Tag Archives: Interview

CSE Performance, Featured

Canadian Securities Exchange CEO Richard Carleton Year-End 2025 Interview

2025 was a pivotal year for capital markets and for the Canadian Securities Exchange. Canadian equity markets were shaped by a mix of global trends carrying over from the previous year and some new drivers closer to home. While stocks in the United States moved higher on continuing excitement around technology, many Canadian stocks benefited from rising prices for gold, silver, copper, and more, concrete acknowledgement of national requirements for critical minerals. Policies from new governments in both Canada and the U.S. also played a role.

This macro environment brought a variety of opportunities for issuers on the CSE, as a glance at the much stronger capital-raising numbers for 2025 can attest. Meanwhile, the CSE team identified opportunities overseas, acquiring the National Stock Exchange of Australia (NSX), an exchange that looks very much like its early self.

In this interview conducted in early December, CSE Chief Executive Officer Richard Carleton discusses market performance in 2025, touches on upcoming regulatory changes, takes readers inside the NSX transaction, and highlights some of the factors set to influence small-cap stocks in Canada during 2026.

The pace of traditional IPOs in Canada was slow again in 2025, while things seemed to pick up in the United States as the year went on, thanks largely to investor interest in the technology sector. What are the headwinds facing the domestic listing environment, and how is 2026 setting up for IPOs and other types of new listings?

As a result of the uncertain nature of the trading relationship with the U.S. and clouds on the horizon for the continued existence of the North American free trade zone, it is fair to say that business investment in new and existing enterprise in Canada was restrained for much of 2025 across most industry groups.   

The Canadian Securities Exchange, of course, is mostly focused on the small-cap sector, and the relative paucity of new listings for much of the year reflected the uncertainty in the broader market. That said, it has to be acknowledged that the large-cap indices are either at or near record highs. So, what is happening?

First, the IPO is not a means that companies, large and small, are using to go public in Canada at this point. Instead, companies are raising money privately through prospectus exemptions and then qualify the securities for a public listing through a non-offering prospectus. 

This technique is the predominant means that companies have used, particularly in the mining sector, over the past year and a half to go public on the CSE.

I think it is fair to say that, regardless of where you stand politically, domestic and international uncertainty has not been helpful to the investment climate in Canada.

One sign of this is that even with increasing prices for many commodities, and gold is the shining example, the junior space did not really get much in the way of attention from investors through investment capital or secondary market activity until the fall.

The catalyst appears to have been acquisitions and joint ventures from some of the mid-level producers in Canada, which sparked an immediate increase in trading turnover. It also appears to have facilitated a lot of secondary market financing activity for CSE listed issuers. We have also begun to see a small increase in the number of companies applying to go public on the Canadian Securities Exchange.

But generally speaking, when you talk about the U.S. market in 2025, the story is dominated by a small handful of stocks with a material stake in the AI and quantum computing future. Investors around the world are coming to the U.S. market to take a stake in these businesses. It has not really been much of a market story from a Canadian perspective in either the small-cap or large-cap space.

For existing issuers on the CSE, 2025 was notably better than the previous year, with trading volume higher and financings again growing in terms of total value. Can you walk us through some of the numbers and offer some insight into how the market performed?

As I mentioned earlier, we have seen the beginnings of improvement in the early-stage capital markets in Canada, and in particular for companies listed on the Canadian Securities Exchange. Another positive indicator is that, notwithstanding the challenges I’ve outlined earlier, the pace of financing activity is up over 2024 levels in the number of transactions and significantly higher in terms of dollars raised on a year-to-date basis: over $2.7 billion, compared to $1.45 billion a year ago.

So, we are looking at one of the better years in total capital raised that we have seen in the last three or four. And the interesting thing is that the mining industry has been responsible for more than half of the transactions and just under half of the capital raised.

As we look to next year, the trendlines are pointing in very positive directions.

The CSE announced the completion of its acquisition of the National Stock Exchange of Australia in October. Let’s first discuss the thought process behind this investment. Is the NSX on a path similar to what the CSE was on a decade ago?

We began speaking to the NSX around 15 years ago, and we noted that it was on a similar trajectory to us: focused on early-stage companies, competing with a well-entrenched incumbent exchange, and struggling to make an impact. 

Indeed, the parallels are almost eerie. The NSX has about 52 listings; we had a similar number in 2010. Prior to the acquisition, the NSX’s balance sheet was challenged (also like us), and it is running the same technology that we integrated in 2005 (and retired in 2016). It hadn’t secured the necessary financial backing to execute the plan we delivered in Canada. With the capital we stockpiled (largely as a result of the trading and listing boom during the pandemic), we had the balance sheet strength to provide NSX with the support it has lacked to deliver a competitive venture market in Australia. 

We believe the Australian market has many similarities to Canada. It generates a lot of new companies on an annual basis from the mining, technology, and life sciences sectors. And we also know there are a lot of companies listed on the incumbent exchange in Australia that find it expensive and difficult to retain their public listing.

The prize is that there is a very healthy retail and institutional capital market in Australia with an appetite for investment in early-stage companies. We believe that by positioning the NSX as a marketplace that serves the interests of investors and companies in the early-stage space, we have a chance to support a significant portion of the early-stage financing opportunities in Australia in a relatively short period of time.

We have a team that is deeply experienced, with many years of working in the capital markets in Australia and abroad. With time, energy, and the balance sheet issues corrected, the NSX team has an opportunity to make a significant positive impact on capital markets in Australia.

What are next steps in helping the NSX to realize its potential? How can the CSE’s experience growing its capabilities and listings over the past decade contribute to the NSX’s success?

It’s a great question in the sense that it has to do exactly what we did. The playbook does not have to be rewritten, just dusted off. The first thing – and none of these is more important than the other – is to put a new technology platform in place that is up to the needs of not only a growing exchange and a growing list of companies on the NSX but also provides trading competition to the ASX for ASX listed stocks.

At the same time, the team needs to be built out, and people need to know who the NSX is and what its value proposition is. It has to engage in the branding work that we did to get people to understand who the NSX is and why it makes sense to list there. Including, of course, the fact that people may know the management team but may not know that it has the balance sheet that ensures its existence.

Those two things are absolutely critical. And the key is to make sure we have the resources in place so that as companies begin to roll in – and it tends to come in as a trickle at first and then as an absolute flood if you are successful working with the early adopters – you have the resources and management systems in place to be able to render a high degree of customer service to those companies.

There would seem to be variation in performance at exchanges, perhaps most recently highlighted by the Cboe operations in Canada and Australia being put up for sale. How would you explain the differences in objectives and each entity’s ability to achieve them?

Even when really well run, exchanges operating cash equities markets, such as the Canadian Securities Exchange, Cboe Canada, Nasdaq Canada, Tradelogiq, Toronto Stock Exchange, or Toronto Venture Exchange, do not generate the kind of financial return that derivatives exchanges generate. That is why two of the largest exchange groups in the United States are the CME Group and the Intercontinental Exchange, the latter of which not only owns the New York Stock Exchange but also operates a number of commodity futures exchanges in the U.S.

The derivatives exchanges, because they are natural monopolies and control the clearing and settlement agency – it is a whole soup-to-nuts operation – generate consistently higher profits than those engaged in our line of work in the cash equities space.

We have seen a number of the large global operators – whether it be Deutsche Börse, Euronext, or London Stock Exchange Group – diversify away from the cash equities side and invest in derivatives markets. In addition, these large operators are also investing in the development and distribution of market data products, risk applications, and analytics. These are the kinds of information services that generate monthly subscription-based revenues and are sticky enough that you can forecast these revenues in two-to-five-year time frames.

That is one of the other issues with cash equities: we are subject to the vagaries of government policies, the interest rate environment, market sentiment, and so on. When times are good, we can operate quite profitably. But, through no fault of exchange management, markets can be bad, materially impacting returns without regard to the quality of exchange management.

Without knowing exactly why the Cboe made the decision they did in Canada and Australia, it is my educated guess that those businesses hold considerably lower return potential than some of the other opportunities they might have, and I think they concluded that further effort to grow those businesses could be applied to other businesses in their portfolio to generate higher returns.

We discussed earlier that fewer IPOs are taking place, yet the number of trading platforms in Canada seems to be growing. Is there a point at which adding more execution venues goes from enhancing competition to actually making markets less efficient?

That is an interesting way of looking at it. I think our customers, if you consider the investment dealers and certainly the investors that are using the system, would say they find the current system opaque, complicated, hard to understand, and from a dealer perspective, it increases the level of risk because there are many rules around how you try to ensure client orders are directed to the best-priced destination. The more venues there are with different order types and layers of connectivity and everything else, that obviously complicates and adds a degree of risk to those responsibilities.

I can’t say I know at what point competition becomes self-defeating in the space. What I will say is that on a per-capita basis, whether it is market capitalization, turnover, or any other measure you want to suggest, Canada seems to support more trade execution venues than any other market in the world. We have about one-third the number the U.S. has. With anything in finance, 10 to 13 times is the normal range between Canada and the United States. So, if we are one-third, that speaks volumes.

I suppose the other way to look at it is that in deciding where to invest our funds, we have obviously concluded that Australia is a potentially more interesting location than here in Canada, given the opportunities we believe exist to grow business there rapidly. The competitive pressure in Canada would probably prevent the rapid expansion of any one business at this point.

Important discussions have been taking place in the policy environment in 2025. The concept of broadening eligibility for Scientific Research and Experimental Development (SR&ED) tax incentives to Canadian public companies is gaining attention. There is also talk of modifying standards to lessen the requirements around quarterly financial reporting. Is the CSE supportive of such initiatives? Are there any caveats to be mindful of?

Before I answer the question directly, what I will say is that these efforts are indicative of a level of engagement from policymakers, government officials, and regulators to try to reduce the decline in the number of companies coming into the public markets.

It is like the stages of recovery, where admitting you have a problem is the first step. I think that realization has taken hold at every level of government. What we are seeing is a genuine effort from the regulators, as well as from the policymaking side of government, to see what can be done to improve the lot of public companies and reduce the expenses for companies to access public capital for growth purposes.

The measures mentioned in the question are two of many initiatives we are going to see in 2026. SR&ED for public companies has long been an obvious change to make. Consider a Canadian-controlled private company versus a small company listed on a Canadian exchange doing business in Canada and hiring Canadians – there is, frankly, no difference between those companies. Why does the private company qualify for SR&ED while the public company does not? So, we are obviously supportive of the changes the government is proposing.

Similarly, talk has been going on for a long time about reducing the reporting cycle for companies from quarterly to semi-annual. To be honest, we have changed our mind on the issue. We have been opposed over the years on the basis that early-stage companies should report key financial data on a quarterly basis – in particular, how much money they have on the balance sheet, what their burn rate is, and when they are likely going to have to raise additional capital to keep their project going.

We will be commenting on the proposals from Canadian securities regulators to implement a pilot program to move to semi-annual reporting for qualified companies, many of which are on the Canadian Securities Exchange. Our suggestion is that there be enhanced cash flow statements required on a quarterly basis, but that there is no need for the management discussion and analysis and the full financial report that is currently required.

We will be working with regulators to identify other areas we believe can and should be addressed at the federal and provincial levels to augment both the number of companies and to reduce the cost of capital for public issuers in Canada.

CSE executives have visited several overseas jurisdictions this year. What were your objectives, and is there anything to highlight from a global perspective for junior markets as we head into 2026?

Generally, when we travel with issuers internationally, it is because we are trying to understand how they are raising money overseas and what we can do to facilitate that process. We have seen over the years that, in some cases, there has been resistance to investing in companies listed on the Canadian Securities Exchange from investors in Europe or Asia or the United States because they don’t know who we are.

Consequently, we have to get out there and explain to the right people, so they understand who we are, the value proposition we represent, and that the organization is populated by executives with deep experience in the public capital markets in Canada.

It is less often that we are looking to recruit international companies to the Canadian market. Although that was certainly a focus during the cannabis days, when companies could not access capital locally and had to come to Canada to take advantage of those opportunities.

At this point in the cycle, we are looking to see where the issuers are going, who they are talking to, and what barriers we need to break down, all with a view to supporting their capital-formation efforts.

Specifically, gold exploration companies have historically found an audience in the German-speaking parts of Europe. We have taken steps to ensure they understand the benefits of a quotation in Frankfurt and some of the off-exchange trading platforms in Europe that are popular with retail and institutional investors.

Also, there are certain brokers who cover the family offices, private banks, hedge funds, and high-net-worth investors in these countries. We need to work with them to make sure they have appropriate levels of connectivity to the Canadian Securities Exchange so that when they have a CSE company showing them an investment opportunity, they know how to trade the stock once they become a shareholder.

That is why we travel internationally, and what we have learned this year is that with gold at more than US$4,000 per ounce, there is a lot of interest in the securities of Canadian early-stage exploration companies. We believe macroeconomics will support a continuation in the increase in the price of gold, so this is not a flash in the pan but rather a trend that will continue to play out over the next several years.

Tokenization of publicly listed securities is gaining attention once again. Based on the CSE experience, where do you see this working, and what are the pitfalls?

The question is always: what problem are you trying to solve with tokenization? If you ask 20 people at a blockchain conference, you’ll probably get 25 different answers as to why it makes sense to tokenize aspects of the securities industry.

There are people who believe on-chain public equities that are tokenized will immediately present instantaneous execution, 24-hour trading, your finances can be completely self-directed, you can have the securities in your wallet on your phone, etc. I don’t buy that for a second.

The systems and structures that have been built for traditional finance are there for a reason. They are there to solve the problems that decentralized finance, underlying crypto trading is wrestling with. I am talking about things like security, assurance that your trade will settle properly, that you will get the cash you expect, and that you will get the securities you purchase delivered in a certain way. There is an enormous investment in infrastructure to be able to provide those solutions for investors.

As I say, I am not in agreement with people who are thinking that these technologies will totally disrupt the existing frameworks of the securities industry. I don’t see that happening.

Now, there are benefits to using tokenization for real-world assets. It has the potential to increase the visibility for companies as to who their beneficial owners are, which means they can improve shareholder relations and competitive analysis compared to their peers.

If you are a musician, for example, and you have monetized your catalogue into a tokenized fund listed on an exchange, then if you find out who is holding your tokens, you can send them information about tickets to your upcoming concert, or you can drop new music you have coming out. There are all kinds of ways you can engage with your existing shareholders using the technology.

In Canada, the ability to quickly adopt a number of these innovations is probably going to be frustrated by the clearing and settlement system that we currently have in place. The United States appears to be moving fairly quickly, with Nasdaq and the Depository Trust & Clearing Corporation (DTCC) looking to provide a tokenized securities rail in the relatively near future. I think we are talking one and a half to two years at this point, and that will enable people to clear and settle and have custody arrangements effectively on a private blockchain that will be provisioned by DTCC. That way, people can opt into the system. It will be interesting to see what percentage of stock trades choose to settle down those channels.

Instead of doing a big bang, they are letting people drive the transition process, assuming there is a transition from where we are today to using more tokenization in the traditional finance space.

Let’s close with a look forward to 2026. What other initiatives does the CSE have planned for next year, and how do you foresee capital markets evolving to enable you to make the most of that vision?

A lot of my time is going to be focused on working with our Australian colleagues building out the proposition with the NSX. From an economic perspective, clearly, the uncertainty in Canada’s trading relationship with the United States will continue. I think it would be unlikely that the Americans will seriously engage with an extension to the free trade agreement. That would have some meaningful consequences, and we are already seeing them, of course, on investment in traditional manufacturing in Canada. We are likely to see the President continue to push for cheaper money, which, without the fundamentals to support it, will see a relative decline in the U.S. dollar. That will continue to put upward pressure on the price of gold, and I believe will focus more and more investment on the precious metals exploration space in Canada.

Similarly, we will see people beginning to think more clearly and strategically about how to supplant China in the supply chain for the so-called critical minerals. It is becoming plain that it has to be both public and private sources to not just invest in the companies that will find the rocks and advance the projects toward production, but projects need power, they need roads, they need rail, they need processing facilities and smelters, and they need port facilities to ship products to international markets. We are talking about billions and billions in investment in infrastructure. And those are the sorts of things that pension funds are good at, especially in partnership with government.

The public markets will supply the capital to the exploration companies identifying commercially significant discoveries, and also fund the eventual development of producing mines for these commodities.

I think that is going to be a continued theme in 2026. Canada is going to start to get its act together. We are going to begin to see more investments being made to advance that vision and those projects. Ultimately, this is positive for the public markets because we will be key partners in this economic development.

#AlwaysInvested

CSE Performance

Canadian Securities Exchange CEO Richard Carleton’s Year-End 2024 Interview

One of the reasons financial markets never lose their vast audience is that they constantly evolve. Whether the change makes investors happy or not, there is always something new taking place, and one day is never the same as the next. It is a dynamic that was on full display once again in 2024.

Large-cap stocks remained strong, with broader indices setting dozens of daily closing records. And while not fully keeping pace, small-cap stocks finally caught a break in 2024, with those in the Canadian market benefiting from several months during which it seemed like gold was reaching a new all-time high every day. Retail trading staged a resurgence in the second half of the year, and institutional investors returning to the Canadian junior market became a frequent topic of conversation.

The Canadian Securities Exchange continued its evolution as well, and in May, celebrated its many successes over the 20 years since it became recognized as a stock exchange by the Ontario Securities Commission. The Exchange also undertook policy and other adjustments to business lines, joined an important global organization for exchanges, and went into the end of the year positioned to take advantage of renewed interest in cryptocurrencies and other digital assets.

With 2025 just around the corner, Richard Carleton, CEO of the CSE, shares his thoughts on Canadian market performance during 2024, the outlook for the year ahead, and previews important new initiatives that issuers and investors will surely want to watch.

In 2024, the CSE celebrated its 20th year as a recognized exchange. Issuers raised more than $26 billion in capital over the course of those two decades, and the CSE became one of the fastest-growing exchanges in the world. What does this milestone mean to you and to the broader CSE team, many of whom have been with the Exchange for a large part of their careers?

Our team takes a lot of pride in the success that the organization has experienced, and particularly in the last 10 to 12 years. It’s fair to say that the first 10 years were quite challenging, as we fought to become a meaningful part of the Canadian capital markets.

We are extremely pleased, not just with the achievements of the organization itself but those of CSE issuers as well. Companies have raised more than $26 billion through the facilities of the CSE, and being part of that means we have helped to foster the creation of new industries in Canada, the United States, and beyond.

The CSE has been part of several key investment themes over the last 10 to 15 years, whether it was the development of the cannabis industry in Canada and the U.S., or as is the case in the current market, the mining industry. The mining industry is vibrant, both in the so-called battery metals sector, which hopes to provide the needed materials to support the decarbonization of the economy as well as the precious metals group, which is riding the wave of record highs in the price of gold this year.

We’re very happy that we have made it this far, but our work isn’t done by a long shot. We look forward to continuing to help Canadian entrepreneurs, and entrepreneurs from around the world, tap into the Canadian public capital markets.

In June, the CSE announced that it had been recognized by the World Federation of Exchanges (WFE), the world’s foremost group for exchanges and clearing houses. What benefits do you anticipate membership will bring?

I’m actually just back from the annual meeting and general sessions of the World Federation of Exchanges in Kuala Lumpur, Malaysia, so I’ve had a chance to witness the organization operating first-hand.

Our move to join the WFE reflects the reality that a lot of our issuers are looking beyond Canada for capital. We see issuers going to the United States, the U.K., Europe, Australia, and South Asia for money. Raising money locally is a challenge in Canada.

As our issuers look beyond Canada, we need to be out there ahead of them to explain to local investors and investment funds that we are part of the Canadian capital markets framework, and one of the aspects of that is undergoing the process we did to become a member of the World Federation of Exchanges.

Our policies, procedures, and rules were vetted by three exchanges: the Warsaw Stock Exchange, B3 in Brazil, and the Johannesburg Stock Exchange, to ensure that we meet global standards for issuer regulation and investor protection. That provides overseas investors looking to trade or invest in companies listed on the CSE the assurance that we meet the standard that the WFE represents.

CSE issuers have been noticeably more active raising capital in 2024. Which industry sectors led the way, and have investors shifted priority with regard to the sectors they are most interested in?

As I mentioned before, the mining industry, and in particular precious metals exploration companies, have been the leaders in terms of the number of financings completed. They tend to be on the smaller side because the needs of early-stage exploration companies are certainly not the same as companies looking to do significant expansions, so they are not looking for hundreds of millions of dollars at one time.

We have also seen some interest in companies that have integrated artificial intelligence solutions into their product offerings. Of course, with the increase in the price of a number of cryptocurrencies over the last six to 12 months, a lot more interest has come back into the blockchain and crypto space.

The big numbers continue to come out of the cannabis sector, but in terms of the number of financings completed, it is the mining exploration group that is leading the way at this point.

Many market participants believe the second half of 2024 provided a more encouraging operating environment for smaller Canadian public companies than the first half. What were the factors behind this and how did they influence the broader operating environment for issuers and for the CSE itself?

I would say that it was the first three quarters that really weren’t very good, from either a trading or capital formation perspective. And I think it is fair to say – and I am not being controversial in any way – that the federal government’s approach to capital gains inclusion was a significant negative for companies looking to raise capital in Canada. I mentioned earlier that we are seeing our companies go out from Canada more and very much looking to the United States, in particular, for capital.

I don’t think there is any doubt that the decrease in interest rates beginning earlier this year helped fuel both the opportunity for companies to raise capital as well as secondary market trading activity. We were at a very low ebb for the first three quarters of the year, but recently there has been about a 50% jump in trading activity across Canada, and certainly, the CSE has more than done its part in contributing to this increase in activity. The interest rate picture is one aspect of it, and the volatility we have seen in the marketplace around the U.S. election and since has been a factor.

I hope it is sustainable into the new year, as it tends to be a leading indicator of more activity on the listings and capital formation front. As entrepreneurs see more trading activity, and thus more interest in the junior capital markets, they, and investors, are far more likely to support new companies coming into the market.

The CSE’s trading and data operations are closely related but also can be viewed as separate business lines. How has each performed in 2024?

People often ask about the relationships between the different business lines at the Canadian Securities Exchange, or any stock exchange. First and foremost, it begins with the issuers. If you don’t have interesting companies that are making progress toward achieving their goals, it is unlikely that people are going to trade the stocks or be interested in the market data related to those companies. So, where it really starts is having a group of companies that investors in Canada and beyond are interested in owning.

With that, as I mentioned earlier, trading levels on the CSE and other Canadian markets have been very low, and I mean levels that we have not seen since 2013 and 2014. It was a very challenging environment.

During that time, we made some changes to our market data policies. Effectively, we have increased some prices for the first time since 2016 in the market data segment. It was a significant bright spot for the results of the organization over the course of the year, and in fact, as the team worked to implement the new pricing and policies around connectivity and access to some of the Exchange’s services, we identified additional customers. As a result, the performance of the market data business has been very strong in 2024.

The CSE welcomed Rektron Group as its second Senior Tier issuer in 2024. What has the overall pace of new listings been? And how does the CSE’s new listings activity rank within the broader Canadian exchange landscape?

The pace of new listings has been quite slow. In fact, not since back into the earlier teen years of this century have we seen such low levels of activity. It has picked up somewhat but delistings over the course of the year exceeded the number of new issuers we welcomed. Unfortunately, we are in a position in the business cycle where the overall number of companies listed on the Exchange at the end of the year will be smaller than what we started with.

That said, we have seen a pickup in activity, particularly since September. Over the last two quarters, we have been listing about half of the companies coming to market in Canada, which is close to historic norms. Perhaps we did a little better in 2022, and particularly in 2021. But, as I say, I am encouraged that we are seeing an increase in the number of companies coming in, and more importantly, an increase in the number of applications that our team is receiving, indicating that we should see a little bit of strength in the new year.

It is clear from CSE press releases that the Exchange’s team has been on the road quite a bit in 2024, attending conferences and meeting foreign executives and industry leaders. The United States seems to be a particular focus. Can you discuss the strategy for international outreach at the CSE?

One of the things people need to appreciate is that a Canadian reporting issuer can access the same prospectus-exempt capital formation techniques that a U.S. reporting issuer can use in the United States. What that means is that without becoming a company that is a reporting issuer with the SEC or listing on Nasdaq or the New York Stock Exchange, you can actually do private placements in the U.S. with U.S. investors using only your Canadian Securities Exchange listing. And the same is true for the other Canadian exchanges.

Given that the U.S. is the largest capital market in the world by a substantial margin – I believe the number is currently something like 62% of the world’s equity market capitalization – it means companies listed on the CSE have a tremendous opportunity to raise money in the U.S. without the significant additional cost that would be undertaken if they were to list on one of the national market system exchanges there.

That has definitely become a real focus for us. As I say, things have been a little tough in Canada over the past year and a half, whereas the U.S. markets have been significantly more robust. There is more risk capital available in the U.S. for entrepreneurs as well. U.S. investors are very interested in the battery metals and the energy metals, and they have been supporting that investment theme for the last two or three years.

But our companies have also gone further offshore. For example, companies in the gold exploration sector, in particular, have always attracted a strong following from Germany and Switzerland. We see our issuers going there for capital formation, as well as to engage in investor relations roadshows and other activities. Many also ensure that their website and continuous disclosure materials are available in the German language.

So, again, that means that we have to be there making sure that local investors understand who the Canadian Securities Exchange is, that we are a material and meaningful part of the Canadian exchange landscape, and that they are not assuming additional risk by investing in a CSE company versus one that is listed on another Canadian exchange.

Bitcoin’s price is near a record high as we head into the end of the year. Does this signal anything about the potential for change in how capital markets operate? Are there businesses that the financial community should be taking a closer look at?

That’s an interesting question because it appears that Bitcoin and other cryptocurrencies are here to stay. And what we increasingly are seeing is those markets being pushed by the regulators in many respects to use the framework and structures that are familiar to those of us in the equity world. So, whether that is the idea that participants in these markets should be members of self-regulatory organizations like the Canadian Investment Regulatory Organization (CIRO) in Canada or that the instruments themselves should be considered securities and the distribution of those securities be done in accordance with the existing securities legal framework, there is an understanding that as these instruments become more mainstream, the traditional finance infrastructure is going to take care of a lot of the concerns people have had about participating in those markets.

It may not mean that they are listed on an exchange, but certainly that there is organized clearing and settlement and that there are regulated parties working in the space in an attempt to reduce some of the criminal aspects that we have seen with some of the companies involved in the crypto space.

As time goes on, it is likely we will see more use of tokenization or digitization of securities and utilization of some of the technologies fundamental to cryptocurrencies to facilitate clearing, settlement, and other processes underlying securities trading in North America.

It has taken a little longer than I thought it would – we were talking about this four or five years ago – but my sense is that progress continues. I think we will see some interesting initiatives in 2025.

In August, the CSE announced approval to introduce a market-on-close (MOC) facility designed to concentrate liquidity, reduce volatility, and enhance execution sizes at the close of trade each day. It comes in reaction to increasing fragmentation of trading activity across a growing number of execution venues. Can you talk about the MOC framework and its importance?

The market-on-close framework is complicated and I don’t expect people to go into the nuts and bolts of how it operates. Basically, the reason we are launching a market-on-close facility is to ensure that entities managing certain types of products, particularly exchange-traded products such as ETFs with CSE companies in them, have the opportunity to manage them in a way that ensures the tightest tracking of their portfolio to the underlying cash market.

This is a critical piece of infrastructure that we need to have in place for the CSE to both have ETFs listed on the Exchange and to make sure that our issuers have the opportunity to be in more ETFs, whether they are listed on the CSE or elsewhere. That is really the motivation – to support our move in 2025 into the ETF listing space.

What other plans does the CSE have for 2025? Can the financial community expect anything else new or different next year in the CSE marketplace and how the Exchange operates?

I’ve telegraphed that we expect ETFs containing CSE issuers to list on the Exchange at some point over the course of 2025. We think it is a great initiative because it will improve liquidity for component companies and increase the visibility of those companies as manufacturers of the ETFs market them to investors. We think there will be real interest from our issuers in wanting to be part of those ETF products, and we will be partnering with a variety of entities to bring them to market. So, this is certainly a big development that investors can anticipate next year.

We are looking to make some further adjustments to our pricing on the trading side with a view to ensure we can cut trading costs for the dealer community as much as possible, while promoting liquidity for companies listed on the Exchange or other-market securities that also trade on the CSE. We made some minor adjustments in October that led to a doubling of market activity in TSX and TSX-Venture stocks traded on the CSE. We think there is more to come in that direction as well.

And while I think it might be premature to go into detail, the Exchange has made some outside investments over the last few years. We are particularly interested in Tetra Trust, which is Canada’s first and leading custodian for digital assets. At this point, it is providing custody services for a number of Canadian and international financial institutions in Bitcoin, Ethereum, and other cryptocurrencies.

We believe there are more services that Tetra Trust can provide to support the continued development of digital assets, in particular, to make access to trading services for those instruments more widely available to retail accounts, particularly through the traditional brokerage community. I think we will see some interesting developments in that regard next year.

CSE Performance

CFN Media Interview with Richard Carleton

Video

Over the last five years, the cannabis industry has undergone a period of transformative growth, and the Canadian Securities Exchange has grown with it, providing countless opportunities for innovation, expansion, and success.

In this interview with CFN host and Managing Partner of Zuber Lawler, Tom Zuber, CSE CEO Richard Carleton discusses the impact the cannabis industry has had on the CSE, the global emergence of new cannabis markets, and the advances that have happened in the industry, both technologically and economically.

Tune in to learn why Canada continues to be a leader in the cannabis industry, the challenges and successes of opening this industry up to the investment community, and the innovative organizational structures emerging from the complicated landscape of cannabis as a consumer product. Hear Richard’s take on prohibition, ancillary cannabis companies, and the future of the European cannabis market in this exclusive, three-part interview.