'It is unacceptable': Investors react to 40-minute Toronto Exchange Outage

A 40-minute outage across three stock exchanges stalled equity trading in Canada, leaving some investors frustrated and others refusing to place orders even after it reopened.
 

Trading was halted on the Toronto Stock Exchange, TSX Venture and Alpha markets around 10:30 a.m. New York time and resumed at 11:10 a.m. All three exchanges are owned by TMX Group Ltd., which stopped trading due to a connection problem that affected order entries. 

“I feel like I’m trading on a third world exchange,” said Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners. “I have multiple orders for $20 million to $40 million that I cannot execute. It is unacceptable,” he added during the trading halt.

The exchange does not know the cause of the breakdown and is continuing to investigate, TMX Group spokesperson Catherine Kee said by phone. The exchange sent its first notice that it was having trouble shortly after 10 a.m. Shares of TMX Group erased earlier gains to fall about 0.6%.

Kee confirmed that the issue began with a problem that affected trading in stocks with tickers beginning with the letters M through S. That would have impacted shares in major companies including Manulife Financial Corp. and Suncor Energy Inc. 

Laura Lau, chief investment officer at Toronto-based Brompton Funds, said she decided not to trade on the Canadian exchange for the rest of the day because the bourse had yet to explain what caused the problem. “I don’t want to execute now,” she said.

Lau likened the “very disruptive” trading halt Tuesday to a recent network breakdown by Rogers Communications Inc. that caused problems for payment systems, automated teller machines and phone connections in Canada. 

“In Canada, we have outages for Rogers and we have outages for this,” Lau said. “I don’t want Canada to have a reputation for outages.”

Total trading volume for the 236 stocks on the S&P/TSX Composite Index is 34% below its 30-day average for this time of day. Roughly 136 million shares have traded hands as of 1:28 pm in New York, compared to the 206 million averaged over the last month. Based on that trajectory, trading volume will end the day at about 286 million, its lowest since July 4, according to data compiled by Bloomberg.

TMX Group is the dominant player in equity exchanges in Canada, though it has some competition now from Cboe Global Markets Inc., which last year acquired the parent of the NEO Exchange, a smaller rival to TMX. 

The Toronto bourse last experienced a major trading breakdown during the Covid-19 pandemic crash in February 2020, when an interruption was caused by a system capacity issue within the messaging technology component of TMX’s trading engine. That halt came in the midst of a week-long dive in global markets as anxiety over the spread of the coronavirus. Chief Executive Officer John McKenzie apologized at the time and said the company’s “absolute focus” was to stay reliable.

The S&P/TSX Composite Index was 0.7% higher at about 19,557 as of 1:30 p.m.