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Upstart exchange Aequitas NEO has secured its first listing. It’s a milestone to be sure, but one that illustrates the task of taking on the dominant Toronto Stock Exchange.
The listing, to visit live sometime in March once the application receives regulatory approval, is a new PowerShares exchange-traded fund (ETF) to become launched by Invesco Canada – a firm which happens to be a shareholder within 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, leader of Aequitas, acknowledges the challenge for the new exchange to land a big corporate fish, despite lower listing prices compared to Toronto Stock Exchange and a seasoned group of backers including Invesco, Royal Bank of Canada and Barclays Corp.
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“We’ve seen many people who expressed strong interest – that are quite keen to list around or migrate to us, but there’s always that fear of the new player,” Schmitt said within an exclusive interview using the Financial Post.
Worse still, large information mill unlikely to migrate from the Toronto Stock Exchange because, he says, it seems they need those listings to be contained in various stock market indices used as investing benchmarks by large institutions.
“If you cannot be part of a catalog, you’ll be very concerned that that will have an affect on the need for your shares,” Schmitt says, adding the largest 250 companies by market capitalization aren’t even around the Aequitas radar for now.
At the top of his list of viable targets are exchange-traded funds, whose backers may have a chance to witness the expertise of the PowerShares DWA Global Momentum Index ETF.
“Many will cautiously take a look at how things go with this first listing,” Schmitt said, adding that they want proof there aren’t any difficulties with access to trading or liquidity, and that data is available across all marketplaces “so that the experience for the investor remains similar to – or what we believe will end up much better than – the experience they have today.”
Beyond ETFs, Aequitas NEO Exchange will court closed funds and, ultimately, companies looking at initial public offerings with an exchange and promising small to medium-sized firms seeking to migrate over in the Toronto Stock Exchange.
‘I can’t tell you at this time, obviously, who they really are, but these discussions are ongoing,” Schmitt said.
He said he’s not interested in inter-listed companies, those that would remain on the TSX while also listing around the Aequitas NEO Exchange, because he doesn’t see the value for them.
Aequitas launched a brand new trading venue last March, and began marketing its listings business in June using the promise of initial fees that were up to 67 percent less than the rival Toronto Stock market.
But Schmitt has maintained that Aequitas won’t compete in price alone, saying that is a trap that hampered earlier challengers to the dominant exchange. The upstart has been pitched as 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 no more 2015, according to figures collected by the Investment Industry Regulatory Organization of Canada. The Toronto Stock Exchange and Venture Exchange had just over 62 percent.
bshecter@nationalpost.com
Twitter.com/BatPost
