Upstart exchange Aequitas NEO has secured its first listing. It’s a milestone to be certain, but one that illustrates the task of dealing with the dominant Toronto Stock Exchange.
The listing, to visit live sometime in March once the application receives regulatory approval, is really a new PowerShares exchange-traded fund (ETF) to become launched by Invesco Canada – a firm that also is surely a shareholder in the new exchange’s parent company, Aequitas Innovations Inc.
In addition, the president and chief operating officer of Invesco, Peter Intraligi, is around the Aequitas board.
Jos Schmitt, chief executive of Aequitas, acknowledges the task for that new exchange to land a large corporate fish, even with lower listing prices than the Toronto Stock Exchange along with a seasoned group of backers including Invesco, Royal Bank of Canada and Barclays Corp.
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“We’ve seen a lot of people who expressed strong interest – that are quite keen to list with us or migrate to us, there is however always that fear of the brand new player,” Schmitt said within an exclusive interview using the Financial Post.
Worse still, large information mill unlikely to migrate in the Toronto Stock Exchange because, he says, it appears they need those listings to be included in various stock market indices used as investing benchmarks by large institutions.
“If you cannot be part of an index, you will be very concerned that which will have an affect on the value of your shares,” Schmitt says, adding the largest 250 companies by market capitalization aren’t even around the Aequitas radar for the time being.
At the top his listing of viable targets are exchange-traded funds, whose backers will have a chance to witness the experience of the PowerShares DWA Global Momentum Index ETF.
“Many will very carefully look at how things go with this first listing,” Schmitt said, adding that they want proof there are no difficulties with use of trading or liquidity, which information is available across all marketplaces “so the experience for the investor remains similar to – or what we should believe will end up much better than – the experience they have today.”
Beyond ETFs, Aequitas NEO Exchange will court closed funds and, ultimately, companies taking a look at initial public offerings on an exchange and small to medium-sized firms seeking to migrate over from the Toronto Stock Exchange.
‘I can’t tell you at this time, obviously, who they are, however these discussions are ongoing,” Schmitt said.
He said he isn’t thinking about inter-listed companies, the ones that would remain on the TSX while also listing on the Aequitas NEO Exchange, while he doesn’t see the value for them.
Aequitas launched a new trading venue last March, and began marketing its listings business in June using the commitment of initial fees which were up to 67 per cent less than the rival Toronto Stock Exchange.
But Schmitt has maintained that Aequitas won’t compete on price alone, stating that is really a trap that hampered earlier challengers towards the dominant exchange. The upstart has been pitched like a quality label, with listing standards that match or exceed the ones from the TSX.
On the trading front, Aequitas had captured about two per cent of Canadian marketplace trading (by volume) at the end of 2015, according to figures collected through the Investment Industry Regulatory Organization of Canada. The Toronto Stock market and Venture Exchange had just over 62 per cent.
bshecter@nationalpost.com
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