Canadian markets info, fromt the ASE site.
cdnx.ca
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What events have occurred? What is the schedule for future developments?
The Vancouver, Alberta, Toronto and Montréal stock exchanges announced March 15th that they had signed
an agreement in principle to restructure the Canadian capital markets along the lines of market specialization,
including a merger of the Vancouver and Alberta exchanges. The merged ASE/VSE entity will also
consolidate the operations of the Canadian Dealing Network (CDN), a subsidiary of the Toronto Stock
Exchange, and junior companies now listed on the Montréal Exchange. An invitation has been extended to
the Winnipeg Stock Exchange to participate in the new junior market.
The reorganization of Canada's exchanges is subject to approval by the securities commissions of Quebec,
Ontario, Alberta and British Columbia.
The Boards of Governors of the Vancouver Stock Exchange and The Alberta Stock Exchange announced April
23rd that they had agreed - subject to regulatory approvals - to merge the two exchanges to form a new
Canadian junior capital market and to ask their member firms to ratify the merger in November 1999. It is
anticipated that the name of the new exchange will be selected and approved by the members at that time.
The new exchange is expected to begin operations by fall of 1999. The CEOs of the VSE and the ASE,
Michael E. Johnson and Tom Cumming, will manage the transition as co-CEOs until the board of the new
exchange appoints a permanent CEO.
What is the objective of the new Canadian junior capital market?
The objective of the new junior exchange will be to provide entrepreneurs and innovators in every region of the
country with access to public equity capital, while increasing protection and flow of information to investors.
How will the new market benefit participants?
Listed companies will have improved access to capital through regional representation provided by all
exchanges and harmonization of regulations, undertaken in coordination with the Canadian Securities
Administrators (CSA). It is also expected that listed companies will benefit from elimination of overlapping
fees, improved service levels and broader investor following.
Investors will benefit from a well-regulated, fair and accessible marketplace with enhanced protection through
uniform regulatory standards, consistent enforcement and improved market information.
Member firms will benefit from common technology platforms between the exchanges, which will enable
greater efficiencies and reduced costs within their own operations. There will also be opportunities for
collaborative marketing programs to expand business in fields of niche expertise such as junior mining,
telecommunications and technology within Canada and worldwide.
How will the Canadian economy benefit?
A stronger junior equity market translates into a significant contribution to the Canadian economy by
supporting emerging growth businesses, the greatest source of job creation.
How was the location of departments and offices decided?
First, it was agreed that a so-called "head office" was irrelevant. Head offices for stock exchanges date back
to the days of trading floors and local investors investing in local enterprises. For a totally computerized
trading system and a national approach to financing and investing, a head office is a concept that is irrelevant.
Second, this is a merger of equals, with the VSE and ASE each having core competencies the combination of
which would become greater than the sum of the parts. Therefore, it had to be a win-win deal for both
exchanges.
Third, applying the win-win objective to practical operating considerations meant that department functions
were to be located where existing strengths and infrastructure reside. The corporate office in Calgary will be
responsible for planning, corporate finance and management responsibility of the regional offices in Montréal,
Toronto and Winnipeg. The Vancouver operations office will be responsible for trading, technology, marketing,
compliance, and market information services. The corporate functions of finance, administration and human
resources will reside in Vancouver. All regional offices, including Vancouver and Calgary, will provide corporate
finance, market regulation and marketing services.
What will happen to the infrastructure that support listed companies in Vancouver and Calgary?
Calgary's traditional role as the centre for the junior oil and gas industry and Vancouver's industry expertise in
the junior mining sector will be enhanced by the formation of the new exchange. Vancouver and Calgary have
over the years assembled the engineers, geologists, accountants, lawyers and corporate finance experts to
serve their respective industry sectors. These support industries will thrive in their existing locations under the
new national junior exchange.
How will employment at the VSE and ASE be impacted?
Employment levels of the VSE and the ASE should not change significantly under the merger. The exchanges
will need current employees to facilitate the merger. Once the merger is complete, a number of employees
may be re-deployed to new assignments to accommodate the growth of the new exchange.
What will be the new exchange's relationship with the TSE?
The new junior exchange's most successful companies may follow a graduation path to the Toronto Stock
Exchange. Nowhere else in the world will a country's junior and senior equity exchanges be so closely
aligned. It is expected this will substantially increase the participation of companies and investors in this
market.
What role will information play in the market's success?
The new market will offer an unprecedented amount of information on market events and all listed companies
via the internet to encourage increased participation of institutional and individual investors in Canada and
abroad.
What role will the provincial securities regulator play in the new market?
Provincial securities commissions in British Columbia, Alberta, Ontario and Quebec will be asked to approve
the market reorganization. The securities commissions in British Columbia and Alberta will also be asked to
specifically approve the merger of the VSE and ASE. In addition, the exchange will work with provincial
securities regulators to develop a harmonized regulatory environmental that would reduce the complexities
companies have traditionally faced in raising capital from province to province.
How will the new market be governed?
The Canadian junior capital market will be governed by representatives of member firms and the public from
across the country. The inaugural board will consist of six member directors and two public directors from
each of British Columbia and Alberta, two member directors and one public director from each of Ontario and
Quebec and one member director from Manitoba. These 23 directors will select a CEO who will become the
24th director.
How will the different qualities of companies be listed?
The specific listing requirements have yet to be finalized, however, a three-tiered structure is planned:
Tier 1 is intended for advanced companies. These companies may be attractive to institutional investors and
may be eligible for special services such as expedited review and preferential policies.
Tier 2 is intended for venture companies with an active business. Included are capital pools that will be
designated by a unique stock symbol until a major/qualifying transaction has been completed. This tier will
represent the majority of listings.
Tier 3 will be for companies that have not yet found a business, are reorganizing, or are too early in their
stage to meet the other tier requirements. It is expected that companies in Tier 3 will eventually move to Tier 2
within a predetermined period. Tier 3 is also designed to offer different access types and will be operated as a
dealer market. Tier 3 companies will have stock symbols with four letters.
Existing ME and TSE members who are not also members of the ASE or VSE will have access to trading
privileges without purchasing a seat/share. Existing CDN broker dealers would be required to apply for access
privileges.
What trading technology will the Canadian junior capital market utilize?
It is expected that the new market will begin operations in fall of 1999. The VSE-owned VCT computerized
system will be used as the interim trading engine for a transition period of up to three years. The use of VCT
during the interim period provides flexibility to choose from one of three strategic options for trading, including:
an enhanced version of the Horizon system, presently used by the ASE,
a redeveloped version of the VSE's VCT, or
the TOREX system, developed by the TSE as its next trading engine.
If the TOREX system is selected, the possibility exists that all Canadian equity markets could be satisfied
with a single trading engine to handle the transactions of the junior and senior equities markets. |
