Canada Equity Market

Overview Introduction (~5 minutes) History Today Participants (~4 minutes) Rules and Regulations (~7 minutes) Structure (~8 minutes) Differences between Canada and USA (~4 minutes) Conclusion/Questions (~2 mins)

History Started 1832 Traded in coffee house in Montreal 1874 – Montreal stock exchange 1878 – Toronto stock exchange 1980’s – Canadian Banks and trust companies can now have ownership

History Continued 1999 – CDNX created Natural resources CDNX was bought by the Toronto stock exchange. TSX was bought by TMX Group Inc. CDNX  Toronto Venture Exchange.

Today 3 main marketplaces: S&P/TSX Toronto Venture Exchange Montreal Exchange Other market places: CSE Alpha exchange Bloomberg Tradebook Chi-X Canada CX2 Canada ATS …(6 more)

Assets traded: Cash and financial derivatives as well as fixed income, energy, natural gas, technology, natural resources Derivatives Fixed income securities Energy Natural gas Market cap of over 889 billion USD.

Participants

As of 2014, there are 187 firms – 17 are foreign owned. 6 largest participants (owners followed by the firm): BMO BMO Nesbitt Burns Canadian Imperial Bank of Commerce CIBC World Markets National Bank of Canada National Bank Financial Royal Bank of Canada RBC Dominion Securities ltd The Bank of Nova Scotia scotia capital TD Bank Financial Group TD Securities

73% 6 largest firms 15% Retail firms 12% Institutional firms Participants

Regulation Federal and provincial regulation Federal CSA: Investment Industry Regulatory Organization of Canada (IIROC) Mutual Funds Dealers Association (MFDA) Provincial (3 largest) Ontario Securities Commission British Columbia Securities Commission Autorité des marchés financiers

Regulation CSAIIROCProvincial MFDAProvincial *Total of 13 regulators including Revenue Canada

Regulation Canadian Securities Association Create uniform rules and regulations Manages approval process In charge of developing IT (nationally) Enforces rules Passport System (except Ontario) Easy Fast Cheap

Regulation IIROC Self-regulatory CSA Standards Protect investors Help prevent fraud Canadian Investor Protection Fund

Regulation MFDA Self-regulatory Not licensed under Quebec regulator Cooperative agreement CSA IIROC Investor Protection Regulates mutual fund distribution

Regulation Problems Difficult coordination Slow Increased risk International Issues Small resistance in collaboration Inefficient Costly

Current Trend 80% of share traded on TMX Group 3% trades in dark pools Banking, mining and energy Heavy dependency on commodities

Structure Toronto Stock Exchange Exempt issuers Non-exempt issuers TSX Venture Exchange Tier 1 Tier 2 NEX Canadian National Security Exchange

Stock Exchange---Four Primary Methods IPO REVERSE TAKE-OVER QUALIFYING TRANSACTION DRICTLY LISTING

The Difference between Canada and US Stock Market Sector weights for Canadian and US markets

The Difference between Canada and US Stock Market Smaller market size Smaller market capitalizations Concentrated sectors Less dark poor trading

References (n.d.). Retrieved March 17, 2015, from Differences-Between-Canadian-and-U-S-Equity-Markets1.pdfhttp://iiac.ca/wp-content/uploads/HFTs-and-the-Structural- Differences-Between-Canadian-and-U-S-Equity-Markets1.pdf Canadian Investor Protection Fund - Home. (n.d.). Retrieved March 17, 2015, from Commissoin des valeurs mobilières du Manitoba. (n.d.). Retrieved March 17, 2015, from Department of Finance Canada * Ministère des Finances Canada. (n.d.). Retrieved March 17, 2015, from Home. (n.d.). Retrieved March 17, 2015, from Investment Industry Regulatory Organization of Canada (IIROC). (n.d.). Retrieved March 17, 2015, from Investment Industry Regulatory Organization of Canada (IIROC). (n.d.). Retrieved March 17, 2015, from OSC-IIROC Market Structure Conference. (n.d.). Retrieved March 17, 2015, from Task Force to Modernize Securities Legislation in Canada. (n.d.). Retrieved March 17, 2015, from