TSE, ME reducing transaction fee

The Toronto Stock Exchange (TSE) and the Montreal Exchange (ME) are reducing the maximum fee charged to members for trading securities.

The fee will be reduced to $100 from $1,000 per transaction, effective July 1 and 4 on the TSE and ME, respectively.

The TSE said the move is intended to make it more competitive with the New York Stock Exchange. It should also result in increased trading in Canadian stocks on the TSE by American investors.

North American exchanges are engaged in a battle over market share. The TSE and ME expect the fee reduction will lead to an increased market share in Canadian-based issues interlisted on U.S. exchanges.

Currently, the TSE does 57% of the trading in TSE 300 index stocks that are listed in Toronto and traded on other North American exchanges or on the National Association of Securities Dealers Automated Quotation (NASDAQ). The TSE recently moved into second place among North American exchanges in both value and volume of shares traded. The exchange accounts for nearly 80% of the dollar value of stocks traded in Canada every day.

During the record-breaking year of 1993, nearly 15 billion shares worth $147 billion changed hands on this market — the most ever traded on a Canadian exchange.

Thus far this year, trading activity is well ahead of last year’s pace. Throughout April, a daily average of 73.4 million shares were traded on the TSE, an increase of 35% over the same period last year. Daily trading value to date is $867 million a day, up 75% from the $494 million recorded for the same period last year.

The reduction is the ME’s second in two years. In early 1993, the maximum transaction fee was chopped to $1,000 from $1,750.

Meanwhile, the TSE says that within the year, it will be able to offer trading in decimal increments. Currently, stocks worth more than $5 trade in eighths whereas those worth less than $5 trade in dollars and cents.