The Montreal Exchange is the Canadian Derivatives and Exchange, which focuses on aspects such as futures, ETF, index options and equity. It also deals with domestic and international currency. Unlike the United States options market exchange, where there are several different types of exchanges available for trading, such as NSDQ, AMEX, CBOE, etc., all Canadian options are only able to be traded on the Montreal Exchange. The fluctuations of the Exchange affect the financial lives of Canadians and people outside of Canada alike; insurance prices, home values and other financial instruments are directly impacted by these fluctuations.
The Montreal Exchange was officially started in 1874 after over 40 years of informal trades in the bank securities and railroad, making it the oldest exchange in Canada. Since 1965 the headquarters of the Montreal Exchange have been located at the Tour de la Bourse, also known as the Stock Exchange Tower, which is the third tallest building in all of Montreal.
Size and Available Equities
The Montreal Exchange, formerly the Montreal Stock Exchange, is based in Montreal, Quebec and trades in CAD. This means that all of the quotes that you will see are denominated in strictly Canadian dollars, including the margin requirements. While the Canadian Options market is not as expansive or as liquid as the US version, it is still extremely comprehensive for its size. Currently there are 291 equities that are available and actively traded on the Montreal Exchange, which include:
- RY (Royal Bank of Canada): This is the largest bank in all of Canada when considered by market cap.
- SU (Suncor Energy): One of the biggest integrated energy companies in all of Canada.
- POT (Potash Corporation): The world’s largest potash producer.
- TRP (TransCanada Corporation): The pipeline and energy generation infrastructure.
- BCE (BCE Inc.): Canada’s biggest telecommunications company.
The market is not necessarily big, but the volume of the options for the top five equities on the market are respectable for its size. For April of 2013, the Montreal Exchange reported a year-to-date volume of 7,187,001 for equity options. The current numbers for the top 5 equities include:
- At 11.04 percent of the total volume stands Manulife Financial.
- At 6.79 percent of the total volume stands Bombardier Inc.
- At 3.76 percent stands the Bank of Nova-Scotia.
- At 3.51 percent stands the Toronto-Dominion Bank.
- At 3.39 percent stands the Royal Bank of Canada.
While these numbers still lag behind the US top 5 equities, the Montreal Exchange is growing at steady rates. Current trends indicate that the exchange will never reach the growth of the US counterpart, however is a contender when it comes to world stock market exchanges.
In April the Montreal Exchange Inc., which is a wholly-owned portion of the TMX Group has raised its position limits in the areas of equity as well as traded-exchange fund options. This shows the potential growth of the market, providing both local and international clients a new market to build their wealth. Currently the Montreal Exchange division of futures market contains three categories: Canadian stock indices, energy futures, and the interest rate of a time horizon from only one day up to 30 years.
Today, the main mission of the exchange is the development and operation of high quality clearing and market services for the advantage of both International and Canadian clients.
Byline Jonathan Jensen is a freelance writer based in Ontario, Canada who focuses on insurance, the mortgage industry, real estate, finance, investment advice and other related topics. To learn more about credit cards visit Kanetix.ca