As of this morning, the CATS computer terminals sitting on stock traders' desks across Canada become little more than unwieldy paperweights.
After more than 20 years of service, the terminals that formed the front end of the Toronto Stock Exchange's Computer Assisted Trading System (CATS) have finally been unplugged. The move will pave the way, the TSE hopes, for a smoother electronic trading environment that will see the end of massive glitches, such as the screw-ups that recently forced halts in trading of Nortel Networks Corp. stock. The CATS terminals have been replaced by new devices sold to the dealers by vendors such as Reuters Information Services (Canada) Ltd., Belzberg Technologies Inc. and Versus Technologies Inc. Over the weekend, all access codes that linked the old CATS terminals to the exchange's computers were cancelled.
There were about 1,500 CATS terminals in use a year or so ago, when the TSE said it was going to kill off the CATS machines and would let third-party suppliers replace them. That number dropped to about 750 recently as brokerages gradually shifted to the new technology.
As recently as 10 days ago, 20 per cent of trades were still routed through the CATS machines, although that volume fell after the TSE board of directors confirmed last week that it would stick to today's deadline for the conversion.
The CATS terminals had one last flight of glory: When transactions in Nortel stalled on Oct. 15, traders found they could execute some trades faster by shifting to the old machines from the newer terminals. The old units, in effect, linked the traders up to the underused back door of the TSE computer.
TSE senior vice-president Adam Conyers said every investment dealer on the TSE had new terminals in place before the weekend.
Brokerages confirmed that they were ready for the final conversion from CATS and had their new machines revved up and ready to go.
"Our equipment is here, it's installed," said Fred Ketchen, head of equity trading at Scotia Capital. "We've been using several systems and CATS has been only one of them, so [the conversion]isn't going to be any burden on this place at all."
Mr. Ketchen said he still has a CATS machine sitting on his desk. "I'm going to leave it here. It won't work but I like to look at it; it's part of history," he joked.
Other brokers said they have been using CATS and the new terminals together for several months, and will have no problem making the switch today.
Paul Bates, president of brokerage Charles Schwab Canada, said his firm converted to new terminals in August. While Schwab's CATS terminals were still in place late last week, they were used only to get extra screens of information, not for trading. Pulling the plug "won't have any impact on us," he said.
For the TSE, dumping the CATS terminals means it can get rid of its problem-plagued order management system -- the communications link that connected the old terminals with the exchange's trading engine. It was the component that caused most of the exchange's technology glitches in recent years.
Trades now move from the terminals through a TSE-owned communications link called Gateway, a more efficient network that can handle large volumes of trades. The software that makes it all work is called STAMP, for Securities Trading Access Message Protocol.
But the core component of the TSE's trading system -- the trading engine -- is the last part of the old CATS system still in place, and it won't be gone until next year.
The move to a new engine couldn't happen until the updated terminals and communication link were in place, Mr. Conyers said. Until the new engine -- which will have a much higher overall capacity than CATS -- is up and running next spring, the TSE has taken some remedial action to make sure a backlog in trading of one stock doesn't crash the whole system.
But there could still be problems, Mr. Conyers admitted. "The current engine can handle significant numbers of trades over a day, but it's got funny little bottlenecks in it."
A few stocks at a time will be moved to the new engine starting in the second quarter of 2001, with the change-over scheduled to be completed in the third quarter.