150 YEARS of the Toronto Stock Exchange

How it all began is anyone's guess. No records remain from the summer of 1852, when a small group of Toronto businessmen met and formed the Association of Brokers. They began dealing whatever was available-shares in the Consumers' Gas Company of Toronto, subscriptions in capital stock to the Guelph Road Company and the Yorkville and Vaughan Plank Road Company. The association grew to 24 members, including brewer Joseph Bloor and distiller William Gooderham, and on October 25, 1861, at the Masonic Hall, this old boys' club launched the Toronto Stock Exchange. For several years after, the exchange had no headquarters, membership cost $5, and trading volume could be as little as two transactions a day. And today? With 180,000 trades daily, the rebranded TSX is about to go public-amid controversy about a hiked fee structure. Here's how it all came to pass, over the last century and a half.

1871

Ten years after its formal set-up, the TSE had 14 member firms, each paying $250 in membership dues.

1901

Memberships cost $12,000 each with 100 companies listed. The TSE moved from its quarters at 24 King Street East to 20 King Street East.

1913

The TSE bought two adjoining buildings at 234 Bay Street, one from Henry Pellatt, builder of Casa Loma and son of an exchange founder. That year, Toronto also got its first print-out ticker, which carried a continuous series of trading prices as well as quotes.

1914

The TSE and the New York Stock Exchange stopped trading for several months during the turmoil of the First World War. But corporate profits and share prices rose dramatically during the war. By Armistice in 1918: high inflation, followed by plunging commodity prices and a deep recession.

1929

Crash; worldwide depression. While the securities industry in the United States suffered the worst-2,000 investment and brokerage firms closed from 1929 to 1932-no member firm of the TSE defaulted on its obligations to clients. From '29 to '34, more than $200 million in gold production helped boost the value of the Canadian dollar.

1934

The TSE merged with its main competitor, Toronto's Standard Stock and Mining Exchange. By 1936, it was North America's third-largest exchange, behind the New York Stock Exchange and the New York Curb. Depression had ravaged North America but it was a good time for the TSE: its board of

governors decided to build a technologically advanced art deco marvel on the site of the existing Bay Street location.

1937

March 23: Re-opening of 234 Bay Street, built by architects George & Moorehouse and S.H. Maw for $750,000. Canadian artist Charles Comfort designed a frieze for the façade depicting "a processional of industry" and eight panels for the trading-room walls; each one paid homage to a prominent business-mining, pulp and paper, oil, and so on. Time magazine called the 10,000-square-foot floor "the most up-to-date trading floor in the world." Eight thousand to 10,000 transactions a day were shown on eight hexagonal trading posts covering 460 listed stocks. The building would be the TSE's home for the next 50 years. It's now Toronto's Design Exchange.

1939

Value of stocks traded in Canada: $521 million. By 1945, the Ontario Securities Act set standards for disclosure to investors. By 1946: $1.23 billion in stocks traded, which increased, in the flush of postwar prosperity, to $1.62 billion in 1950. By 1955, value would shoot up again by 250%.

1958

The year the TSE governors required listed companies to disclose any company changes or affairs that might affect share price.

1960s

Lieutenant-General Howard D. Graham became the first outsider appointed as president of the exchange. Previously, all presidents were appointed from member firms.

1977

Introduction of CATS, the Computer Assisted Trading System (shown above), which allowed trades to be executed directly from brokerage houses. The TSE later sold the system around the world, including to the Paris Bourse.

1983

Under president and CEO J. Pearce Bunting (above), the TSE moved to its new headquarters in the Exchange Tower at 130 King Street West. Total market value of shares traded: $350 billion.

1997

The TSE's trading floor closed on April 23. No more traders in coloured jackets-green for TD, red for Nesbitt Burns and so on. After the exchange upgraded its computers to the Tandem system in 1992, most brokerages did away with phone clerks and the majority of trades were conducted electronically.

2001

The TSE acquired the Canadian Venture Exchange (CDNX); the name changed a year later to TSX Venture Exchange.

2002

The TSE was rebranded with the acronym TSX in preparation for an initial public offering later in the year, which would broaden its ownership structure beyond a few dozen member investment houses. In mid-August, the TSX asked the Ontario Securities Commission to allow individual shareholders to own up to 10% of the exchange-the same as any large financial institution-a doubling from the maximum currently allowed, 5%. An IPO would involve the exchange forming a holding company, TSX Group Inc., which will own 100% of TSX Inc., its operating company. It will also form a "conflicts committee" to review complaints of conflicts of interest that may arise with a stock exchange trading shares on itself. In late August, Peter Brown, chair of Canada's largest independent brokerage, Canaccord Capital Corp., sent a letter to the TSX accusing it of passing on "excessive" fee increases to its members-Canaccord's fees went up by almost 72% this year. "These dramatic increases are added in one of the worst economic years for our industry since 1981," Brown wrote.

"It would appear that these increases have been made...in preparation for the upcoming IPO."