- TMX Group Ltd, parent company of the Toronto Stock Exchange, closed on its highest level since July 2020 after posting revenue and earnings that beat analyst expectations thanks to a boom in listings and corporate financing.
Chief Executive Officer John McKenzie said the second quarter continued a capital market renaissance as an increasing number of companies have found investors receptive to their initial public offerings and follow-on equity deals. The trend looks set to continue for some time as the IPO pipeline remains'very robust, he said.
Revenue from capital formation - which includes fees charged to companies when they go public or raise additional capital - rose 44% in the quarter over the previous year, TMX said in a statement. The shares were up 4.4% to close at C $142 in Toronto on Thursday and are up almost 12% this year.
TMX traded as high as C $145,91, an intraday record.
As companies get successful deals done, public companies see the opportunity to use the market to do the same, and success begets success, McKenzie said in an interview Thursday.
Capital formation revenue gains more than offset a drop in equity and bond trading fees. Overall, the company sales grew C $245 million in the quarter, 13% more than a year earlier. Revenue from derivative trading and data sales also rose.
Net income was C 107.1 million on an adjusted basis or C $1.90 per diluted share. Analysts expected C $1.68 share.
The second quarter of 2020 was characterized by frenetic trading activity as stocks bounced back from the pandemic crash in February and March of that year. TMX is trading activity on all the equities marketplaces. Runs went down by 12%, said the company.
The quieter trends continued in July and into August, partly from'market fatigue' after an exceptionally busy period for traders, McKenzie said. Activity by retail traders looks poised to normalize at a higher rate than before the pandemic, helped by new, low-cost trading platforms and the proliferation of exchange traded funds, McKenzie said.
I do expect that it's going to be elevated from where we were because of those more permanent market structure changes, in terms of ease of access, direct-trading tools that traders didn't have in the past, comfort with direct trading that some traders may not have had prior, McKenzie said.