Canada stock market shutdown pushes investors to explore options

Rare outage at Canada’s major stockexchanges could dent the credibility of operator TMX Group Ltd. and encourage investors to explore alternative trading channels, fund managers and traders told the media on Monday.

Canada’s stock market suffered a partial shutdown on Friday, forcing TMX to halt trading more than an hour early.

TMX has since said the exchanges resume trading on Monday after “internal technical issues” were resolved.

The outage sent investors to TMX competitors and exchanges in New York that listed Canadian companies, traders said.

Some of Canada’s biggest companies, including the likes of Suncor Energy, Enbridge Inc. and Barrick Gold, are listed both in Toronto and New York.

While the shutdown occurred on a low-volume trading day, it highlighted the technological challenges faced by exchanges such as TMX and the risks to reputation that come with them.

“It is not a good thing for the exchange or the investors. It is lost business for TMX and lost credibility. It makes investors look elsewhere,” said David Cockfield, portfolio manager at Northland Wealth Management.

Cockfield said he expects traders to take defensive steps: “They will say, ‘Maybe I better establish alternative trading routes.

If the TMX goes down on me again, I don’t want to be caught twice.”

TMX’s exchanges in Canada, account for about 61 per cent of trading on the world’s sixth-largest stock market, according to official data.

They include the Toronto Stock Exchange, Toronto Venture Exchange, TSX Alpha Exchange and the Montreal Exchange.

Some traders and fund managers said it was still too early to assess the full extent of the damage from Friday’s outage.

Jos Schmitt, chief executive of NEO Exchange, said no one wins from a shutdown.