Toronto-based TMX Group Ltd. is planning a series of measures designed to boost listing and trading activity on its moribund venture market.
The stock exchange operator announced on Tuesday that it will publish a white paper in the next couple of weeks that will propose a set of planned changes intended to rejuvenate the TSX Venture Exchange (TSXV).
That paper will outline TMX Group’s planned tactics for revitalizing the market by reducing the administrative burden to TSXV issuers; enhancing the market’s appeal to early-stage companies; expanding the base of investors for TSXV issuers; and enhancing liquidity, overall.
TMX Group is not yet revealing any of the specific changes it intends to propose, although it does signal that it intends to shift the market further away from resources and toward the technology sector. The firm’s announcement notes that the changes will aim “to accelerate growth in listing, financing and trading activity in sectors such as technology, clean technology and life sciences.”
“We are squarely focused on revitalizing the market to remain the pre-eminent financing option not only for early-stage resources companies, but also for growing businesses in the burgeoning technology and innovation sectors in Canada,” says Nick Thadaney, president and CEO, global equity capital markets with TMX Group, in a statement.
The demise of the venture industry in Canada has been a key concern for the investment industry, particularly for smaller dealers, which have suffered from the decline in financing activity and trading action in that end of the market. According to data published earlier this year by the Investment Industry Association of Canada (IIAC), small-cap equity financings are down by about 50% since the financial crisis and trading in venture shares is down by about one third.
In addition, trading volume on the TSXV is down a further 15% through the first 10 months of 2015 compared with 2014 and the value of that trading is down by about 38%, according to the latest data from TMX Group. On the financing front, the value raised on the TSXV is also down by about a third so far this year.
The IIAC has flagged a range of issues that it believes is impacting the TSXV, including weak resources prices, demographics, regulation and the rise of the exempt market. It has called on dealers, institutional investors, exchanges and policy-makers to help rejuvenate the venture markets.
TMX Group says its forthcoming white paper proposals follow from consultations that it has undertaken in recent months. The firm also notes that it will also detail the planned changes in a series of town hall meetings that it will host across Canada starting in January 2016.