Why would a brokerage house or dealer choose to trade (e.g. buy and sell equities or derivatives) on TMX Group exchanges (TSX, MX, etc.) versus another exchange like NYSE or Nasdaq?
Hello, and thanks for your question about why a brokerage house or dealer choose to trade (e.g. buy and sell equities or derivatives) on TMX Group exchanges (TSX, MX, etc.) versus another exchange like NYSE or Nasdaq. I have found that brokerage houses/dealers may choose to trade on TMX Group exchanges because they have shown rapid growth and are getting stronger. In addition they are seen as recession proof markets that are safer than NASAQ and NYSE for example. Below you will find a deep dive into my research, along with all the details as to how I came to this conclusion.
The TMX Group operates derivative, energy, cash and equity trading facilities, and is headquartered in Canada. The Toronto Stock Exchange (TSX) is a subsidiary of the TMX Group which includes the Montreal Exchange, the TSX Venture Exchange, Shorcan and NGX, and others.
In order to discover advantages/considerations that a brokerage house/dealer thinks about when determining where to purchase a trading seat I followed several avenues of research. I looked for sources which explain what a brokerage house/dealer looks for when choosing a market to trade in, as well as comparison of the separate markets in relation to buying and sell equities or derivative . However, these initial searches turned out sparse results, I believe that the information is fairly specific, and research/articles have not been published/are not freely available on these topics.
Next I searched for information regarding the benefits of trading on TMX Group exchanges, as well as disadvantages of competing markets. Here I was able to find more relevant information that I have detailed below, however it was not able to tell me specifically what advantages/considerations that a brokerage house/dealer thinks about when determining where to purchase a trading seat. However, I have included an explanation of the useful findings below, as well as suggesting possible continued avenues of research that may be of interest to you.
First of all I found that the TMX Group exchanges are attractive to brokerage houses/dealers because they offer an alternative that allows for rapid growth with the backing of public markets.
In addition to this, the TMX Group exchanges are currently getting stronger, they are attracting companies from both Silicon Valley and Canada’s technology hubs. While they are currently known as the "world leading exchange for the global resources sector and public venture companies.", they are attracting new kinds of business by "cutting administrative and compliance costs and combating the perception the Venture Exchange is only for natural-resource firms". They are also assisting private companies in the early stages of their development gain access to capital.
The TMX subsidiary TSXV is known as "the world's leading public venture market for small and medium-sized enterprises", and they claim that they are building to be stronger and stronger. President and CEO of Global Equity Capital Markets, TMX Group, Nick Thadaney states that "We are squarely focused on revitalizing the market to remain the preeminent financing option not only for early-stage resource companies, but also for growing businesses in the burgeoning technology and innovation sectors in Canada."
When considering the TMX Group exchanges in comparison to other markets there are a few disadvantages of the competing markets that become apparent that do not impact on the TMX Group. For example, the passage of Sarbanes-Oxley and other regulatory changes have meant that the NASAQ and NYSE are finding it more and more difficult to compete with foreign exchanges for new company listings.
In addition to this, a main advantage of the TMX Group exchanges is that they are Canadian. Many believe that the NYSE and NASAQ are not as stable as canadian markets. It has long been considered that Canada is recession-proof, and therefore Canadian markets safer.
POSSIBLE CONTINUED RESEARCH
It may be of interest to you to follow some alternative avenues of research related to this request. For example, what are the safest stocks to invest in on TMX Group exchanges? How have the TMX Group exchanges evolved over time? Or what does the future look like for TMX Group exchanges' competitors?
Overall, there was no data available that could specifically answer your question. However I have found that brokerage houses/dealers may choose to trade on TMX Group exchanges because they have shown rapid growth and are getting stronger. In addition they are seen as recession proof markets that are safer than NASAQ and NYSE for example.
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