Toronto Stock Exchange Rules May Change

A sweeping revamp of the Toronto stock exchange’s rules was proposed Thursday, designed to attract more trade to the exchange--the same exchange that Wednesday was halted for an embarrassing three hours because of multiple computer failures.

Stock exchange Vice President Jim Gallagher, speaking after a news conference to announce the proposals, was at pains to categorize the computer crash as an isolated incident.

“We haven’t had a double hardware failure--which means you’re out of operation--in the 26 years this exchange has been using computers. But it’s going to happen once in a while, and it will happen to anybody.

“We’ve told all the systems people, ‘forget about what happened, just make sure it doesn’t happen again.’ ”

The proposed new rules are complex but have one simple aim--to increase the volume of trade in Canadian stocks handled by the exchange.

President Pearce Bunting said Toronto lands about 51% of the trading volume done in Canadian inter-listed stocks, an improvement from 43% in 1987.

Exchange officials believe that they can boost this to 75% by 1995 simply by making automated stock information more detailed and more accessible.

“A certain amount of trading in Canadian stocks is done in New York and other U.S. exchanges by Canadian inter-listed stocks, and it is because they believe the liquidity they want is there when it might have been at Toronto all along,” said exchange chairman Charles Caty.

“We believe that the more information we are willing to give out, the more business that will come to us,” said Vice President Gallagher.

The reform package, a result of a nine-month review by the exchange, encourages dealers to trade through an electronic trading book rather than open outcry.

At any moment, each stock’s top five bid quotes and asking quotes, as well as the volume on offer, will be displayed in the electronic book.

This would theoretically give securities firms and the investing public a better idea of what is the true market situation on the trading floor with any one stock at any one time.

Currently, only the top buy and sell quotes are displayed, as is the case in most exchanges.