No blue chip market planned for VSE, Hudson tells forum

Given the recent market crash, you would think investing in securities would be the last thing on anybody’s mind. But the 1987 International Investors Forum held in Vancouver recently suggests otherwise. Hundreds of guests attended seminars and visited the over 200 exhibits at the Vancouver Trade and Convention Centre.

Among the many prominent speakers addressing the forum was Donald Hudson, president of the Vancouver Stock Exchange. Hudson emphasized that the exchange’s No 1 priority would continue to be the listing of venture capital companies. “We won’t ever become a blue chip market,” he said, noting the value of vse financings this year should be over $1.25 billion. About 80% of that involved private placement financings.

The financing total represents a 67% increase from last year and he added that the 2,400 companies presently listed have a market capitalization of over $5 billion. Incidentally, about one-third of these are non-resource stocks and he conceded the exchange was having problems “keeping up with the growth” in both areas. Hudson also said the exchange will have to “streamline regulations and listing requirements to speed things up.”

Although he didn’t see any decline in the number of companies listing on Vancouver, Hudson predicted more competition between exchanges for this type business. He said he wouldn’t like to see a vse-type exchange in Toronto or the United States, emphasizing that “we want to do as good a job as possible to protect ourselves.”

To retain its competitive edge, the vse will begin computerized trading in March, 1988. By year- end about 1,400 stocks will be listed on the system and eventually floor trading will be eliminated. The cost of developing and installing the trading system is approximately $6 million, although $12 million in total has been budgeted for computerization, he noted.

Hudson said the securities industry has been in “relative turmoil” since deregulation and the “internationalization of the industry.” Conceding that the future is “still uncertain at the moment,” Hudson suggested the federal government might get involved eventually which could lead to jurisdictional disputes between the two levels of government. With deregulation, Canadian banks have been allowed into the securities business and banking falls under federal jurisdiction; each province regulates its own securities industry.

Aware that the exchange has “image and credibility problems,” Hudson said they aren’t “concerned with honest failures but we are concerned about keeping scams out of the market.” A top priority in the future will be to “improve the image of the vse,” he pointed out.