AAhh perfect!!!! A goood exchange in Canada!!!
Quebec tries to entice Nasdaq
Wants it to set up Montreal operation
RICHARD BLACKWELL
The Globe and Mail
Saturday, December 11, 1999
The Quebec government is trying to lure Nasdaq to Montreal, a move that could damage the new Canadian
Venture Exchange (CDNX), and perhaps hurt the Toronto Stock Exchange as well.
A spokeswoman for Quebec Finance Minister Bernard Landry said government officials and senior members
of the Montreal business community visited Nasdaq Stock Market executives a little over a week ago to ask
the exchange to consider setting up operations in Quebec.
The Nasdaq link in Montreal would be an electronic stock exchange that lists high-tech firms and other
small-cap companies in the province, linked to its New York trading network.
Currently, about 130 small-cap firms list on the Montreal Exchange, although trading takes place on the
facilities of CDNX in Vancouver. That arrangement was made as a compromise after Mr. Landry balked at
the plan to move all small-cap trading, including that of Quebec firms, to the CDNX under the agreement to
revamp Canada's stock markets.
Mr. Landry's spokeswoman, Andrée Corriveau, said yesterday that the proposal to get Nasdaq to expand
into Quebec was initiated by the government, not by Nasdaq. However, she said, the reaction of the
exchange's executives to the proposition was "very favourable" and they have made a commitment to "look
into it."
Nasdaq made no commitment to go ahead, Ms. Corriveau said. "Obviously they are business people, and
they will analyze everything. They asked us for all sorts of information, which we gave them."
The idea is that any small-cap Quebec firm could list on this electronic market. Companies from outside
Quebec would probably be able to list there as well, Ms. Corriveau said, although those kinds of details have
not yet been worked out.
A spokesman for Nasdaq would say nothing about the meetings. His only comment was that "we are
constantly speaking to markets around the world."
Nasdaq recently signed a deal to create a pan-European stock market that would list high-growth companies
from across that continent, and another deal to create a electronic Nasdaq system in Japan. Both are set to
start before the end of next year.
Mr. Landry did not attend the Nasdaq meeting, but officials from his department were accompanied by
several members of the Montreal business community. A report in the Montreal newspaper Le Devoir said the
group included Jean-Claude Scraire, chief executive officer of the powerful Caisse de dépôt et placement du
Québec, and Guy Savard, a senior Quebec executive of Merrill Lynch Canada.
A Caisse spokeswoman would not confirm or deny that the meeting took place, and Merrill Lynch would not
comment yesterday.
If Nasdaq opens an office in Montreal to list Canadian companies, "then it would be a new ball game for
Montreal and for Canada, too," said Dominik Dlouhy, president of Dlouhy Investments Inc. in Montreal.
The only people who would suffer would be CDNX, he said, "but I don't have much faith that [CDNX] will
really provide the input and knowledge and credibility that small companies need."
CDNX, forged from the merger of the Vancouver Stock Exchange and the Alberta Stock Exchange, is trying
to establish itself as the sole Canadian small-cap market from a base in Western Canada.
Mr. Dlouhy says Nasdaq would give small firms exposure to investors in the United States, who are more
creative and less conservative, and give higher values to small-cap companies. "It would be a wonderful thing,"
he said. "I'm sure that people in Quebec would see this as a real coup, having lost the [Montreal] exchange to
Vancouver and Toronto."
It makes sense for Nasdaq to come to Montreal, rather than Toronto, he said, because the TSE is tied up with
battling the New York Stock Exchange for senior listings, and Nasdaq would not want to get involved in that
fight. "It's virgin territory here now."
But Bill Hess, president of the CDNX, disagrees that a Nasdaq link in Quebec would necessarily be bad for
Canada's junior exchange. "If it's Nasdaq, I don't see where that's an issue for CDNX at all," Mr. Hess said
yesterday. "Nasdaq is a senior exchange. It deals with issuers that, to a large extent, are significantly [more]
senior than the ones that we're starting with."
People have a misperception about Nasdaq, he said, and don't realize it lists companies with a fairly large
market capitalization. "The real Nasdaq market is not competition [for us]. In fact, we'd be looking to work
with Nasdaq just like we're working with the TSE to ease the transition for the junior companies."
Mr. Hess said the proposal could be a problem for Canadian markets in general "if it reverts us back to the
fragmentation of the senior market." However, he said, securities regulators are preparing to open the markets
to more competition from electronic exchanges, and this proposition might fall into that category.
TSE president Barbara Stymiest said yesterday that the TSE is prepared for competition from any source,
including Nasdaq. One of the main reasons for the realignment of Canada's exchanges was to prepare for new
players, and "we're certainly getting our act together for competition," she said.
"In some ways it underscores why the Competition Bureau didn't have a problem with the Canadian
exchanges deciding to specialize -- so that we're focused and able to compete with this kind of threat."
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