When Pierre Lortie, 38, became the seventh and youngest-ever president of the Montreal Exchange (ME) in 1981, his first task was to keep the market from shutting down. The election of the Parti Québécois government in 1976 had led to an exodus of banks and firms that accelerated a decades-long decline in Montreal’s financial district. Said Lortie: “Had our share of national trading dropped any lower, it would have brought the usefulness and the viability of the exchange into question.” Now, the silver-haired, pipe-smoking Lortie has put the ME on the leading edge of Montreal’s financial rebirth. In his papercluttered office overlooking rue StJacques, once Canada’s major financial centre, Lortie displays the kind of confidence that characterizes a whole new generation of francophone businessmen in Quebec. His goal, he said, is nothing less than to make the ME “the dominant exchange in Canada.” Called “le grand Dieu gris” (the great grey god) by ME employees, Lortie is one of the well-educated and ambitious francophone executives who have re-
placed the anglophone businessmen in Montreal since 1976. Indeed, his presidency, and those of Quebec businessmen Michel Belanger and Robert Demers before him, signal a new French-Canadian ascendancy at the ME, which was once such a prominent symbol of Anglo-Saxon financial power that the separatist group the Front de Libération du Québec (FLQ) exploded a bomb on the trading floor in 1969.
Since Lortie took over, the exchange has undergone a major transformation. He has introduced a series of exotic financial products, from gold options to lumber futures, and he has linked the exchange by computer with other world markets to speed up international trading. Last week the ME opened a London office to attract additional business, making it the first Canadian market with a foreign office.
Lortie’s tactics enabled the ME to surge ahead last year when other Canadian markets sagged. In 1984 the value of trading on Canada’s five stock exchanges dipped by 8.4 per cent to $36.1 billion from 1983’s record $39.3 billion. But under Lortie’s leadership the value of shares traded on the ME reached $7 billion, up 38 per cent from the previous record of $5 billion set in 1983.
The nation’s largest market, the Toronto Stock Exchange, still outperforms the ME. Investors traded 2.1 billion
shares, worth $26.7 billion, in 1984 on the TSE. But Montreal is steadily eroding the TSE’s dominance. By the end of last year the Montreal Exchange had captured nearly 22 per cent of the combined value of shares traded on the two markets, compared with about 14 per cent in 1983. Indeed, many Montreal traders are clearly delighted with Lortie’s achievements. Said John Scott, a 36year-old ME trader: “A lot of guys on the floor believe that if Pierre Lortie were running the TSE we would be out of business.”
A native of Montmagny, near Quebec City, with training in business and economics from the University of Chicago and the University of Louvain, in Belgium—as well as an engineering degree from Quebec City’s Laval university —Lortie was well equipped to revitalize the Montreal exchange. He first came to public attention in 1970 as a 23-year-old chief executive assistant to former Quebec Liberal finance minister Raymond Garneau, now a federal Liberal MP. Then, in 1974 he joined the Montreal Stock Exchange as its director of development. Since becoming president of the exchange, which pays him a salary of about $100,000 a year, Lortie, a father of one, has refused to sign a contract, leading to speculation that he may want to eventually pursue a political career. In fact, both the Liberal and Conservative
parties asked Lortie to run in the 1984 federal election—offers he declined.
As president of the exchange, Lortie was determined to keep pace with the rapid evolution of North American markets. Soon after taking the job he dropped the word “stock” from the exchange’s name to reflect the fact that it was selling everything from common shares to gold and commodity futures (contracts that obligate an investor to buy or sell a commodity at a specified price and time). Lortie also ordered the installation of an advanced computer system to speed up share trading and he made the exchange part of an international trading network offering gold and currency options. The exchange was electronically linked last September to the Boston Stock Exchange, enabling Canadians to trade stocks in the United States by computer rather than by phone. Said Lortie: “By 1990 the Canadian exchange that survives will be the one that can best compete internationally.”
Many Montreal businessmen also credit Lortie with giving the exchange a more central role in the province’s economy. Said David Schulman, an investment analyst with Geoffrion, Leclerc Inc. in Montreal: “Pierre has used his high profile to bring the market closer to the people.” The exchange now offers advanced courses to experienced inves-
tors and directs novices to an association of 50 investment clubs across Quebec. As well, to show the public exactly how the market works, Lortie set up a mini-exchange which trades actual stock at savings and investment shows held throughout Quebec.
Still, Lortie cannot claim sole credit for the ME’S renewed vigor. In 1979 the province introduced the Quebec Stock Savings Plan, which allows tax deductions of as much as 150 per cent on purchases of newly issued stock in Quebec-owned firms. More than 108,000 Quebecers invested in QSSPs in 1983 alone, and total investment now exceeds $1.5 billion. But this political support has caused controversy. Last fall TSE president Pearce Bunting called the ME’S resurgence an “aberration” resulting mainly from supportive legislation introduced by the Parti Québécois. But in a recent interview with Maclean ’s Bunting praised the ME’S performance, adding that it is “a direct reflection of Pierre Lortie’s aggressiveness.”
With North American stock markets bursting back to life this year, the rivalry between the TSE and the ME will intensify. Leaders of Toronto’s financial community say they are not worried about the Montreal Exchange’s new dynamism, but Bunting admits that the TSE is finally looking over its shoulder at its fast-rising Montreal counterpart.^
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