Happy New Year to all!!! The IETA Board looks forward to 2002 with great enthusiasm. The Board furthered our goals towards becoming effective lobbyists, advocates for increased education, and a continuing social group for our members over the last half of calendar 2001. In the upcoming weeks, the Board is hosting a number of key events including the Super Montage meeting with the NASDAQ Inc., on Wednesday, February 6, 2002, 5-7 p.m., at the Royal Meridien King Edward in Toronto, and an introductory meeting with Tom Atkinson the President of the RS Inc., on January 30, 2002, 5:00 p.m., at the Tasting Rooms, First Canadian Place, Toronto. Both meetings are key to the changing landscape of our capital market, and we look forward to a strong turnout from our members. The IETA will also hold its first Annual Winter Vendor Fair, on Feb 21st at the Design Exchange, which will give all members the chance to bring their IT personnel out for a look at the latest in technology, as well as enjoying some food & drink.

The IETA was represented at the STA conference in Chicago where some of our members participated in a phenomenal tour of the Mercantile and Chicago exchanges as well as the CBOT. We saw first hand what a powerful lobby group the STA has become, especially in light of the recent passage by the United States senate of Section 31a Fee Reduction on Stock Transactions. http://www.securitytraders.org/index.shtml STA’s success in championing this legislation will save investors $14Billion over the next ten years.

The philanthropic activities of the STA remain incredibly strong and include the STAR Fund established to support family members of the STA victims from the September 11th atrocity. Further details are available on the STA and IETA website. http://www.securitytraders.org/starfund.html The IETA has made a donation to this fund on behalf of all our members.

Given the quiet nature of our market, I thought it appropriate to discuss some ongoing issues of trading protocol in the Canadian equity markets. The comments I have recently received relate to some of our local practices on two-way markets, and protection on blocks only. In this column I will deal only with the two-way market concerns and leave the other for a later time. As an example, consider if a dealer has a two-way natural market on ABC $5 ½ to $5 ¾ volume matched, and both the buyer and seller pass on the respective bid/offering. A third player enters the market and is willing to either buy or sell at $5 ½ or $5 ¾, respectively. Why do either the buyer or seller expect and/get protection on the trade when it is executed at prices upon which they have already passed? The ability of a third player to execute on either the buy/sell side should be widely understood and accepted. Our market is not a “buffet” table. The integrity of our markets is only consistent with the actions of the existing players and this “protection practice” is one, which I believe should be eradicated.

I look forward to your responses to any of the comments in “UPTICK” and would be happy to print all signed written feedback.

Thanks for all your enthusiasm in making 2001 a great year for the IETA, and Best Wishes for a healthy and prosperous 2002!!

James Beattie, CFA, President, IETA Toronto
james.beattie@rbccm.com
416-842-6000

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About 1300 STA members from across North America attended this years STAC conference. Many of our own members from Toronto were also in attendance. It’s great to see more of our members getting involved in other affiliate’s conferences. Nick Savona attended the STA affiliate business meeting on January 11th. The STA has formed an Affiliate Liaison Committee, which will help to share information and to gain insight into how our affiliates would like their STA Board to assist them and to coordinate conventions.

There will be more affiliate representation on National Committees. Nick will be joining James Duncan on the International Committee, and will keep IETA members informed of progress and any news that may be of importance to the IETA membership in Toronto.

A tour of the Chicago exchanges offered during STAC's 76th annual mid-winter meeting was gratefully accepted by a small but very enthusiastic group of traders. Our first stop was at the Chicago Mercantile Exchange for the opening, to witness first hand the organized chaos which occurs here on a daily basis. After some coaching by the very experienced and helpful people who were assigned to us, we began to realize that there really is a method to the madness. Several of us would have been content to stay here for the remainder of the day learning the Merc "sign language", but we were then off to the Chicago Board Options Exchange. The CBOE gave us a brief overview of their history and their hopes for the future. They see a decrease in the number of Options Exchanges, and are very excited about the upcoming trading of single stock futures this year. We finished up at the Chicago Stock Exchange where we were allowed on the floor, something which is no longer permitted at the Merc or the CBOE.

Many thanks to the Security Traders Association of Chicago for allowing us to visit and learn from the people at these three organizations.

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Peggy Bowie, immediate Past President, IETA, Toronto, as well as Diane Peto, Chairperson, CSTA, have been asked to sit on the Security Trader’s Association Institutional Committee for 2002. Mary McDermott-Holland, Vice Chairman STA, and Lisa Utasi from Smith Barney Asset Management will co-chair this committee. The goal is to have a broad representation of firm types and locations, and the committee is to focus on Institutional issues.

Our very best congratulations to both of you!! The STA is very fortunate to have your participation.

James Beattie, President, IETA Toronto
james.beattie@rbccm.com
416-842-6000

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In the previous UPTICK, Gregory King points out that liquidity concerns and implicit costs are more important to the buy side than brokerage commissions. This is as it should be although I'm not sure all buy side institutions behave as though this is true.

In terms of the new priority rules, I agree that they are not ideal. Brokers don't like to ask for consent to participate with a client any more than clients like to give it. However, clients that are not in the habit of giving consent should not expect liability capital. The reality is that we need to keep ourselves in shape as much as possible in order to continue providing this service. Market participants will adjust to this new environment over time, however awkward. Buy side institutions will learn (or indeed already know) who they can and can't trust and on which stocks. I'm not sure the new priority rules will have a negative impact on liquidity perse.

In terms of the MOC, the implication in Mr King's summary is that the sell side has shyed away from its role as guarantor. This is not the case. We said in our meeting with the TSE that we would provide this service as long as the process made sense and the return on the provision of overnight capital was fair. I think Mr. King’s idea of a Dutch auction for the MOC is a good one that should be explored further. However, it appears at this point that the TSE will propose a solution that effectively extends the market’s hours of operation by 15 minutes. Neither Dutch auctions nor dealer guarantees will apparently be features in the Exchange’s new MOC function.

Regards,
Andrew Foote CFA
Managing Director
Institutional Equity Liability Trading
RBC Capital Markets

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For four years, the Traders Challenge has been very successful in raising funds for shelters that help women and children fleeing domestic abuse. The hypothetical $1,000,000 investment portfolio game will be open for registration on January 7, 2002, and will be played in real-time, online from January 25 through to February 25. Details will be sent to all members shortly in the form of an e-card or e-mail blast. In the mean time you can visit the website at: www.ericssontraderschallenge.ca.

Nick Savona
Vice-President, IETA Toronto
nsavona@itgcan.com
416-874-0743

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At the November 1st Educational Forum, Randee Pavalow, Director of Capital Markets, Ontario Securities Commission along with Susan Greenglass and Tracy Stern presented the basic outline of the rules governing Alternative Trading Systems operating in Ontario. The OSC has set up a framework to guide and control markets with ATS's. Within these rules there are many areas that will change as markets mature and more alternative trading systems become active within the Canadian Market.

The OSC will monitor exchanges and ATS's very closely over the first year and make adjustments to the rules if necessary. Randee left us with an open invitation to contact her or any member of the OSC Capital Markets staff, if you would like to talk about problems or conflicts that you are encountering under the new rules.

Peggy Bowie
Past President, IETA
mbowie@cpinvest.com
416-865-3247

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Trust is fundamentally an attitude based upon beliefs and feelings and implying expectations and dispositions for behaviour, which creates a positive sense of the other’s competence. In trusting another person, we willingly increase our vulnerability to that person whose behaviour and actions we cannot control.

As part of the CSI’s continuing education curriculum, the Ethics Seminar has increased enormously in popularity, from being offered 3 – 4 times a year to now being offered on a weekly basis.

The seminar was very enlightening and thought provoking and was very well instructed. I was introduced to the ethical decision-making process and it helped me better understand the ethical dynamics of my actions. As securities professionals, this seminar is very valuable in helping to bring an awareness of ethical-decision making into all of our day-to-day lives. For those of us that don’t have an in-house ethics course and need to take a course on this subject to satisfy IDA requirements for Registered Representatives, I would highly recommend attending this seminar – and the case studies were very interesting!

The best way to be seen as trustworthy is to act trustworthy.

Carol Banahan
carol_banahan@otpp.com
416-730-5326

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This always exciting and fun-filled evening will be held at Bathurst Bowlerama located at 28 Cecil Street (Bathurst and Glencairn) on Thursday, February 7th, 2002 from 6:00 pm to 11:00 pm. Please register your teams in ASAP or you may be disappointed (half of the spots have already been filled)!!

The fee is $100/player with a maximum of 5 players per team. All proceeds will be donated to Nazareth House and Bloorview MacMillan Children's Foundation.

If you have any questions, please feel free to contact me (except for Mike MacCormac).

Judy Nishimura
jnishimura@yahoo.com
416-308-4743

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The Board of the IETA would like to thank everyone for the outstanding turnout and participation at this year’s Christmas Party. The Board would especially like to thank all the auction participants. The sports memorabilia available were truly fantastic.

Over $6,200 was raised and donated to the Bloorview Macmillan Children’s Foundation and the Make A Wish Foundation. We anticipate increasing our charitable donations in the future and hope for a large turnout at this year’s Charity Bowling Tournament where proceeds will be donated to the Bloorview Macmillan Children’s Foundation and Nazareth House.

We hope to see everybody out on February 7 at the Bathurst Bowlerama.

Jay Bakker
Treasurer, IETA
jbakker@sprott.ca
416-943-6428

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It is with mixed emotions that I must announce that Jim Gallagher has resigned as President of the Canadian Security Traders Association, Inc.

While our group will greatly miss Jim's input based on his many years of experience in our industry, it is impossible not to be happy for Jim as he assumes his new position as President, CEO and Director of CNQ (Canadian Trading and Quotation System Inc.). Even though Jim is no longer "officially" part of the CSTA, I am sure that our paths will cross in the near future and we will once again avail ourselves of his expertise.

Thanks for all your help in the past years Jim, and we all wish you every success in this new endeavour. For those of you who would like to extend congratulations personally, he can be reached at 416-409-0981.

Diane Peto
Chairperson, Canadian Security Traders Association, Inc.
dpeto@omers.com
416-369-2413

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Without a doubt, the 2001 Christmas Party was a huge success. A new venue, coupled with a record number of attendees, guaranteed a great holiday party. Our new host, the Sutton Place Hotel, helped put everyone in the spirit by serving up a fantastic meal with plenty of holiday cheer. Mark Hebsher, our guest Auctioneer, struggled to be heard above the crowd (which is a first for Mark), but still managed to generate lots of interest in our first ever live auction. The auction culminated with an autographed Mohammed Ali boxing glove selling for $1700 to a very lucky Jim Beattie. That glove will be a great addition to his closet. But as custom dictates, the real highlights of the evening followed the formal events. Between the action at the Martini Bar and the escapades on the dance floor, the remainder of the evening was highly entertaining.

Many thanks to all of our corporate sponsors, Acker Finley, BMO Nesbitt Burns Inc., First Energy Capital Corp., Gerard, Klauer, Mattison & Co., Inc., Knight Trading Group, NDB Capital Markets, Paradigm Capital Inc., Raymond James Ltd., Sprott Securities Inc., State Street Global Assets, and Toronto Stock Exchange, for making the party a success. Thanks to all who attended for helping to raise nearly $7000 for the Bloorview MacMillan Children’s Foundation as well as the Children’s Make A Wish Foundation.

JP Matthews
jpmatthews@rbcgim.com
416-974-2216

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Over 450 traders attended Boca from North America and France, including some members of the CSTA. The shortened three-day event featured keynote speakers Barbara Stymiest, Toronto Stock Exchange; Dick Grasso, New York Stock Exchange; and Rick Ketchum, NASDAQ. 49 vendors attended this year, down from last year but understandable as was the lower attendance.

The 2002 officers were announced:
Michael A. Bird, Chairman;
John P. Hughes, Senior Vice Chair;
Mary McDermott-Holland, Vice Chair;
James Duncan, Treasurer; and
The late Tim Graziosso, Honorary Secretary.

New governors included:
Bart Green from St.Louis,
Bill Yancey from Dallas,
John Barone from Chicago, and
Jan Pitman was re-elected from Los Angeles.

This year’s Conference was a much more subdued affair and much of the program honored our lost friends of the 9/11 terrorist attack. Panels included NASDAQ Super-Montage, decimal pricing and trading, market structure and globalization. The event ended on Saturday night at a black tie dinner.

Peter Dapuso, President of Cantor Fitzgerald was the keynote speaker and, although a more sombre affair than others in years’ past, it turned out to be a great conference in that it allowed many old friends to gather and share their grief.

James Duncan
james_duncan@canaccord.com
416-869-3844

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Watch for further details regarding the Vendor Fair – February 21, 2002.

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Congratulations and best wishes to the following individuals who have recently made moves:

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We would like to take this opportunity to welcome the following new members to the Association:

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