CDNX integrates Canadian Dealing Network quoted securities
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167 former CDN companies now trading on
CDNX
CALGARY, AB Today marks the first
day of trading on the Canadian Venture Exchange (CDNX) for 167 companies previously listed
on the quoted issuer market of the Canadian Dealing Network (CDN), a subsidiary of the
Toronto Stock Exchange (TSE).
As part of the reorganization of Canadas securities
marketplace initiated last year, CDNX was to become the sole junior exchange in Canada. As
a result, eligible CDN companies that have made application to CDNX moved off the CDN at
market close Friday, Sept. 29, and onto a newly created Tier 3 category at CDNX.
"With the opening of a Toronto office and the
integration of CDN companies, many of which are headquartered and have shareholder bases
in Ontario, the Canadian Venture Exchange is delivering on its promise to become a truly
national exchange for venture capital securities," said Gerry Romanzin, CDNX
Executive Vice-President. "This is another step in our mission to enhance the North
American marketplace for venture capital and we are pleased to welcome these companies to
CDNX."
The 167 quoted issuers that began trading today on
TradeCDNX represent those companies that met a September 15 deadline to become listed on
Tier 3. A second tranche that met a later September 29 deadline will be assessed and put
onto Tier 3 commencing October 10.
Tier 3 was established as a transitional step to move CDN
quoted companies to Tiers 1 or 2 on CDNXs prescribed auction market. The transfer of
these quoted companies from CDN to CDNX was agreed to as part of the overall Canadian
securities market restructuring. As a result, these issuers were moved to CDNX outside of
the normal listing and sponsorship processes that companies must successfully complete to
become listed on CDNXs Tiers 1 and 2. CDNX plans to put the Tier 3 quoted companies
through a complete review by the end of the year to ensure they are able to meet the tier
maintenance requirements of Tier 2 companies. Tier 3 companies that dont meet Tier 2
maintenance requirements will have up to 18 months following a review to take the
necessary steps to meet these requirements.
Many of these CDN quoted issuers were classified under
Canadas tax laws as private corporations or Canadian-controlled private corporations
and qualify for small business tax deductions or credits. CDNX and CDN have been working
with the federal Department of Finance to preserve, for a period of time, this beneficial
tax treatment for CDN quoted companies that list on Tier 3 of CDNX. Discussions with the
federal Department of Finance are ongoing.
In the event that CDNX is successful in securing the relief
sought from the Department of Finance, investors should bear in mind that Tier 3 quoted
companies may not qualify for certain types of investments for the purposes of the federal
Income Tax Act. Specifically, the securities of Tier 3 companies may not constitute a
qualified investment for registered retirement savings plans (RRSPs), registered
retirement income funds (RRIFs) and other types of deferred income plans.
For these reasons, investors can identify Tier 3 stocks
with root symbols beginning with the letter Y in the three-letter trading
symbols.
"Theres no question that the new Tier 3 CDNX
companies will benefit from enhanced credibility and visibility that the worlds only
well-regulated, sophisticated venture capital exchange can provide," said former CDN
Director and new CDNX Vice-President for Ontario, Kevan Cowan.
Cowan noted that shareholders of the new Tier 3 CDNX
companies also will benefit from the trading advantages and technical sophistication of a
pure auction market like the CDNX. "These 167 companies also represent approximately
$2 billion in market capitalization (excluding debentures)," he added.
The Canadian Dealing Network also has provided for the
reporting of trading in unlisted, unquoted equity securities in Ontario. While awaiting
final regulatory approval, its expected that CDN will discontinue operating the
reported market on Friday, Oct. 6 and the new Canadian Unlisted Board (CUB) will commence
operations of a web-based trade reporting system starting Monday, Oct. 10. CUB will
maintain these CDN "reported" trades in its capacity as agent for the Ontario
Securities Commission (OSC). CUB will provide monitoring and surveillance services to the
OSC for trading in securities reported through the over-the-counter (OTC) system; however,
enforcement will remain with the OSC.
The Canadian Venture Exchange (CDNX)
was launched in November 1999 with some 2300 listed companies active in the technology,
resource, industrial and manufacturing sectors. As the countrys venture capital
marketplace, CDNX provides emerging companies with improved access to capital while
providing investors with a well-regulated market in which to make venture investments.
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