Member Profile | TSX Private Markets
Q&A With Peter Conroy, Tarun Ajwani, and Jeremy Dietz of TSX Private Markets
Q: Tell us, what is TSX Private Markets?
A: TSX Private Markets is a voice-brokered service to facilitate capital formation and secondary trading of securities in the exempt market across Canada. The business will be operated by Shorcan, a division of TMX Group and registered Exempt Market Dealer with over 35 years of experience as an inter-dealer broker. Shorcan’s business has traditionally focused on dealer-to-dealer brokering of fixed income, financial derivatives, and more recently, physical crude oil. We view TSX Private Markets as a natural extension of our dealer-to-dealer business model. More specifically, TSX Private Markets will exist as a platform that offers:
- Secondary trading of private issuer securities
- Capital formation for private issuers
- Facilitation of public issuers’ private placements
- Secondary trading of public issuer “hold period” shares
Q: Why is TMX Group Entering the Exempt Market?
A: TSX Private Markets is a natural extension of TMX Group’s existing business that already includes the TSX and TSX-V. By entering the Exempt Market, we believe that we can leverage our organization’s core strengths - providing investors with liquidity, price discovery, and transparency - to help further develop Canada’s Exempt Market.
Q: Who Can Participate in TSX Private Markets?
A: TSX Private Markets will function as a registrant-to-registrant marketplace, making it available to approved Exempt Market Dealers, Exempt Market Dealer Representatives, IIROC Broker Dealers, Fund Managers, Portfolio Managers and other Financial Institutions. While we expect accredited investors and issuing companies to benefit immensely from the increased liquidity that the TSX Private Markets platform provides, all accredited investors must transact through an approved market participant such as an EMD, IIROC Broker Dealer or Dealer Representative.
Q: Does TSX Private Markets Plan to Compete with EMDs and Dealer Representatives?
A: No. TSX Private Markets is not intended to disintermediate the Exempt Market. Rather, our business model will rely on EMDs and Dealer Representatives to provide KYP, KYC, suitability oversight of their clientele and product offerings before transacting on their behalf. We will conduct KYC & KYP of the registrant and plan to partner with EMDs and Dealer Representatives to build liquidity in the market and will be looking to them to facilitate the posting of bids and offers as well as capital formation opportunities. Accredited investors and issuers seeking to transact on the platform will be referred to approved participants of TSX Private Markets. We believe TSX Private Markets will enhance an EMD and Dealer Representative’s existing business by consolidating the fragmentation of the industry onto one platform.
Q: What are the Benefits to EMDs and Dealer Representatives?
A: We expect this platform to provide significant benefits to the EMD and Dealer Representative community, including:
- Dealer and Representative brand endorsement by TSX Private Markets
- Ability to create secondary liquidity events prior to redemption dates
- Price discovery via three levels of ‘firm’ bid/ask market spread
- Access to detailed issuer profiles and disclosure documents
- Seamless settlement and clearing via Clearing and Depository Services Inc (CDS)
Q: What are the Benefits to Issuing Companies and Shareholders?
A: In addition to the dealer community, we will be able to provide significant value to issuers seeking to raise capital privately or facilitate trading of their outstanding securities. Some of the core benefits we can provide are:
- Issuer brand endorsement by TSX Private Markets
- Access to secondary market liquidity and a mechanism to value holdings
- Control over quantity, timing, and participant access of buy and sell orders
- Exposure to Canada’s top-tier deal-makers and permitted clients
- Shorcan-facilitated introductions to dealers & advisors to help structure and underwrite capital formation offerings
Q: Can You Provide Some Insight into Issuer Posting Criteria?
A: One of our main objectives here is to increase the transparency and integrity of the Exempt Market space. In keeping with this, issuers on the TSX Private Markets platform will be expected to adhere to a set of criteria designed to provide market visibility without being overly burdensome.
Highlights of these criteria include:
- Issuer nomination of a sponsoring registered dealer
- Requirement of PIFs for management, directors, and significant shareholders
- Documents creating, describing or governing the issuer and offered securities
- Audited or review engagement financial statements for internal TSX Private Markets review
- Optional posting of financial statements to the platform at the issuer’s discretion
- Confirmation of a CDS approved transfer agent
Q: When will TSX Private Markets Launch? Where Can We Access More Information?
A: We are targeting the third quarter of 2014 for our official launch date. In between now and then we plan to be actively educating the market on our offering and answering any questions that people might have. I would encourage anyone who has any questions to contact us at firstname.lastname@example.org