Toronto Stock Exchange Releases Information Circular

The Toronto Stock Exchange has released an Information Circular which provides details of special resolutions to be voted on at the Annual and Special Meetings of Members to be held on June 10, 1999. In addition to the usual items of business, members will vote on three special resolutions: 1. The demutualization of the Exchange, where seats would be exchanged for shares in a new corporation, TSE Inc.; 2. The realignment of the Canadian exchanges; and 3. Changes to the composition of the Exchange's Board of Governors providing for 50% independent governors. In October 1998, the Board of Governors of the Exchange announced a new strategic direction for the Toronto Stock Exchange which recommended changing the Exchange from a not-for-profit, co-operative utility into a business-driven, for-profit corporation, where members will exchange their seats for shares. If approved, the changes will be subject to regulatory and government approvals. In the new Exchange, participating organizations will sign contracts to gain access to the Exchange's trading system. Participating organizations need not become shareholders to trade on the Exchange. "The new proposed corporate structure will help the TSE to respond quickly and decisively to opportunities and threats in the future. In addition, members will enjoy a more efficient Exchange, where the bottom line will depend on the Exchange's ability to provide members with a trading environment where liquidity is rewarded, costs are competitive and products and services are responsive to user needs," said TSE Chair, Ms. Barbara Stymiest. The second item members will vote on is the realignment of the Canadian exchanges. The proposed realignment formalizes a natural evolution of the Canadian capital market place, allowing each exchange to focus on its proven expertise and core strength. For the TSE, it means further strengthening its position as Canada's senior equities exchange. Montreal would become Canada's national derivatives market, and a new national junior market would be created through the combined re-organization of the Vancouver Stock Exchange, Alberta Stock Exchange and the Canadian Dealing Network to service the venture capital and small-cap needs of Canadian businesses coast to coast. Benefits include:minimizing the existing duplication of investment in technology, infrastructure, regulatory programs and services among the exchanges; streamlining dealings with the exchanges for the many issuers that are interlisted on two, three or four exchanges today, which will reduce their costs; streamlining dealings with the exchanges for securities dealers, which will reduce their costs; eliminating overlapping, but not always uniform exchange rules applicable to both member firms and listed companies, which will reduce complexity and costs; improving liquidity in each market by minimizing market fragmentation which will strengthen each market and improve the exchanges' ability to compete globally. "The exchanges have agreed to implement such arrangements as are necessary to provide issuers and users of their markets with an equivalent quality of service to that provided at the time of entering into the agreement," said Ms. Stymiest. Members will also vote on a Board proposal to change the composition of the Board. The Board recommends reducing the number of member governors (who must be partners in or officers of a member) by three while introducing three non-member governors (i.e. governors who are not affiliated with a member) who will still be elected by the members. In addition, there will continue to be four public governors. "The board views sound corporate governance as vital to the effective management of the Exchange and believes that the new Board composition will ensure that the interests of all stakeholders are more appropriately reflected," said Ms. Stymiest. The fully automated Toronto Stock Exchange consistently ranks as one of the world's top exchanges and is Canada's premier market for senior equities, accounting for approximately 90% of all equity trading in Canada. In 1998, more than 26 billion shares traded, worth more than $490 billion - about $2 billion a day in share transactions. With a proud 147-year history at the heart of the Canadian economy, the TSE continues to provide Canadian and international investors with a well-regulated, fair and accessible marketplace.