Toronto Stock Exchange.Sami Siva
A resurgence in some trading activity has enabled Toronto Stock Exchange operator TMX Group Inc. to raise its dividend for the first time since equity markets crashed and sparked a global financial crisis.
"The resurgence in activity across some of our key revenue drivers, combined with focused cost control led, to strong growth in our bottom line," said chief executive officer Thomas Kloet.
"So, with confidence we thought that we could raise the dividend and reward the shareholders," he told analysts on a conference call Wednesday to discuss the group's third-quarter results.
The 5-per-cent dividend boost - to 40 cents per share - is a sign the group is confident about the future, Mr. Kloet said. This is the first time since 2007 it has raised its dividend.
TMX Group, which also operates the Montreal Stock Exchange and the Toronto Venture Exchange, reported third-quarter net income of $50.8-million, or 68 cents per share, on Wednesday.
That beat analyst expectations of 64 cents per share, according to a survey by Thomson Reuters, and compared with a profit of $41.7-million, or 56 cents per share, a year earlier.
Revenue rose 8 per cent to $141.6-million, slightly above analyst predictions. Meanwhile, the volume of trading in derivatives was up 28 per cent at the Montreal Exchange.
TMX said it has been able to keep costs fairly flat over last two years despite taking on new initiatives and those lower expenses also helped drive profits higher in the third quarter.
The group has benefited from a growing interest among foreign companies and now has 300 international listings on its exchanges, including 52 Chinese companies, 147 based in the United States and more than 30 from Australia.
Mr. Kloet said many potential international listers are intrigued by its unique "two-part marketplace," which includes the venture exchange as a venue for small- to medium-sized companies seeking financing, a number of which graduate to the senior Toronto Stock Exchange.
Mr. Kloet added that he believes a rebound in equity markets provides a stable platform as it embarks on launching a new trading system.
"It's clear that the market evolution in Canada continues," Mr. Kloet said, adding that the timing is right to introduce TMX Select, a new alternative trading system that will operate on its Quantum trading platform.
The new exchange will include expanded trading hours, a simplified market structure with continuous trading of board lots only and strict price-time priority for visible orders.
"What TMX Select will allow us to do is focus on some different market structures that I think will be interesting to the marketplace. ... This will allow us to contemplate some different pricing models that we might not want to introduce into the core market," he said.
TMX is closely watching the takeover of the Australian Stock Exchange by Singapore Exchange Ltd. announced Tuesday, a move that has already initiated merger and acquisition speculation about other markets.
Mr. Kloet said TMX Group is already involved in a number of international partnerships and is open to examining a closer partnership or acquisition opportunities in future.
Mr. Kloet also said that the TMX is working on developing a domestic solution to the G20 leaders' objectives related to improving the over-the-counter derivatives markets.
"We think as a G8 country with a mature economy, that Canada should have a domestic solution," he said. "We think we will be presenting a very compelling proposal for the Canadian marketplace."
Besides the Toronto Stock Exchange, TSX Venture Exchange and Montreal Exchange, TMX Group also operates the Natural Gas Exchange, the Boston Options Exchange, Shorcan and Equicom.