Montréal Exchange
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| Montréal Exchange | |
| |
| Founded | 1874 |
|---|---|
| Headquarters | Montréal, Canada |
| Key People | Jean Turmel, chairman; Luc Bertrand, president/CEO |
| Products | Futures and options in equities, indexes, interest rates and currencies |
| Web site | www.me.org |
The Montréal Exchange (MX) provides trading, clearing and settlement of futures and options in equities, indexes, interest-rates and currencies on its electronic platform. The Canadian group also has equity interests in the Boston Options Exchange, the Montreal Climate Exchange and the Canadian Resources Exchange (Carex).
TSX Group, owner of the Toronto Stock Exchange announced plans on December 10, 2007 to acquire MX for C$1.3bn, with the merged entity to be known as the TMX Group[1]. MX shareholders approved the deal on February 13, 2008[2].
Volumes rose 5 percent in 2007 to 42.5m contracts[3].
Contents |
History
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The Montréal Exchange is Canada's oldest financial exchange, established in 1874 after 40 years of informal trading, primarily in financial and railroad stocks. It merged with the Canadian Stock Exchange in 1974, introducing stock options a year later, the first move towards dropping cash equities and becoming a pure-play derivatives exchange in 2005[4].
The clearing unit was established in 1977 and, with derivatives becoming more important, changed its name to the Montréal Exchange in 1982.
MX became Canada's sole derivatives exchange in 1999 - when it also joined Globex - under a 10-year agreement which gave it a monopoly over futures and options, while TSX became the sole equities platform. The looming expiry of the deal had seen the TSX announce plans to start a derivatives business after 2009[5].
MX demutualized in 2000, taking full control of the clearinghouse. Full automation was introduced in 2001. The MX became a founding shareholder in the Boston Options Exchange in 2002 - the Box launched in February 2004 - with a 31.4 percent stake, announcing plans in October 2007 to lift this to 53.2 percent by acquiring shares from the Boston Stock Exchange[6]. In December 2005 it became a pure-play derivatives operation, and also signed a joint venture with the Chicago Climate Exchange to launch the Montreal Climate Exchange. The exchange opted to go public in 2006, listing its share on the TSX in March 2007. The same month saw a deal with the New York Mercantile Exchange to establish Carex, with Nymex taking a 10 percent stake in the MX[7].
Merger with TSX
The MX confirmed it was in discussions with TSX about a possible combination on November 29, 2007 [8], and the proposed deal was announced on December 10, 2007[9]
The proposed deal has been approved by both boards and by MX shareholder, with regulators due to hold hearings on the combination on March 26 and 27, 2008. TSX Group Inc is offering 0.5 of its own shares and C$13.95 in cash for Montreal Exchange Inc, valuing MX at C$39 a share based on undisturbed prices.
The proposed TMX Group would be based in Toronto, with MX and the derivatives business remaining in Montréal, alongside the Canadian Derivatives Clearing Corporation. The Autorité des marchés financiers would remain the lead MX regulator.
TSX will appoint 13 of the 18 initial directors, with its chairman, Wayne Fox, assuming the same role at TMX. Richard Nesbitt, CEO of the TSX, was slated to head the combined entity, but is due to leave on February 27, 2008 to head CIBC World Markets. Luc Bertrand, CEO of the MX, was due to become deputy CEO.. The companies have targeted C$25m in annual cost synergies. The proposed deal is expected to close in the first quarter of 2008.
Product Development
MX currently lists:
- Equity derivatives (equity options)[10]
- Currency derivatives (options on the US dollar:US/CAD)[11]
- Index derivatives [12] [13]
and
- Interest rate derivatives (bond and money markets)[14]
The three most active of Montreal Exchange's individual products (not including equity options as a group) include 10-year government of Canada bond futures (CGB), 3-month Canadian Bankers' Acceptance futures (BAX),and S&P Canada 60 Index Futures (SXF).[15] In November 2007, Montreal added futures on 30-year government of Canada bonds.[16]
Clearing Services
The MX clearing house, the Canadian Derivatives Clearing Corporation (CDCC), provides central counterparty clearing services to participants. It holds a top investment rating and a strong reputation. The CDCC has completed regulatory rule changes allowing the clearing house to offer risk management services to partners in the OTC market.
Market Data
The Market Data Services of the Montréal Exchange (the MX) manages sale and distribution of market data. It certifies vendors and establishes external and internal distribution and subscriber fee policies for real-time and delayed market data. Market data is available in the following types:
- Real-time basis
- Delayed basis (at least 15 minutes)
- End-of day summary basis
References
- ↑ Press release. Montreal Exchange. Retrieved on January 23, 2008.
- ↑ Press release. MX. Retrieved on February 14, 2008.
- ↑ Press release. MX. Retrieved on January 23, 2008.
- ↑ History. MX. Retrieved on January 23, 2008.
- ↑ TSX joins consolidation race with Montreal deal. Financial Times. Retrieved on January 23, 2008.
- ↑ Press release. MX. Retrieved on January 23, 2008.
- ↑ Press Release. MX. Retrieved on January 23, 2008.
- ↑ Press release. Montreal Exchange. Retrieved on January 23, 2008.
- ↑ Press release. Montreal Exchange. Retrieved on January 23, 2008.
- ↑ "Equity Options”. www.m-x.ca. Retrieved on Dec. 2, 2007.
- ↑ "Options on the U.S. Dollar”. www.m-x.ca. Retrieved on Dec. 2, 2007.
- ↑ "Indices”. MX. Retrieved on Dec. 2, 2007.
- ↑ Options List: Index and ETF options, Equity options, Currency options. MX. Retrieved on Dec. 2, 2007.
- ↑ "Interest rates”. www.m-x.ca. Retrieved on Dec. 2, 2007.
- ↑ "Monthly reports”. www.m-x.ca. Retrieved on Dec. 2, 2007.
- ↑ MX expands govt. bonds. www.bloomberg.com. Retrieved on Dec. 2, 2007.
