The Toronto Stock Exchange (TSE) has agreed to take responsibility for the unlisted stock market known as COATS. Towards the end of January, the TSE will take over the trading system from the Ontario Securities Commission (OSC), which has been trying to find a sponsor for the junior market since the beginning of 1988.
COATS (Canadian Over-the- counter Automated Trading System) was originally introduced by the commission in 1986 to help junior companies, including many mining issues, raise equity capital in Ontario without having to pay high fees for TSE listings.
But the OSC’s mandate is to monitor the securities markets, not administer a market of its own.
When the TSE is offically in charge of the junior exchange, the senior exchange will regulate and operate COATS as a non-profit subsidiary. The TSE already provides the computer system used to run the market.
Most observers agree the transfer of control will have little effect on the day-to-day operations of COATS. “We don’t expect any changes as a result of the takeover,” said Robert Wright, OSC chairman.
“Unless things get better in the market, I don’t really think it matters one bit,” added Mike Shunock, a W.D Latimer, a broker specializing in over-the-counter stocks.
Lately, the junior exchange has been showing signs of ill health. While total trading volumes remained steady at about 325 million shares during the past two years, total value slipped to $382 million in 1990, down from $562 million in 1989.
Some observers suggest that if the TSE makes an effort to market the under-promoted exchange, COATS could undergo somewhat of a revival in the coming years.
Following the transfer, the OSC will continue to review the network’s operation on a regular basis and will have the right to resume control of the trading system for up to three years.
Slightly more than 1,000 stocks are eligible for trading on COATS, many of them speculative mining and oil and gas companies.
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