canoe.ca
"For Wednesday, April 21, 1999
His sorry regime
Rowland Fleming could not tame the
TSE's member firms
TSE board huddles to plan next step
Seeking TSE president, experience required
By ROD MCQUEEN
The Financial Post
Rowland Fleming, who resigned Monday as president of the
Toronto Stock Exchange, could never decide whether the
TSE's 102 member firms were the cross he had to bear or
the crutch on which he leaned.
Was he supposed to be a visionary leader who produced
bold ideas? Or was he merely a hired hand meant to do the
members' bidding?
Mr. Fleming liked to compare himself to Mahatma Gandhi,
the Indian statesman and spiritual leader. As Mr. Fleming
told me in an interview a year ago, "Gandhi once summed it
all up when he said, 'I must follow my people, I am their
leader.' I know many, many leaders who know the time to
stand in the spotlight and know the time to spend in the
shadow."
Leadership is indeed important, but even more important is
followership.
And that was the core of Mr. Fleming's failure. He was
never able to convince anyone to follow. Gandhi's
revolutionary technique was passive resistance. Mr. Fleming
certainly got the passive part right.
During his four phlegmatic years on the job, the few moves
he made were either far from adventurous or forced by
circumstances. Floor trading was ended, something that
London had done away with a decade earlier. Stock pricing
was converted from fractions to decimals. Helpful, perhaps,
but hardly heroic.
The structure of the TSE was altered from a co-operative
to shareholder-owned, a shuffle that made consensus no
easier to obtain. Member firms range from the large
bank-owned investment dealers through tiny boutiques to the
glowing screens of electronic day trading. Finding agreement
among such diverse groups on any issue is all but impossible.
As a result, the TSE is no different from a trade association
such as the milk producers where the lowest common
denominator applies because the puniest policy is the only
one with which everyone can agree.
In a shrinking global market where every major stock
exchange is in the process of reinventing itself or striking a
strategic alliance with an exchange in another country, the
TSE was inexplicably inactive until last month when
Canada's four largest stock exchanges agreed to restructure.
Large capitalization stocks would trade in Toronto, small-cap
stocks on a combined exchange in Western Canada,
derivatives would be handled in Montreal.
But the only big idea championed by Mr. Fleming faces stiff
opposition that could mean nothing ever happens. Like last
year's proposed bank mergers, the future of the four
exchanges requires the approval of their political masters,
particularly, in this case, Quebec. Mr. Fleming had done no
sounding out in advance, so why call a news conference to
announce something that you might never be able to
achieve? And then why leave before the good fight has even
began?
Mr. Fleming should have fretted more about the fact that a
growing number of Canadian companies no longer regard the
TSE as their main market under any arrangement, revised or
otherwise. Nasdaq has become the most popular forum for
high-tech firms to raise capital. The New York Stock
Exchange is the bourse of choice for large-cap companies.
Moreover, scandals during his sorry regime besmirched the
TSE's once-proud international reputation. Two major frauds,
Bre-X Minerals Ltd. and YBM Magnex International Inc.,
cost investors hundreds of millions of dollars after the TSE --
without sufficient due diligence -- blindly embraced both
firms, thereby giving them the respectability of a listing on
Canada's largest exchange.
Equally scandalous has been the lack of progress on
technology. Without an efficient and up-to-date trading
platform, the TSE might as well not bother to exist. Yet the
TSE's core technology remains the same antiquated
two-decades-old system that was in place when Mr. Fleming
arrived. And what exactly possesses a man who is president
of what is in reality a technology company to leave in the
midst of Y2K concerns?
Perhaps Mr. Fleming was the wrong man for the job all
along. After all, he came with no experience in the
investment dealer business; he'd spent the previous 25 years
in financial services. He appeared ill equipped to help a
sector that badly needs sound guidance and profound
change.
His banking career began while he was a teenager in his
native Ireland. At the time he also earned pocket money on
the stage. He particularly enjoyed playing roles in witty
comedies by Oscar Wilde, the brilliant writer who was later
imprisoned then lived out his impoverished days in France.
In 1900, when Mr. Wilde died in a shabby Parisian room,
his last words were reputed to be, "Either that wallpaper
goes, or I do."
At the TSE, the choice was equally clear. The wallpaper stays.
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