So much for increased transparency and disclosure ...
TSE to implement 'broker anonymity'
Exchange plans many more changes to boost business ahead of IPO this year
Richard Blackwell
00:00 EST Wednesday, February 13, 2002
TORONTO -- The Toronto Stock Exchange will no longer reveal which brokerage conducts each stock trade on the exchange -- one of many changes the TSE is planning in its attempts to boost trading business ahead of an expected initial public offering later this year.
Richard Nesbitt, president of TSE CDNX Markets Inc., the exchange's trading and data subsidiary, said yesterday that implementing "broker anonymity" is one of several innovations that will help bring back trading in Canadian-based interlisted stocks that has shifted to U.S. exchanges.
Mr. Nesbitt told financial journalists that about 56 per cent of trading in interlisted stocks took place on the TSE in 2001, a sharp drop from 65 per cent in 1997.
To battle this trend, the TSE has made several specific changes that will be put in place in the coming months. Among them:
It will eliminate the rule that requires the disclosure of brokers' names when they conduct a trade. The exchange and regulators will still know who is trading, Mr. Nesbitt said, but the public and firms who currently use this information for competitive purposes will be cut out of the loop.
He said U.S. markets do not reveal this data, and dealers have been sending trades south of the border as a result.
Disclosure will be voluntary as of the end of March, so some brokerages may continue to reveal their trades, he said.
The TSE will set up a "call market" that allows big institutional traders to anonymously match large orders twice a day. This should eliminate some "upstairs trading" that takes place privately among brokerages and does not appear on the TSE books.
The exchange will set up a "market on close" which will allow investors to put in orders during the day that will trade only after the market closes. This would end the "free-for-all" of trading that often occurs at the close, and cut down on market manipulation, Mr. Nesbitt said.
Other changes being considered, but not yet a certainty, include:
The establishment of a TSE-run alternative trading system designed specifically to handle round-the-clock trading.
Trading some interlisted stocks in U.S. dollars. This would effectively create dual listings for companies such as Nortel Networks Corp. -- one with stock trading in Canadian dollars and the other in U.S. dollars.
Exchange officials have held talks with Nasdaq about the possible inclusion of the TSE on the new "SuperMontage" market that will link multiple international markets. Talks are also under way about possible links to the New York Stock Exchange and the Australian Stock Exchange.
The TSE is considering establishing a market to trade fixed-income products.
Mr. Nesbitt said these initiatives are crucial if the TSE is to expand and compete, especially when it is barred by regulators from the U.S. market.
They will also help support the TSE's IPO, which will take place some time this year, he said. The specific timing is up to the exchange's board of directors, he added.
The board hasn't set a date yet, but it could do so at any of its regular monthly meetings, Mr. Nesbitt said. The next board meeting is scheduled for Feb. 26.
Small brokerages that currently own stock in the exchange are very keen for the IPO to go ahead so they can unlock the value in their shares.
A single board seat -- converted to shares when the TSE became a for-profit entity in 1999 -- would be worth several million dollars after the IPO, Mr. Nesbitt said.
While TSE shares "are not going to command the price they would have two years ago, they will sell well," he said.
Copyright © 2001 The Globe and Mail |
