File photo from 2010 of a Lululemon clothing store in Vancouver.LAURA LEYSHON/The Globe and Mail
Lululemon Athletica Inc.'s plan to give up its Toronto Stock Exchange listing is a bigger blow in prestige for the market than it is financially.
Based on owner TMX Group Inc.'s TSX listing fee schedule (pdf), Lululemon would have paid about $95,000 a year in fees to keep its listing on the TSX.
However, losing one of its biggest homegrown names to Nasdaq, where most of the trading in Lululemon takes place, is a significant blow on a couple of other fronts.
There's the simple fact that one of Canada's biggest consumer brands believes the country's main exchange is something it can live without.
Beyond that, it means less choice. The disappearance of a significant consumer name from the TSX's roster at a time when investors are avoiding some other significant TSX sectors (mining, we're looking at you) is a problem.
And finally, it shows the TSX still has far to go in its long battle to repatriate trading in Canadian companies that are listed on both sides of the border. That was a big part of the Maple Group's pitch when the group of investment firms and banks fought (successfully it turned out) to buy TMX Group.
The idea was that an integrated model that put together clearing and stock markets would make Canada a more efficient place to trade, "which will help attract new investment to Canada's markets, repatriate inter-listed company trading activity and contribute to continued growth in a highly competitive global marketplace," as Maple put it in an open letter to Canadian capital markets participants in late 2011.
Now, almost a year after Maple's takeover closed, the fruits of that integrated model have not yet ripened.
Lululemon's average daily volume on the TSX was about 145,000 shares over the past year. On Nasdaq, the stock traded almost 2.5 million shares a day.
Plenty of other Canadian stocks show similar U.S. first dynamics. Barrick Gold Corp. trades a bit more than 11 million shares a day on the New York Stock Exchange, twice its Toronto volume.
More than 37 million Research In Motion Ltd. shares trade daily, on average, on Nasdaq. In Toronto, RIM averages 9.6 million.
There are certainly exceptions, such as Brookfield Asset Management and the inter-listed banks, which trade more in Toronto.
Investors go where the best prices and liquidity are. But if Canadian investors care about Canadian listings, they need to support their home exchange.
Editor's Note: Lululemon pays about $95,000 a year in fees to keep its listing on the TSX. An earlier version of this post incorrectly said it pays about $900,000.
(Boyd Erman is a Globe and Mail Capital Markets Reporter & Streetwise Columnist.)
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