For many at the Canadian Securities Exchange, 2014 was a year to remember with records shattered and the Exchange gaining traction and momentum heading into 2015.
In this exclusive two-part series, CSE Chief Executive Officer Richard Carleton discusses the record breaking year that was for the Exchange and looks ahead at what he believes will be a strong 2015.
Engaging, thought provoking and insightful; this question and answer series with Carleton touches on several leadership aspects of the industry, including strategy, growth, forecasts and analysis; along with the CEO’s perspectives on trends and regulatory issues.
In part one of the series, Carleton reflects on some of the key factors which contributed to a year of great accomplishments at the CSE and he also reveals some of the CSE’s goals for 2015 and why he is predicting strong growth for the first quarter of the New Year. Carleton also shares insight from the marketplace and what is top of mind for issuers.
Be sure to check out part two of the interview where Carleton shares an intimate story about why he loves his job and delves deep into industry related issues; on how the CSE can support investment in CSE-listed companies by retail investors and how the industry is reacting to a surging Exchange.
Part 1: A Good Year and Forward with Confidence
Question: What did the Canadian Securities Exchange accomplish in 2014? Did these accomplishments meet the expectations that the exchange had at the beginning of the year?
Carleton: The goal of the exchange is to reduce the costs of Canadian public capital for growing businesses. As we tell people, we do this in two principal ways: through the provision of a streamlined listings process, and by providing a liquid and efficient secondary market trading services. We received powerful feedback from the industry in 2014 that our message is resonating: new listings, financings and trading all exceeded previous records by significant margins during the year. Approximately half of our new listings came from other exchanges in Canada, suggesting that our service offering is competitive with alternatives for public companies.
Question: What are the Canadian Securities Exchange’s goals for 2015? What are the plans for achieving them? Is there anything new or different compared to the thinking that prevailed at the beginning of 2014?
Carleton: We put a lot of effort into raising our profile with key segments of the public finance community in Canada and internationally in 2014. We will build on these efforts in the coming year with more resources available for our sales and marketing team. In addition, we will be launching key initiatives on the trading side to improve the liquidity picture for our listed companies: we are launching a formal market making program designed to provide our issuers with a trader responsible for posting a continuous two-sided market, automated execution at the bid/offer for eligible orders and automated odd lot execution; new order routing, compliance and risk management tools to assist dealers in directing trading traffic our way, and an expectation that within a short period of time we will have all of the Canadian discount brokers with electronic access to our markets.
Question: The year 2014 saw record growth in listings. How is the first quarter of 2015 shaping up, and how would you characterize listings expectations for the full year? Does the Canadian Securities Exchange anticipate that certain industry sectors will contribute more or less than they did in 2014?
Carleton: The application pipeline is very strong, so our outlook for early 2015 is strong. Continued finance challenges for early stage companies, in particular, seems to make our operating model more attractive for these issuers. There appears to be no immediate relief on the horizon for these companies, meaning that our cost and time effective listing model will continue to be an important incentive for companies to work with us. As for sectors, as I tell people often, we don’t focus on particular sectors, instead we reflect the choices made by investors in agreeing to finance companies. We didn’t go into 2014, for example, believing that medical marijuana was going to generate a substantial amount of interest; that came about as a result of investors supporting the launch of a great many new companies in the space. I wish I could tell you what the next break out sector will be.
Question: In general, what did issuers tell the Canadian Securities Exchange that it did well in 2014? How did they say they would like to see the exchange improve?
Carleton: Issuers were almost unanimous in crediting our listings team with an excellent service attitude: identified problems were resolved in a timely and constructive manner, with companies able to take advantage of the deep experience represented by our team. On the other side of the coin, issuers were almost unanimous in looking for us to address the remaining access (Canadian and international discount brokers in particular) and visibility (where do I go to find a quote?) issues. We have made great strides on both points, but much work remains to be done.
Stay tuned for part two of this interview to be released soon.
(interviewed conducted with Peter Murray)