President and CEO Jos Schmitt said incident made Canada look like a 'Mickey Mouse market'
The co-founder of the Aequitas NEO Exchange has taken a swipe at Canadian regulators for the closure of the TSX yesterday afternoon. He blamed an outdated regulatory framework for the closure, which the TSX said was caused by a glitch linked to the coronavirus selloff and the high volume of trades.
Jos Schmitt, president and CEO of the NEO Exchange, told Bloomberg BNN that the suspension was a “black eye” for the Canadian market. He said he wrote to regulators in 2016 and 2018 telling them they needed consolidated market data, which means that when an exchange goes down, trading can’t move to other markets.
“We are in 2020 but we are still experiencing things which, for me, are part of the Dark Ages,” Schmitt said in his BNN interview on Thursday. “We all look, as Canadian capital markets, like a Mickey Mouse market.”
Schmitt also criticized the immediate decision-making of the TSX. He noted that the issue arose around 1:40pm and announced the closure at 3pm. He said this decision held everyone with orders in the system “hostage” for two hours. He thinks they should have declared the closure right away.
Schmitt puts the onus on Canadian regulators to modernize the system. He noted an unfairness in the closure yesterday where people who might have wanted to leave a position were unable to, while professionals still had avenues to offload.
“I am not blaming the TSX, as it can happen to all of us, but I am frustrated with the Canadian securities regulators,” Schmitt wrote in a LinkedIn post referencing his interview. “The consequences of such an incident on our capital markets can be avoided, just like a similar scenario happening in the US is a non-event nowadays.
“Didn't we learn anything from April 27, 2018? How many times do I need to bring it up and write about it before we address the issue? Not good for Canadian capital markets' credibility and the efforts of all of us to bring in more investors and foreign issuers.”
Most advisors, too, were left without consolidated data when the TSX went down. Schmitt thinks that advisors should call for consolidated market data to be made available at a reasonable cost.
“I wrote [the regulators] two times,” he said in his BNN interview. “I’m not going to write them a third time.
