• Letter From The President

• STA 71st Annual Conference and Business Meeting in Boca Raton, Florida - October 6-10, 2004

• Fall Bash Review - September 30, 2004

• IETA Christmas Party - December 9, 2004

• Meeting With Catherine Kinney, NYSE - November 10, 2004

• Dates To Remember

• Who's Where? This 'N That

• A Warm Welcome to our New Members

It would be an understatement to suggest that the markets in 2005 have been sluggish out of the blocks. After being range bound for most of 2004, we finally had a rally late in the year. The year ahead looks like a tough grind for equities, with the market having a bit of a defensive bent initially. We all have our work cut out for us!

The STA Annual General Meeting was held in Boca Raton, Florida in October 2004. The incoming Chairman was fellow Canadian James Duncan of Canaccord. He is the first non-American to hold this position. The conference speakers were very topical with one of the more interesting panels focusing on “Non-Traditional Trading”. On a lighter note, the “Canadian Ball Hockey Challenge” was an entertaining evening with TD Securities winning the bragging rights.

In November 2004, we had an interesting evening with Catherine Kinney, President of the NYSE. Given the changes over the last few years at the exchange, it was interesting to have a chance to find out where the NYSE is heading. The introduction of the hybrid (electronic) market may be one of the first steps towards maintaining fast, efficient, liquid markets ensuring “best execution”.

On the Charity front, we were able to make a contribution to Nazareth House (supportive housing for women and infants at risk) due to the generous contributions at the IETA X-mas party. The IETA also made a contribution to UNICEF and the Red Cross in support of the tsunami victims. We continue to volunteer at the “Feed the Homeless” breakfast at Osgoode Law Hall cafeteria. Anyone interested should contact any Board member or myself if they would like to help.

Thanks,
Dan Dowling, President, IETA (of Toronto)
416-863-7511
dan_dowling@scotiacapital.com

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The conference began with the Affiliate Presidents’ breakfast. One of the highlights of the meeting was the new Trader’s Advocate section of the STA website. (www.securitytraders.org) This site allows users to focus on industry issues, and to enable easy e-mail dialogue with local state congressman/senators. Input from the STA has been has had significant impact with the SEC on topics such as Reg NMS and Soft Dollars. Emphasis remains on education, social, and charity work of the 3 Canadian and 25 U.S. Affiliates.

Some interesting discussions included panels on “Non-Traditional Trading”, “Liquidity in the Marketplace”, and “Soft Dollars”. The growth in the use of program trading is accounting for more than 50% of the NYSE volumes this year. On the TSX, it is more like 25%, but growing quickly. Algorithmic trading, Pairs, VWAP strategies, etc. are becoming more commonplace. In many cases, liquidity has improved in the marketplace. Average block size has decreased over the past few years, however volumes are up.

Reg NMS remains front and centre for the SEC. The trade-through rule, which allows an automated market to trade through a non-automated market for up to a certain size order, has been hotly contested. The SEC seems to be backtracking on some issues. They would like to see the industry work this issue out themselves. The NYSE Hybrid market may provide some relief. Speed and/or best prices remain key drivers. The proposed NYSE Hybrid marketplace will allow orders to be sent electronically to the floor where the electronic book and auction market should provide “best execution”. Floor brokers can participate electronically and in person at the point of sale, while specialists will continue to stabilize price moves/volatility. We also heard from the NYSE, NASDAQ, and the SEC on this theme. Finally, Ralph Acampora tried to give us some “Technical insight” about where markets are headed!

One of the more entertaining events of the conference was the “Canadian Ball Hockey Challenge”, during the Thursday night buffet dinner. Eight teams battled it out (literally and figuratively) for the bragging rights. The strong Canadian contingent became apparent early on, with TD Newcrest finally edging out Scotia Capital 4-3 in the final. It was a well-fought battle with no major injuries!

The Canadian theme of the conference was, of course, due to the fact that James Duncan, of Canaccord is the incoming chairman of the STA. He is the first non-American to hold this role. His contribution over the years to the Vancouver Security Traders Association and STA is understated! With his strong industry knowledge, relationships, and countless hours involved in charitable work, he is well prepared for the year ahead. The Canadians attending the conference were proud to be part of the ceremony. We wish him well!

Dan Dowling
416-863-7511
dan_dowling@scotiacapital.com

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150 Members, summer patio weather, a trendy Queen West venue, and mass quantities of refreshments .... Now that's best execution!

Thank you to everyone who attended this year's fall bash! Continuing its solid tradition, the event was a great success.

I hope everyone had an excellent time and thank you to Habitat Lounge for hosting a memorable evening.

James Bolen
416-868-4088
jbolen@cppib.ca

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The 2004 IETA Christmas Party was once again held in the beautiful Queens Park Ballroom at the Park Hyatt Hotel. With plenty of holiday cheer, great d'oeuvres and a record turnout of close to 400 members, you were almost guaranteed to have a great bash!!

Many thanks to everyone who helped raise close to $4000 (particularly those 2 cute little elves) for the Nazareth House, who provide a safe environment for abused women and their children. Also, thanks to Vera Vincic and the Park Hyatt for once again running a top notch event.

Chris Rigby
416-869-3326
chris_rigby@canaccord.com

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On Wednesday November 10, 2004 the CSTA and TSFA hosted a meeting at the Sheraton Center with Catherine Kinney, the President and co-Chief Operating Officer of the NYSE. In her presentation entitled ‘Change’, Mrs. Kinney spoke of many new developments at the NYSE including new leadership, efforts to repair the reputation of the exchange, changes in the governance of the NYSE, and the NYSE’s response to the SEC’s proposals for a new National Market System (“Reg NMS”).

The NYSE is responding to the Reg NMS proposal with their own initiative to create a Hybrid Market that will increase the automation of the execution of orders while maintaining their floor-based agency auction model. The NYSE believes that such a hybrid market will provide customers with the ability to trade electronically with speed, certainty, and anonymity while still providing tight spreads, deep liquidity, low volatility, and resiliency in times of market stress. Mrs. Kinney stated that the NYSE strongly disagrees with the weakening of the Trade-through including the adoption of any ‘opt-out’ provisions because the trade-through rule protects customers by ensuring that they get the ‘best price’ for their orders.

Mrs. Kinney highlighted the following key aspects of the Hybrid Market initiative:

• Expanding the NYSE’s Direct Plus System that gives customers the opportunity to obtain an immediate execution at the best bid or offer. The NYSE is eliminating the 1,099 share maximum size restriction and the prohibition against entering orders for the same account within 30 seconds.
• The introduction of a sweep capability so that customers who desire an immediate execution have greater access to the depth of the book and floor brokers’ agency interest. Unlike other markets the sweep will provide price improvement to liquidity providers to the clean-up price. The ‘clean-up’ price will reflect brokers’ undisplayed agency interest files that are not displayed in Open Book and specialists’ electronic interest.
• Volatility moderators called Liquidity Replenishment Points (LRPs) will be set at 5-9 cents from the best bid or offer. When an LRP is triggered, the quotation will be designated as not available for automatic execution and the specialist, crowd, and off the floor participants may enter orders to replenish liquidity on the other side of the market. The market will return to automatic execution mode when a trade takes place or a manual quote is entered.
• Where another marketplace has posted the national market best bid or offer, NYSE Specialists will have the opportunity to automatically match the bid or offer before the NYSE routes the order to the marketplace. When an NYSE specialist has not systematically matched best bids and offers on other marketplaces that provide immediate automatic execution the NYSE will automatically route any market or marketable limit order to that market.

Mrs. Kinney stated that the above changes would address NYSE customers’ requests for greater speed and certainty of order execution while providing customers with the best of electronic and floor markets. She estimated that a pilot of the expanded Direct Plus system will start within 12 months.

Geoff Keith
416-643-4016
Geoff.Keith@barclaysglobal.com

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IETA Charity Bowling Tournament - Thursday, February 3, 2005
IETA/CSTA Third Annual Vendor Fair - Thursday, February 17, 2005
IETA Annual Spring Fling - late April, 2005
IETA Annual and General Meeting - Thursday, June 9, 2005
IETA Annual Golf Tournament - Friday, June 10, 2005

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

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For further information regarding all current industry news, issues, and upcoming events, please log on to www.ietatoronto.org