TRADING HALTS
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Sunday July 25, 11:57 am Eastern Time
Bay Street Beat: Rain falls on
Toronto's "halt" parade
By Scott Anderson
TORONTO, July 25 (Reuters) - Members of the Toronto Stock
Exchange, Canada's biggest, are urging the exchange to get its
regulatory act together following a recent flurry of apparently
gratuitous halt-trading orders.
A handful of trading halts in the past couple of weeks, including an erroneous and embarrassing one
on the stock of a major blue-chip company on Tuesday, has prompted charges that TSE officials are
getting trigger-happy in order to counter past criticism of lax rexulation.
Critics of the TSE pay homage to the need for timely dissemination of corporate information, but say
they want to see discretion and common sense used when ordering trading halts.
''They are a part of life and a part of an efficient market, but I get frustrated when I see a halt where
there's no reason for it,'' said Fred Ketchen, director of equity trading at brokerage ScotiaMcLeod
in Toronto.
TSE chairman Dan Sullivan told Reuters he does not see a problem with the market's trading halts
policy nor he does he expect any rule changes in the near future.
However, for many traders and investors the problem was put on the front burner last week when
trading was stopped for 45 minutes in Toronto and New York after the TSE ordered a halt on
Canadian National Railway Co. (Toronto:CNR.TO - news) stock after receiving a draft copy of a
press release saying the company planned to split the stock. The release was not to be issued to the
public until after the market closed.
The stock was halted because a TSE official believed the release had already been issued.
''What was very, very difficult to understand is that decision was taken by that individual within the
Toronto Stock Exchange without ever checking anything with us first,'' CN President Paul Tellier
said later. ''As a result, again without talking to us, he communicated with counterparts in New
York, where the trading was also halted.''
This followed halts in the last couple of weeks of Canadian lender Newcourt Credit Group Inc.
(Toronto:NCT.TO - news) and troubled department store chain T. Eaton Co. (Toronto:ETN.TO -
news).
In both cases, the stocks were halted in response to speculation published in the media and the
companies were forced to issue denials.
On the other hand, a few days earlier, the TSE did nothing when shares of Canada's No. 1 cable
TV company, Rogers Communications Inc. (Toronto:RCIb.TO - news), rose almost 10 percent
amid rampant rumors that Microsoft Corp. (Nasdaq:MSFT - news) might buy a stake.
A few days later an interactive television deal was unveiled under which Microsoft would invest
about $400 million for a holding in Rogers.
''Rumors are carried in the press and it's part of the press's job,'' said Ketchen. ''While rumors are
part of the market, you have to treat them with a certain amount of respect.''
''At the same time you should go to the fountain of all knowledge -- the company -- who after all
should be aware of the responsibilities to the shareholders and the public in order to comply with the
requirements of continuous disclosure.''
Under TSE guidelines, trading can be halted in a stock if there is a material change during normal
trading hours that requires immediate timely disclosure. The exchange makes the ultimate decision as
to whether the stock should be halted.
''It's a question of a constant judgment process and occasionally the judgments will be
inappropriate. That's part of the business of being a human being in the brokerage business,'' said
Paul Bates, president at Charles Schwab Canada.
In a phone interview with Reuters, TSE chairman Sullivan said the exchange has not been trying to
get tougher on trading halt regulation in the wake of constant criticism.
''The corporations are pretty good at making the disclosure at the appropriate time and the TSE is
certainly the policeman that, from time to time, will question something and talk with the company
and jointly determine whether or not disclosure should be made or not,'' he said.
''What the TSE has done is that we've been very consistent. There's been no change in policy and
frankly there's been no discussion at the board because I think we feel the TSE's performance been
just fine in the past,'' Sullivan said.
''I think we're being very rigorous and what we've seen in the past week is just a matter of
coincidence.''
($1=$1.51 Canadian)
More Quotes
and News:
Canadian National Railway Co (Toronto:CNR.TO - news)
Microsoft Corp (Nasdaq:MSFT - news)
Newcourt Credit Group Inc (Toronto:NCT.TO - news)
Rogers Communications Inc (Toronto:RCIb.TO - news)
The T. Eaton Co Ltd (Toronto:ETN.TO - news)
Related News Categories: Canadian Market News, US Market News
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