The operator of the Toronto Stock Exchange and the Montreal Exchange shut down all of its markets about two hours early on Friday afternoon after experiencing "internal technical" problems with trading.

"Trading will not resume today, including market on close," TMX Group said in a tweet sent shortly before 3 p.m. ET. "We apologize for the inconvenience."

The exchange operator later said in a statement that it had identified the issue and was working to rectify it. TMX said it expects to resume regular trading on Monday.

The company has not disclosed the nature of the trading problem, but a Toronto Stock Exchange spokesperson said the trading outage was not due to "a hack."

The outage was inconvenient, said Sheryl Purdy, vice-president and investment adviser at Leede Jones Gable in Calgary.

"I was very lucky that the trades that I needed to do today were done earlier in the day," she said. "I was very lucky that I didn't have client instructions to execute upon particular trades in the last two hours of the day."

However, Purdy wouldn't say she has lost confidence in the exchange. "I would say that it was a glitch, in [that] they're going to work on it."

The Ontario Securities Commission has been in contact with TMX Group and will be throughout the weekend.



"We continue to monitor and watch the situation closely," a spokesperson for the regulator said.

UPDATE 4 - TMX has decided to shut down all markets for the remainder of the day. Trading will not resume today, including market on close. We apologize for the inconvenience. Further updates will be provided. —@TMXGroup

TMX Group said earlier that "all users are equally impacted and are unable to connect to our exchanges."

The move halted all trading in stocks, options and derivatives on TMX's markets. Also affected were the TSX Venture Exchange, a market for small capitalization stocks, and the TSX Alpha Exchange, a market geared to active traders.

The problem began affecting the Montreal Exchange at 1:37 p.m. ET, and began hitting the TSX less than two minutes later. TMX Group sent out an initial tweet warning of the problem shortly after 2 p.m.

At the time that the issue arose, the S&P/TSX composite index was up 31.34 points at 15,668.93.

TMX Group said it will be using the last board lot traded prices to determine closing prices for equities on the TSX and the Venture Exchange. A board lot is standard trading unit. For stocks worth $1 or more, a board lot size is 100 units.

No flash-crash

According to Bloomberg, about 115 million shares changed hands on Friday before the trading problem arose. In comparison, 208 million shares were traded the previous day.

"I don't think it was an incredibly high-volume day," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

"At this point it looks like … technical issues. It doesn't seem like it's tied to a flash crash."

Larry Bates, a 30-year investment industry veteran and the author of the soon-to-be-released book Beat The Bank — the Complete Guide to Simply Successful Investing, said the main issue to be addressed is ensuring the market reopens Monday morning.

Speaking on CBC's On the Money, Bates said trading disruptions have happened before and will happen again.

"It's an unfortunate event. It's not unprecedented," he said.

The last extended shutdown on the TSX was on Dec. 17, 2008, when trading never opened because of a problem with data feeds.

Ways to deal with it

Bates said the shutdown makes life difficult for active traders, but he doesn't see Friday's trading problem as a big issue for long-term investors,

Large traders and institutional trader can get around the issue by hedging or using derivatives, or trading on other exchanges, he said.

"There are ways to deal with it," he said. "Institutions have more flexibility and more power to be able to deal with these issues and manage their risks than individual investors."

A message posted to users of TD's Web Broker accounts reads:

"Due to technical issues at the TMX Group Inc., Canadian order flow is currently unavailable for the TSX, TSX Venture, Montreal Exchanges and other Canadian ATS exchanges. U.S. order flow and the Canadian Securities Exchange are not impacted."