CANADA’S FOUR STOCK EXCHANGES

Haim Ratzabi
Oct 16, 2022
3 min read

In the last few days I was exploring the Canadian stock exchange market. Here are some interesting points to share:

CANADA’S FOUR STOCK EXCHANGES

Like many major capital market centers around the world, Canada has multiple stock exchanges to publicly list and facilitate the buying and selling of securities. Canada’s Stock Exchanges are as follows:

TWO SENIOR STOCK EXCHANGES

▪ Toronto Stock Exchange (“TSX”) - the Toronto Stock Exchange is owned by the publicly traded, for-profit entity TMX Group. It also owns the junior TSX Venture Exchange, the Montreal Exchange (Canada’s financial derivatives exchange), the Alpha Exchange, and the NGX.

▪ The Neo Exchange (“Neo”) - The NEO stock exchange is the new senior stock exchange in Canada. Focused on its principles of fairness, liquidity, and transparency.

TWO JUNIOR STOCK EXCHANGES (known as venture issuer)

▪ Toronto Venture Exchange (“TSXV”) - The TSXV is one of Canada’s markets for venture issuers that are looking to grow relatively early stage companies by accessing the public capital markets.

▪ Canadian Securities Exchange (“CSE”) - The Canadian Securities Exchange is home to nearly 800 uniquely listed issues covering a broad range of industry sectors.

Spotlight on the CSE

The term Canadian Securities Exchange (CSE) refers to an electronic alternative stock exchange for small-cap and microcap firms and emerging companies in Canada. The exchange began operations in 2003 and was recognized and approved by the Ontario Securities Commission as a stock exchange the following year. The exchange operates electronically, which means there is no physical trading floor. The CSE is based in Toronto with an office in Vancouver.

The CSE operates electronically and does not have a traditional, physical trading floor. The trading system is based on price-time priority and does not take an over-the-counter market approach. It is fully regulated by the Ontario Securities Commission.

Companies must meet several requirements before they can list on the CSE. These include:

Demonstrated liquid assets or a viable plan to show they can sustain their operations and achieve their goals.
A proven revenue stream or a plan outlining how they will develop their business and the financial resources.
An interest in or the potential for earning one in a property with a technical report for mineral or oil and gas exploration companies.

Reporting requirements

While the CSE offers simplified reporting requirements and reduces listing barriers in order to remove the duplication of regulation between the exchange and the provincial securities commissions. This eliminates wait times for transaction approvals or reviews and cuts down on the cost and time for companies to get a listing.

The TSX, on the other hand, has more rigid requirements. Reports must be filed to one or more entities, including the exchange, investors, and the regulatory body. The recipient of these documents depends on the type of report being issued.

For example - Financial Statements for the issuer - Notice 2021-001 - Guidance - Financial Statement Requirements for Listing

25.1 Provide the following audited financial statement for the Issuer:

(a) copies of all financial statements including the auditor's reports required to be prepared and filed under applicable securities legislation for the preceding three years as if the Issuer were subject to such law; and

(b) a copy of financial statements for any completed interim period of the current fiscal year.

25.2 For Issuers re-qualifying for listing following a fundamental change provide

(a) the information required in sections 5.1 to 5.3 for the target;

(b) financial statement for the target prepared in accordance with the requirements of National Instrument 41-101 General Prospectus Requirements as if the target were the Issuer;

(i) the last full fiscal year of the Issuer, and

(ii) any completed interim period of the current fiscal year.

Read the full Notice 2021-001 - Guidance - Financial Statement Requirements for Listing - full notice 2021-001

Moreover, I was looking for Why US Cannabis Companies are Listing in Canada, especialy in CSE.

I found that in Canada, there is currently no federal ban on the sale of marijuana. Medical marijuana is also legal across the country, and the nation is reportedly going through proceedings to legalize cannabis for recreational use as well. All of these factors have made Canadian stock exchanges especially tempting for U.S.-based marijuana companies. In spite of the fact that medical marijuana is legal in 30 states and recreational cannabis use is legal in 10, U.S. marijuana companies are not able to list on U.S. stock exchanges, or even to receive basic financial services, as a result of the federal ban.

Due to the high proportion of marijuana stocks, the CSE has sometimes been facetiously referred to as the "cannabis stock exchange."

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