On Thursday, TMX Group president and CEO of global equity capital markets Nick Thadaney and TSX Venture Exchange president John McCoach spoke to a crowd of some 300 on a number or proposed improvements to the TSX Venture Exchange. Thadney and McCoach were called to discuss the findings of a white paper released last December, in which TSXV leadership vowed to improve the lives of their clients in three main areas: cost reduction, liquidity enhancement, and listing diversification beyond resource stocks.
Some in the crowd were forced to stand during the “town hall meeting” at the Pan Pacific Vancouver Hotel - one of several similar meetings being held across Canada, which only heightened the energy in the emotionally charged room.
Throughout the meeting, the crowd was excited and vocal - and not always in a positive sense, according to Stockwatch’s Karen Baxter (a subscription is required for the full article). Baxter reported that both Thadaney and McCoach were frequently interrupted with whistles and applause at times, as well as jeers and guffaws. Early into his opening remarks, Thadaney was taken aback when his assertion that Canadians had “one of the best venture capital systems in the world” was met with snickers and calls of “not anymore!” by the rowdy crowd.
McCoach didn’t get off any lighter, however, as he faced frequent interruptions from members of the audience who felt he was oversimplifying and talking down to them while attempting to summarize the contents of the white paper. The most apparent sign of discontent among the crowd came in response to the question of whether the TSX-V had plans to rid itself of inactive stocks from companies that are no longer in operation. These “zombie” stocks are currently keeping the number of one- and two-cent companies seemingly higher than they actually are.
After one member of the audience asked why the exchange didn’t delist those companies, instead of moving them to “the purgatory which you call the NEX,” McCoach defended the practice as “transparent and enforced,” sparking a flurry of laughs throughout the crowd and one audience member accusing McCoach of telling “bald-faced lies.”
Changes Coming...But are They Enough?
McCoach soldiered on despite the opposition, explaining that the TSX-V hopes to reduce the administrative and compliance burden of companies by automating online filings, eliminating the need for sponsorship and shareholder meetings in some cases, and introducing “kind of like a quasi-Nexus program” for proven, active directors so they do not have to keep renewing their personal information forms. Less popularly, McCoach acknowledged that the TSX-V has no plan to reduce the fees it charges or reduce its fee schedule.
On investor awareness, McCoach asserted the TSX-V would begin “showcasing” companies to fund managers, retail investors, research analysts and other parties. After the meeting, McCoach clarified that showcasing would come at no cost for leaders of selected companies, though they would be responsible for their own transportation to the showcases. McCoach also mentioned that the TSX-V will seek to change rules so that US investors would find it easier to invest in small Canadian stocks, though how this would be accomplished was left unclear.
McCoach also made note that TSX-V would be actively seeking to diversify their holdings. In particular, he’d like to see the exchange reduce the percentage of resource companies it holds, from 70% down to around 50%.
The audience was polled on key issues facing the exchange. The majority of the crowd felt the TSX-V should return to being a dealer-owned operation rather than a non-profit, though a full rebranding would not be necessarily. The crowd also felt that short selling has had a material negative impact on the market. Interestingly, when asked whether listing standards and management compensation should be more stringent and regulated, the crowd said “No”.For the spirited yet frustrated crowd, perhaps the best news to come from the meeting was the indication that changes would be coming, and that Thadaney and McCoach recognize the need for them. Whether these changes come quickly enough - and prove effective enough - to pacify the charged Canadian investment community remains to be seen.
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