EDITORIAL Can we learn from Black Monday?

What really happened on Oct 19? What caused the sharpest stock market decline in history and could it happen again? How much insider trading occurred? Who gained, who lost? Should we even care considering how calmly the market crash seems to have been accepted?

The Ontario Securities Commission and the Toronto Stock Exchange apparently feel we shouldn’t. Neither has plans to initiate any kind of inquiry or hearings into Black Monday and its aftermath.

It’s not hard to understand why. There have been no bankruptcies among tse member firms — the stock brokers who actually trade the shares on the floor of the exchange. And as far as the osc is concerned, the market mechanism performed admirably on Oct 19 and during the following fortnight. True, it’s a pity that millions of dollars were lost, but the strength of the financial institutions themselves was amply demonstrated by the way they weathered that storm. The only tangible adjustments made by Ontario’s regulators were the shortening of trading hours — more because of the volume of trading than because of the slide in prices — and the abridgement of normal course issuer bid regulations so that companies could buy back their own shares more easily.

Still, it seems prudent that these regulatory bodies should want to set straight, for the record, just what transpired during the second half of October, 1987 — if not for the sake of clarification, then for the sake of future regulators who may want to know how this crisis was handled. Now is the time to determine not only where the weak links in the financial chain are, the links that might be the first to break the next time a Black Monday arrives, but also to determine what strengths the system has. Now is the time to talk to the individuals who were on the firing line, the institutions that rely on the money markets and the regulators who are responsible for bringing together buyers and sellers in an orderly way.

Obviously, authorities in Canada can’t change what happened in New York, London and Tokyo. Those financial centres led us into the October debacle — Canada was merely carried along. Nevertheless, as the largest financial market in Canada, it might be worthwhile for the osc and the tse to combine on some sort of public inquiry into Black Monday.

That may not prevent another market crash, but it may help everyone cope the next time one happens.