This morning, John McCoach, the President of the TSX Venture exchange emailed me, and many others to let us know he will be retiring shortly from his position atop the exchange. As one of the architects of the TSX Venture Revitalization project, first announced in December of 2015 as the exchange traded at all-time lows, his optimism and warnings are worth reading.


Canada’s Venture Market Breaks Out


Yes, the TSX Venture is up huge in 2016, amidst a raging gold market that has ignited investor optimism in not just junior gold stocks, but most of the mining sector as a whole; however, the recent success of the exchange can largely be attributed to uncontrollable price action in various commodities and currencies.

Immediately following the white paper released by the TSX Venture in December titled Revitalizing TSX Venture Exchange Canada’s Public Venture Market I published an article titled Can the TSX Venture be saved in 2016?


The article revolved around 3 core initiatives previously laid out by the exchange in December of 2015:

  • “We will reduce our clients’ administrative and compliance costs, in a meaningful way, without compromising investor confidence.
  • We will expand the base of investors financing companies and generally enhance liquidity.
  • We will diversify and grow the stock list to increase the attractiveness of the marketplace overall.”



Despite the optimism of December’s report, I asked the question Can the TSX Venture be saved in 2016?Below is a short excerpt:

“Some investors, having ridden junior resource stocks with decent fundamentals into the ground over the past half-decade, will have a justified wait and see attitude. However, this three-pronged initiative is a step in the right direction as the TSX Venture exchange prepares to take action to spur interest, greater diversification and increased liquidity on Canada’s preeminent venture capital market.”

It’s easy to point at the more than 60% rally in the TSX Venture from the January lows to now and say it was a success, but many of the policies have yet to be initiated. Remember, the average bull market on this exchange witnesses a 98% rally from trough to peak…


July 2016 Revitalizing TSX Venture Exchange Progress Report


This morning’s report has a stated goal to:


The TSX Venture exchange provided a number of ‘Actions’ followed by an ‘Update’ in its report to gauge the progress of its overall goals:

The first action was: “Bolstering programs to create more positive awareness of Canada’s public venture market and to showcase TSXV-listed companies”

The update was: “TSXV technology and energy companies will be featured in upcoming investor days”

Diversification is the ultimate security. An exchange or household too dependent on one source of income will always be susceptible to price shocks and bear markets.

Another action was: “Leading an action team with a goal to reduce the barriers to U.S. investors wishing to participate in the Canadian market”

The update was as follows:

“There are no simple solutions to this issue. The team has identified specific issues and barriers, and we will continue to seek solutions.”

TSX Venture and Emerging Markets


I wrote about the positive impact a higher proportion of American investors could have on Canada’s small-cap market in TSX Venture Stocks benefit from negative rates, yesterday. While Canada is not classified as an emerging market, our currency has been discounted hugely to countries such as China, the U.S. and all of Europe. For this reason, the below fact is relevant:

Emerging Global Advisors’ (EGA) latest Emerging Markets (EM) Investor Sentiment Survey shows sentiment increased 28% from 538 in the first quarter of 2016 to 687 in the second quarter of 2016, according to WealthAdvisor.



If the TSX Venture exchange can tap into this demand, it could become a boon for Canadian issuers seeking investment capital.

Another actionable initiative outlined in this morning’s progress report was: “Simplifying TSXV continued listing requirements and helping companies to reactivate from NEX”

The update went as follows:

“Policy amendments relating to this tactic are scheduled to commence in the third quarter of 2016.”

This is an interesting update to me personally, as I wrote about the expansion of the NEX Board during the bear market. In late-November of 2015 I published an article titled Some Struggling Junior Resource Stocks opt for NEX Board, where I reveal dozens of companies opting to delist from the Venture in a bid to reduce costs and stay in ‘care and maintenance’ mode until the exchange recovered. Check out an excerpt from that report below:

“NEX provides cost savings as companies reorganize and reboot

Clearly, one of the more obvious advantages has to be in the cost structure to remain a public entity. The TMX Group sums up the polar difference when it comes to cost:

“NEX charges a single quarterly listing maintenance fee of $1,250, payable on the first business day of each quarter. By contrast, TSX Venture charges an annual sustaining fee and filing fees, ranging from $5,200 to $90,000, with each reviewable filing made during the year. NEX fees are designed on a competitive basis with other evolving and emerging markets, and with consideration of TSX Venture’s pricing structure.”


Click here to read Can the TSX Venture be saved in 2016?


The final action, outlined in the July 2016 Revitalizing TSX Venture Exchange Progress Report, is an important one: “Promoting financial literacy and capital markets education in universities and colleges across Canada”

The update on this progress was that:

“The Voleo TSX Equity Trading Competition was a great success with participation by over 75 universities and colleges. We plan to continue the program in partnership with Voleo in the next school year.”

In a July report from, a survey found that 80% of millennials are not investing in the stock market. We have written about this trend for years as liquidity declines even on major U.S. indices and the average age of the population in the developed world continues to increase. Initiatives such as “promoting financial literacy” are long overdue and critical for the success of exchanges such as the TSX Venture.


TSX Venture’s Policy Amendments to reduce costs


Subject to regulatory approval, the TSX Venture has proposed to eliminate the “sponsorship” requirement for TSXV companies. While not intending to abandon the notion of independent due diligence, using the example of a simple RTO transaction; “…we believe these changes can reduce the cost of going public on TSXV by as much as 40%. The savings are realized if the cost of sponsorship can be eliminated, and the issuer’s costs associated with the shareholder meeting can be reduced.”

Click here to read the entire report and more on how policy amendments could significantly reduce costs.


This morning’s updated white paper and Progress Report from the TSX Venture, closed by stating:

“We will continue to push ahead with actions outlined in the December 2015 White Paper and those subsequently introduced based on client input. The feedback we have received since December has been valuable and encouraging. We are confident the initiatives we have outlined are on the right track and will deliver tangible benefits to our clients and stakeholders.”

Click here to read the entire report.


Reducing fees, increasing exposure, allowing greater access and more fluid means to finance and list on the TSX Venture are all important issues. After reading this morning’s white paper, it is encouraging to note that some of the key agreed upon policy amendments should come into effect in Q3 of this year. Few have been executed to date, whether in the “formal submission” or “submitted proposal” process as the exchange is waiting on various regulatory bodies to make decisions on different initiatives. This shines light on the reality that investor sentiment has been the catalyst behind the TSX Venture’s stabilization and more than 60% rally in 2016, not a handful of policy changes, many of which have yet to be executed. In the long term, the TSX Venture needs to continue being responsive, by taking action to support diversification, so one sector, mining, cannot take down an entire exchange.

Don’t get me wrong. It’s great to have the bull market on the TSX Venture back, led predominantly by gold and mining stocks; however, it was not long ago the top 10 most liquid stocks on a daily basis were healthcare or tech related. Where have these issuers gone? For the most part, liquidity in them has dried up as the small-cap investor seeking yield has dived head first back into the mining sector and, by doing so, embraced the ‘boom-bust’ nature of the TSX Venture.

Click here to listen to our latest podcast, Time to believe in this TSX Venture Bull Market? which discusses the state of the TSX Venture from April (including a prediction the exchange would rally through the summer). We have been bullish on the exchange, gold and juniors since early this year.




This article represents solely the opinions of Alexander Smith. Alexander Smith is not an investment advisor and any reference to specific securities in the list referred to in the article does not constitute a recommendation thereof. Readers are encouraged to consult their investment advisors prior to making any investment decisions. The information in this article is of an impersonal nature and should not be construed as individualized advice or investment recommendations.