Computer Failure Closes Toronto Exchange

OTTAWA - In an event that brought annoyance, and perhaps in some cases relief, to investors on Wednesday, a computer fault shut down the Toronto Stock Exchange.
Canada’s largest exchange, and one of the world’s leading mining exchanges, shut down 18 minutes after opening when it become apparent that only some customers were receiving data about trading. Both the main exchange and the venture exchange for junior listings were closed.

While the effective loss of an entire trading session was extraordinary, it is one of series of technical problems that have plagued the exchange, which converted to all-electronic trading 11 years ago. Several analysts believe that the problems may benefit several alternative exchanges that have appeared over the last year to challenge the 147-year-old Toronto exchange.

Late in the afternoon, the exchange, which is owned by the TMX Group, abandoned all hope of reopening. Later it issued a statement promising that the exchange would open on Thursday morning for regular trading.

The exchange did not identify the cause of the problem, at least publicly. But in a series of brief statements, it made it clear that the computers that actually handle trading were not involved.
Instead the problem was in a separate system that delivers data about trades to brokers and news organizations.

In an interview with BNN, a Canadian business news television channel, Luc Bertrand, the deputy chief executive at TMX, declined to comment about whether the exchange had a back-up system in place.

While it provided a lift for his business, Ian Bandeen, the chief executive of CNSX, which operates two alternate exchanges, did not welcome the latest problems at his competition.
“It’s obviously disappointing for everyone in our country,” said Mr. Bandeen. “One has to take the view that there but for the grace of God go I.”

Mr. Bandeen said that his two exchanges, Pure Trading and the Canadian National Stock Exchange, handled about 34 million trades. Pure, the larger of the two normally handles 11 to 12 million trades a day with the Toronto Exchange normally clearing about 43 million.
The absence of the main market, Mr. Bandeen said, apparently caused many investors to sit out at least part of the day.

“You had a lot of people who were sort of paralyzed,” he said. “Trading was halted right across the board until they knew how to react.”

Several large Canadian corporations are also listed on Nasdaq and the New York Stock Exchange, providing investors with alternatives.

In 2002, computer problems caused quotes on the Toronto Exchange to be updated on a 15-minute, rather than 15-second, cycle. In May a surge in trading of Bell Canada shares led to two shutdowns in a single day of trading in that company’s shares and problems with trading in 37 others. Different computer problems caused the exchange to delay its opening by 10 minutes last month.