With the TSX Venture Composite Index hitting a historic low this week, it was time for a senior TMX official to put the situation in perspective and explain what an exchange operator can and cannot do for customers.
“We can’t change macro-economics, for example, and we can’t change the price of commodities,’’ said TSX Markets President Kevan Cowan during an interview with BNN on Wednesday.
“We have to keep in mind that the Venture Exchange is a unique exchange that is designed for early stage speculative companies, and because of that , it is very susceptible to cyclical swings and the market swings that we are seeing.’’
The product of a 1999 merger involving the Alberta and Vancouver Stock Exchange (which later amalgamated with The Canadian Dealing Network, Winnipeg Stock Exchange, and equities portion of the Montreal Exchange).
That combination became a unit of the Toronto Stock Exchange in 2001 and is now home to roughly 2,000 issuers.
On Wednesday, when the TSX Venture Composite Index touched an all-time low of 667.91, Cowan was asked what the exchange could do to help ailing issuers weather the storm.
His responded by outlining some of the programs that have already been put in place, including:
The Ignite Program which helps issuers understand the opportunities they have in the markets.
“We have extensive mentorship programs to help them understand the costs and challenges of being a publicly traded,’’ he said.
An expanded investor outreach program that aims to stay in regular contact with about 180 portfolio managers internationally.
The aim is to let them know about the opportunities that exist on the TSX Venture.
TSX Private Markets, a new service designed to help companies raise money in the private or exempt markets. “Many of our publicly listed issuers do undertaken extensive financing there,” Cowan said.
Adding a new order type to the Venture Exchange called the long life order. It will reward those who are willing to commit an order to the order book for a longer period of time, with priority in the queue.
The exchange has a minimum financing price of 5 cents. However, in certain circumstances, the TSX will look at requests for a waiver from that exemption so issuers can undertake a financing at a lower price.
The exchange has also changed its rules to allow warrant exercises and convertible debenture exercises at a lower price. “We have reduced that from 10 cents to 5 cents,” Cowan said.
The exchange as also removed the need for companies that are looking at lower share prices and having to consolidate their shares to do so without shareholder approval.
“History has shown us that shareholder approval was an additional cost that really wasn’t adding value to investors or to the company,’’ Cowan said.
“I would like to add that this is all about investor confidence. When we make changes we want to ensure that we are not contributing to a regulatory race to the bottom. We want to build investor confidence to ensure that issuers can access that capital.”