>> Looks like the TSE gets another black eye...
Well, you're right, CR, and on Friday they got another one that very few people outside the business well have seen, but it's a doozie. As you all know, Friday was expiry. Starting about 2:30 PM, the exchange through its clearing arm, the CDCC, stopped providing us with accurate positions for our trading. They didn't tell us, of course, but we're a little used to it inasmuch as it is the TSE after all. The problem came at 4 o'clock when it was time to exercise our in-the-money open positions. Guess what--they couldn't provide this to us! Now, I try to keep a running tally of my positions as I go, but you have to understand that the last hour before expiry is a *very* hectic time, especially when you have four active stocks. There is such a thing as automatic exercise, but for our mutual protection, I have a written contract with my clearing broker that only signed exercise notices submitted by me to them will be binding. Some of you with very long memories will remember the shameful way the TSE conducted itself when they made an oversight on HBO options about fifteen years ago and hung losses on some traders in the neighbourhood of $100,000. Friday the exchange said initially that nothing would be put through until Saturday morning (somewhat dodgy legal ground imo), then said we might be able to get confirmations by around 7PM Friday. Right. Miraculously my running tally turned out to be accurate, and I exercised exactly the right number of all my open positions, making me very grateful for the discipline I have forced on myself over the years to keep an accurate count. The main point here is it is inexcusable for the exchange to allow this continuing problem to exist, and to have it break down totally at expiry is a calamity. Somebody's head should roll for this, but it won't.
I spent an interesting two hours Thursday talking with a senior business reporter from a national publication. He was a little surprised that I was willing to speak 'on the record' the whole time; heh, heh, he didn't know about this discussion thread we have going here. I'm on the record every time I post, why should the press be any different? Anyway, he seemed genuinely shocked to hear about the transformation the TSE has in mind for derivatives, turning it into a dealer market a la NASDAQ. He had not heard one word of it--and he's a senior correspondent on the Toronto beat. I think (and hope) he found this issue 'meaty' enough to write an article about it. I truly believe if the true investing public hears about this and can be made to understand what a huge step backward it is, it isn't too late to put a stop to this foolishness. The 'third column' and the OSC are the only possible courses of action left now that the TSE board has signed off on this. It still curdles my guts that the Public governors swallowed this swill without trying to grasp the impact it will have on the public. (Remember, this is only my personal, professional, 19 years in the trenches where the public meet the market, opinion.)
Happy trading.
Happy Victoria Day
Porter
E&OE |
