# Vancouver Stock Exchange

The Vancouver Stock Exchange (VSE) was a stock exchange based in Vancouver, British Columbia. It was incorporated 1906. On November 29, 1999, the VSE was merged into the Canadian Venture Exchange (CDNX).

## History

It was incorporated 1906 and was the third major stock exchange in Canada, after the Toronto Stock Exchange (TSX) and Montreal Stock Exchange (MSE), and featured many small-capitalization, mining, oil and gas-exploration stocks.
In 1989, Forbes magazine labelled the VSE the "scam capital of the world." The VSE tended to attract colorful characters involved in questionable schemes. The best known 'character' on VSE was Murray "the Pez" Pezim. The British journalist Bob Mackin wrote about Pezim: ""The Pez" was the quintessential Howe Street wheeler-dealer known for smoking cigars, promoting his latest get-rich-quick scheme and womanizing. He flogged Vita Pez pep pills and audio tape greeting cards through Pezzaz Productions, a subsidiary of Pezamerica. He scored big with the 1981 Hemlo Valley and 1989 Eskay Creek gold discoveries."
In 1973, the Royal Canadian Mounted Police estimated that between 20%-30% of the stocks of the companies listed in the VSE were involved in some sort of fraud. In 1979, a study revealed that investors in companies listed on the VSE lost some of their investments due to fraud 84% of the time, and all of their investments due to fraud 40% of the time, giving the VSE the dubious reputation as the stock exchange with the highest rate of fraud in the world. In 1991, it listed some 2,300 stocks. Some local figures stated that the majority of these stocks were either total failures or frauds. A 1994 report by James Matkin (Vancouver Stock Exchange & Securities Regulation Commission) made reference to "shams, swindles and market manipulations" within the VSE. Regardless, it had roughly C$4 billion in annual trading in 1991. The Hells Angels were extensively involved in many of the stock market frauds on the VSE in the 1980s-1990s. Sasha Angus, the anti-fraud officer of the B.C. Securities Commission in charge of regulating the Vancouver Stock Exchange complained that many wealthy businessmen are quite willing to do business with the Angels and that "We understand the biker gangs are behind a lot of stuff [fraud] we've seen. But they don't always leave their calling card".
The dubious reputation of the VSE made investors unwilling to put their money into stocks in the "scam capital of the world", and led to the VSE to go into a major decline by the 1990s as investors much preferred the better regulated Toronto stock exchange. The journalist Clyde Woolman wrote: "The often swashbuckling, sometimes outrageous style of the likes of Nelson Skalbania and Murray Pezim sucked up newspaper print and did nothing to alter the exchange's image". The image of the VSE was so badly damaged by the number of scandals that it was finally shut down. On November 29, 1999, the VSE was merged into the Canadian Venture Exchange (CDNX) (now known as the TSX Venture Exchange), along with the Alberta Stock Exchange (ASE) and the minor-cap stocks from the Bourse de Montréal (MSE). The trading floor of the old VSE remained as the trading floor of the new CDNX.

### Rounding errors on its Index price

The history of the exchange's index provides an example of large errors arising from the accumulation of seemingly minor round-off errors. In January 1982 the index was initialized at 1000 and iteratively updated with each subsequent trade. After each update, the index was truncated to three decimal places. The truncated value was used to calculate the next value of the index. Updates occurred approximately 3000 times each day. The accumulated truncations led to an erroneous loss of around 25 points per month. Over the weekend of November 25–28, 1983, the error was corrected, raising the value of the index from its Friday closing figure of 524.811 to 1098.892.