Financial Post 5.2.97: Brokers slap curbs on Bre-X trades as Busang clock ticks
By SANDRA RUBIN
The Financial Post
The Toronto Stock Exchange is set to slap trading restrictions on Bre-X Minerals Ltd. as the stock's hour of reckoning approaches.
TSE officials met member brokerages yesterday to discuss how to handle the Bre-X situation.
The exchange will issue "new directives" today on trading in the company's shares. The directives -- expected to be trading restrictions -- likely won't come into effect until Monday and will be issued after consultations with other exchanges.
Bre-X also trades on the Montreal and Alberta exchanges, as well as on Nasdaq, the U.S. over-the-counter market.
But some of Bay Street's biggest brokerages, including Nesbitt Burns Inc., RBC Dominion Securities, CIBC Wood Gundy and TD Securities Inc., have already stopped accepting certain types of orders for Bre-X shares.
The stock (bxm/tse) slid yesterday as day traders lightened their positions ahead of an independent audit of Busang's gold reserves by Strathcona Minerals Ltd.
The report is now believed to be in Bre-X's hands. The Calgary-based junior has said it expects to release the results before North American markets open Monday.
The stock was under steady selling pressure all day, but started to skid around noon, with more than one million shares changing hands in an hour. It closed down 44› at $3.04 on volume of 7.1 million shares.
"There are some nervous holders in here," said Fred Ketchen, chief equities trader at ScotiaMcLeod Inc. "They've got today -- and then we're all locked in to whatever the news may be."
He said the trading restrictions reflect brokerages bracing for the fallout that's bound to rock the market once it's clear whether Busang is the strike of the century -- or not.
ScotiaMcLeod has not yet placed restrictions on trading of Bre-X shares.
But Nesbitt Burns, one of Bre-X's earliest and most enthusiastic supporters, is no longer taking all-or-nothing orders, stop-loss orders or accepting orders to short the shares.
"We're not accepting any term orders on Bre-X shares," said spokesman Joe Barbera.
Aubrey Baillie, Nesbitt's chief operating officer, is warning brokers to avoid even discussing Bre-X with clients. "There continues to be considerable rumor and innuendo surrounding Bre-X," he told employees in an internal memo. "It is important that Nesbitt Burns and its employees do not offer advice based on such information.
"All employees are reminded that we should avoid all unfounded comment and until such time as we have sufficient information on which to base our advice, no one should be offering comment on Bre-X."
Jack Geller, chairman of the Ontario Securities Commission, said some trading restrictions are understandable. "Given the current state of the market and Bre-X, I can understand why brokers would refuse some types of orders," he said.
"But as long as they're willing to take orders to sell at market, or at a given price, I would not think that they're doing anything which is improper."
At least one investor said she objects to the restrictions -- and there were no such limitations when she bought her 400 Bre-X shares for $3.50 each last month.
"I do have objections," said Maria Reeves, who was told by her Nesbitt broker it wasn't prepared to fill her all-or-nothing sell order at $4.50.
"I don't think they should be allowed to do that. They're fiddling in one stock. It's got to be to someone's advantage -- and it's not to mine." |
