the two exchanges.
TSE spokesman Steve Kee said ideally a stock would begin trading at the same time on each exchange.
"You are dealing with two different regulatory environments and we can't trade a stock until we are told we have approval to trade a stock," Mr. Kee said. "Ideally you would like to have them open at the same time."
Yesterday's initial public offering was the result of a decision taken earlier this year by TD Bank to sell part of its global discount brokerage empire to the public, including Canada's Green Line Investor Services and New York-based Waterhouse Investor Services. The bank bought Waterhouse in 1996 for $726-million (Canadian).
TD Bank now owns 87.6 per cent of TD Waterhouse after selling 12.4 per cent to the public. TD Waterhouse is the third-largest discount broker and the second-largest on-line trader in the United States.
Rich Repetto, an electronic commerce analyst with Lehman Brothers in New York, said he was pleased with the company's stock market debut.
"It has held up very well today, especially with the brokerage stocks being down recently," he said.
"I think there was concern because the on-line brokerage stocks have been so volatile lately."
Indeed, the entire sector has been all over the map lately. Heavyweight Charles Schwab Corp. posted a gain of $3.37 (U.S.) yesterday to close at $97.12 on the New York Stock Exchange.
During the past week, though, it has fallen as low as $82.
The softness in the sector sent TD Bank back to the drawing board to reprice its issue earlier this month. Initially, it was hoping it could raise about $1-billion by issuing just 32 million shares. However, two weeks ago it set the issue range at between $20 to $24. |
