Monday 26th September 2016

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Canada’s other exchange

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“Since the exchanges were merged and bought out by the banks, there’s been a noticeable change,” he said. “The banks couldn’t care less about junior capital. It doesn’t make them any money and they control the stock markets. It’s costing the average junior company $200,000 a year just to keep in compliance.”

By comparison, the CNSX charges what it calls “simple, fixed listing fees: $12,500 for application and $500 per month.”

One of the things we want to do is ensure that companies spend less of their money meeting exchange requirements and more of their money growing their business. We do want to offer solutions to the small issuers and independent dealers to help them through these difficult times.—Richard Carleton,
CEO of CNSX Markets

Martin also said the Venture imposes unnecessary duplication. “For example, by law you’ve got to do your SEDAR filings and if you’re falsifying those things it’s criminal. You should be charged. So why the heck do we have to have the exchange put another level of inquisition in there?”

Martin said he knows one executive who’s “so frustrated with what they’re doing, he’s thinking of moving everything over to CNSX. The CNSX just says, ‘You’ve got your SEDAR filings, you’ve done your work.’”

Junior explorers currently make up over 50% of CNSX-listed companies. But with only 180 issuers, the exchange has less than a tenth of the Venture’s size. Does Martin see the CNSX gaining more prominence? “Well that’s up to them,” he replied. “I can’t speak for them.” His advocacy group, meanwhile, has begun a campaign of lobbying, fundraising and public awareness.

Obviously Carleton would like to see juniors move from the Venture to the CNSX. “We certainly want to make a compelling case for them to do so. One of the things we want to do is ensure that companies spend less of their money meeting exchange requirements and more of their money growing their business. We do want to offer solutions to the small issuers and independent dealers to help them through these difficult times.”

Of course efforts to recruit listings face challenges, Goodman emphasizes. “We’re competing against the banking community that owns all the stock exchanges other than the one I just bought, and the banks control the retail products so it’s going to have problems. We’ve even heard stories that banks won’t accept margin on shares listed on the CNSX.”

Attracting new companies is “not going to be easy. But I’ve created a career by doing things that aren’t easy.”

He points to NASDAQ for inspiration. “When it went into the business, no one wanted to know anything about it,” Goodman says. “Now the New York Stock Exchange has a complete floor of people that do nothing but try to convince NASDAQ players to come back to the New York Stock Exchange when they were refused in the first place because they were start-ups.”

Taking part in the Dundee announcement was the CNSX’s largest shareholder, Urbana Corp TSX:URB.A, which holds interests “across the financial services sector from exchanges to banks to broker dealers and investment managers.” Urbana president/CEO Thomas Caldwell chairs the CNSX board.

As the new deputy chairperson, Goodman says, “I’m partners with him in the sense that we’ve agreed on how the place is going to be run.”

Read more about Ned Goodman’s plans for the CNSX.

Read more about the Venture Capital Markets Association.

Read about efforts to create a single Canadian securities regulator.

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