Is there life beyond the P/E ratio?
As securities trading becomes more globalized, stock exchanges can no longer rely on domestic investors to keep them afloat. The problem has been recognized in Canada, where the four exchanges are taking positive action to avoid being sidelined, forming a strong and competitive alliance and trying to appeal to a broader base of investors.
From November, each Canadian exchange is adopting a speciality, with the Toronto Stock Exchange handling all trading of senior equities. It is hoped that this renewed focus will help the TSE to fight off competition from the New York Stock Exchange. Futures and derivatives business will be centralized at the Montreal Stock Exchange in a bid to win back business from the Chicago exchanges, which have captured 70% of Canada's derivatives market.
The widespread restructuring began in March with the announcement of a merger between the stock exchanges in Calgary and Vancouver. These exchanges had long specialized in trading junior equities from the mining, oil and gas industries, and will now be the site of Canada's market for start-up companies.
Michael Johnson, president and CEO of the Vancouver Stock Exchange (VSE), hopes the merger will boost start-up activity and create one of the world's leading venture capital markets.