Source: Pixabay


According to Bloomberg: “TMX Group Ltd is an integrated exchange group that operates markets for multiple asset classes. The Company, through the stock exchanges it operates, provides liquid markets for a broad range of issuers, provides access to capital for companies in the early stages of growth, and also the trading and clearing of natural gas and electricity contracts”

The Toronto Stock Exchange (TSX) is a wholly-owned subsidiary of the TMX Group for the trading of senior equities. Recently, TMX Group published its inaugural Environmental, Social and Governance Report (ESG) report — the first in the 168-year history of the company. It states:

“Over the last few years, environmental, social and governance (ESG) factors have become priority criteria for investors and asset owners and sustainability practices have become increasingly important considerations for companies across all sectors. The goal of this report is to inform all of our stakeholders, including current shareholders and potential investors, of TMX Group’s progress in incorporating ESG matters into our corporate strategy, processes, and operations. We recognize issuing this first report is very much just one step on an important journey for TMX Group”

In other words, the ESG Report points to the need for a real transformation at TSX. So, in similarity to my previous “Reinventing” posts, I looked at the Past, Present, and Future of TSX — using my Reinvention Strategy described in:

· Reinventing GoDaddy

· Reinventing Bombardier

· Reinventing Boeing

· Reinventing Indigo

· Reinventing Booking

· Reinventing Andrew Lloyd Weber

· Reinventing XYZ


From its humble beginnings in 1852, the Toronto Stock Exchange (TSX) grew to become: “the 9th largest exchange in the world by market capitalization. A broad range of businesses from Canada and abroad are represented on the exchange. In addition to conventional securities, the exchange lists various exchange-traded funds, split share corporations, income trusts, and investment funds. More mining and oil and gas companies are listed on the Toronto Stock Exchange than any other stock exchange” —

And DBRS rating agency also adds: “TMX is the leading provider of listings, trading, clearing, settlement and depository services in Canada where the Group enjoys significant market shares across a breadth of products within equities, fixed income and derivatives. Furthermore, TMX sources 33% of its revenues from outside Canada, predominantly through its Global Solutions, Insights and Analytics (GSIA) segment.

The Group faces competition from exchanges and other service providers seeking to enter the Canadian market; however, barriers to entry are high, given TMX’s preeminent position. From a supervisory perspective, TMX subsidiaries have extensive oversight by various regulators at the federal, provincial, and foreign levels, providing an additional level of scrutiny at the operating subsidiary level”. What’s not to like? — especially, the steady climb of TMX Group’s market cap over the years…


As per TMX’s press release: “TMX Group operates global markets, and builds digital communities and analytic solutions that facilitate the funding, growth and success of businesses, traders and investors. TMX Group’s key operations include Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montréal Exchange, Canadian Derivatives Clearing Corporation, and Trayport which provide listing markets, trading markets, clearing facilities, depository services, technology solutions, data products and other services to the global financial community. TMX Group is headquartered in Toronto and operates offices across North America (Montréal, Calgary, Vancouver and New York), as well as in key international markets including London and Singapore”

That is a lot of exchanges and a lot of trading… So, I asked myself a simple question: How is COVID-19 going to affect the financial markets in general, and TSX in particular?

COVID-19 & Supply Chain

For example, healthcare companies will be rethinking their global supply chain network strategy, placing a stronger emphasis on risk diversification as opposed to cost savings. Such a shift would have a profound economic impact on countries with a large manufacturing base.

Moreover, COVID-19 highlighted the deep deficiency in sustainability — everywhere. No government will have any chance of re-election by promoting the pre-COVID-19 globalization and outsourcing agendas.

Together with ESG, BRT, and more equitable Capitalism 2.0 — COVID-19 redefined the past economics, forever. Locally designed and locally manufactured products are the new mantra behind the focus on Supply Chain 2.0.

As a result, large Chinese conglomerates will have no choice but to open localized plants in North America and Europe — instead of sticking to the old logistics of doubling the shipping containers traffic every few years.

Cheap overseas labour is taking a hair cut already, as the revival on North American middle class and the local jobs that come with it — take a central stage. COVID-19 simply turned the table on the lopsided job market of the past. So, is Fintech going to be left unscathed?

COVID-19 & Fintech

Before COVID-19, I wrote about how instead of utilizing High Frequency Trading (HFT) bots, the leaders in AI technologies could use AI innovation to monitor and prevent securities fraud and abuse patterns such as: front running, naked short selling, etc. Democracy is coming to a financial fraud near you…

Fraudulent & manipulative HFT schemes corrupt the efficient market pricing process on all exchanges and cause irreparable harm and damage to retail & institutional investors.

Sophisticated manipulations aiming to defraud and manipulate securities markets and the trading of equities on those markets — rob billions of dollars annually from buyers and sellers of securities. And it’s not a secret anymore. It’s a… common knowledge.

Blinded by substantial kickback payments in exchange for providing HFT firms access to material trading data — some financial institutions abandoned their fiduciary duty to clients, and their mandates to regulate the markets and benefit the public interest.

Train robbers needed significant logistics in place to perpetrate their crimes. In comparison, HFT traders make train robbers look like boy scouts. They can get away with a much bigger loot without ever leaving their offices, glued to a workstation

Yes, it takes HFT traders less time to pocket millions than sipping on a cup of cappuccino from a nearby Starbucks…

But there is more. Governments and regulators such as: SEC, OSC, IIROC, etc. — can do much more to level playing field while we embark on a recovery from the worst economic collapse since WWII. Simply put, businesses need to be temporarily shielded from the “peace-time” Wall Street/Bay Street pressures — see: Capitalism 2.0 — Part 1

Since the COVID19 effect on businesses IS NOT linked to any past economic metrics and since companies were ordered to shut-down — why would any business be measured today by the quality of its dividends? Granted, some companies have more cash to spare than others and can still pay dividends…

But why would we ask the corporate world to twist themselves into a pretzel & offer dividend just to “keep up with the Joneses?” — the behemoths such as Apple, Microsoft, or Amazon? The mandatory shut-down of businesses had nothing to do with economics …

Until the government-mandated shut-downs due to COVID19 pass and the companies begin to recover — NO DIVIDENDS and no SHARE BUYBACKS should be allowed to level the playing field. And many exchanges could facilitate such ESG developments.

And why would we even allow considering SHARE BUYBACKS following the biggest bailout in history that will be offered to all companies by… taxpayers! Are bailouts supposed to benefit only the shareholders instead of all the stakeholders — at the expense of preserving the employment?

It’s time to reverse the biggest mistake of the past and make share buybacks illegal. Is using taxpayers’ money to manipulate markets & send a fake message of a “greatly improved” profitability… the best we can do?

Before 1982, share buybacks were considered illegal and treated as market manipulation by SEC. There is enough evidence 38 years later that tinkering with SEC rules didn’t work. Neither did the globalization…

If corporate profits are to be reinvested in developing new products, building new factories, or opening new stores — they can’t be redistributed, instead. Otherwise, we will be stuck with dwindling employment and diminished capacity to innovate — when we need it the most…


So, I emailed, called, and emailed again the CEO of TMX Group, John McKenzie — offering to help TMX monetizing ESG activities and to turn ESG Cost Centre into a Profit Centre.

I also contacted Ungad Chadda, President of Capital Formation at TMX Group — responsible for all aspects of Toronto Stock Exchange’s and TSX Venture Exchange’s listings business.

I actually know Ungad from about 10 years ago, when we jointly presented to Chinese and Israeli technology companies the benefits of CPCs. Capital Pool Companies (CPCs) program allows for inexpensive Reverse Take Overs (RTOs) of publicly-listed CPC shells — an attractive way of going public on TSX-V.

At such time, CPC was a truly unique and innovative program offered by TSX — much before the US-based gigantic SPACs emerged and dwarfed CPCs by starting to offer billions of cash to RTO candidates.

Truth be told, I do firmly believe that TMX cans capitalize on the trillion-dollar ESG trend that has captivated financial markets. But it has to be done distinctively — to differentiate TMX’s brand from 100 other exchanges. They all can publish equally glossy reports — rich in form, yet without profound ESG substance.

I also observed that ESG’s appetite grows stronger by the day. The developments are real and profound, such as:

• Goldman Sachs starts a $1.5 billion ESG fund…

• Jeff Bezos launches a $10 billion Global Earth Fund…

• BlackRock is committed to having over $1 trillion in ESG assets within the next decade…

Without a doubt, the ever-increasing ESG awareness creates a unique opportunity for the exchanges to step up to the plate and be handsomely rewarded while at it — just as I proposed in: Capitalism 2.0 At Davos

Therefore, I’m convinced that the exchanges can introduce several “peace-of-mind” services for which early-stage companies would gladly pay a hefty premium — such as:

No Short Selling Listings — an option to provide an exclusive listing on the exchange that would disallow the short-selling of companies’ stock. Offering a thinly traded enterprise to escape the hedge fund’s “activism” — could become the preferred choice for many. Providing of course, that the ESG regulatory regime would allow the young companies to ask for such an explicit listing…

No Share Buybacks — a listing of the companies explicitly committing to the ESG spirit and directing all the profits toward New Business Development, Growth Activities, R&D, and maintaining full employment — especially during the post-COVID-19 recovery

No Dividends — a listing of the companies explicitly committing to postpone all dividends during the post-COVID-19 recovery

My predictions as to ESG evolution assume that the regulators and the exchanges will face pressure to allow for much greater flexibility in the future. After all, the investors and the shareholders will always vote with their wallets. And for example, if some younger startups PREFER to be listed as companies forbidding short-selling altogether — it will be for the investors to decide if they are ready to purchase such securities…

Granted, in the absence of market makers and short-sellers, the liquidity of such securities might be affected. But what if some younger ESG investors prefer it that way? You see, nobody ever believed that ZERO COST trading will be offered, too — until the Robin Hoods of this world turned the tables on the established Brokerages…

And yes, market regulators such as IIROC may use a very sophisticated SMARTS program today to detect the violators. It has no other choice under the existing Market Integrity Rules. But the Fintech world is changing, too…

I still remember how smart my AI programs were when International Neural Machines (the first AI company in Canada that I started in… 1990) developed a program to capture Visa Fraud for Canadian Banks. But now, more and more issuers allow the cardholders to be in control.

The ability to Enable/Disable credit card transactions by the end-user can now reduce the card-not-present fraud by 99%, if not more — see my post: How To Eliminate Billions In Credit Card Fraud By Lifting An Index Finger — No AI Necessary!

Still, some will tell you that since the rules around short-selling are established by the national market regulator, IIROC — the exchanges are not in a position to establish short-selling rules that are specific to the exchange.

And yet, many will admit that while there may be some industry concern about IIROC’s record of enforcement of short selling activities that are “manipulative and deceptive” — the exchanges and other industry participants regularly alert IIROC to potential abuses and the lack of compliance with UMIR (the “Universal Market Integrity Rules”).

I also often hear that there is a substantial body of research that indicates that short sale bans have a significant negative impact on liquidity. As a result, while the exchanges advocate for more public action on abusive short selling on the part of IIROC, they are not in favour of an outright ban of such practice. And why would they? After all, the exchanges and the hedge funds make a lot of money through short-selling transactions…

So, to all the “Doubting Thomases”, I strongly recommend reading the recent publication from McMillan LLP, a leading business law firm serving public, private and not-for-profit clients across key industries in Canada, the United States and internationally: An Analysis of the Short Selling Landscape in Canada:

It describes in detail the profound difficulty in monitoring, detecting, prosecuting, and convicting the short sellers. It concludes: “Finally, we implore the OSC to increase enforcement activity. We also strongly encourage the CSA to evaluate (including by seeking commentary from market participants) whether it is appropriate to create a statutory private right of action that allows investors to recover losses from those who manipulate our markets with misleading information”

Therefore, my common-sense reasoning was as follows: TSX can’t lose by starting and promoting the “ESG at Stock Exchanges” debate with the regulators… If it wins, it will offer to TSX the bragging-rights in front of nascent issuers and younger investors. And if it loses, the enormous PR exposure to initiating ESG debate is not less valuable. Especially, in a post-COVID-19 world of greater accountability.


The same ESG Report from TMX concludes: “As we look into the future, despite prevailing uncertainty looming in our operating environment as the business world prepares to emerge from the COVID-19 pandemic, TMX Group remains firmly focused on serving our clients with excellence, providing our markets with continuity, and executing against our global growth strategy. In times of crisis, it is especially important to also address the needs of the local communities in which we operate”

Well, the time for action is NOW. And if TSX/TSX-V are not going to do it, someone else will. I was particularly impressed by the new Canadian alternative exchanges such as The Canadian Securities Exchange (CSE) and NEO.

Take CSE for example. It caters primarily to small-cap issuers in nascent Cannabis and Blockchain industries. And although the buybacks employed by large international companies over the last many years are not a major concern to CSE — I am convinced that the biggest mistake of Cannabis 1.0 companies going public boils down to this: they jumped into a public space UNPROTECTED — and hence, extremely vulnerable.

In many cases, regardless of the value proposition, the Cannabis companies got played by the deep-pocketed market participants — who wear long pants, not shorts, to a party. Until Cannabis 2.0 can count on innovative exchanges that offer protection from short-sellers — the potential for the next carnage will continue.

Example: some cannabis companies such as HEXO or Tilray lost over 85% of their market cap in the last 12 months. Do you think they wouldn’t welcome and pay extra fees for the ability to escape the short-sellers’ clutches?

Without such options, billions will be lost, thousands of jobs will evaporate, and many promising startups will file for bankruptcy protection. I wrote about it in Canada-Israel Weed Nirvana: One Small Puff For A Man, One Giant Leap For Cross-Border Entrepreneurship

Moreover, I was particularly impressed with NEO’s bold action against High Speed Traders. The company’s website says it all:

“What Happened to The Stock Market? — In the beginning, the core purpose of the stock market was simple: Create a market where investors can build wealth through their investments, while helping companies raise the capital they need to grow. Investors had a level playing field and companies benefitted from a reliable price formation process. It was win-win. And together, these simple ideals drove our economy, created jobs, and supported growth and progress.

The Stock Exchanges Became the Money-Makers. The focus on these two aspirations was so straightforward, it seemed like the stock market must be something that belonged to all of us. But many stock exchanges have become publicly-traded companies themselves. They belong to shareholders. And just like any other company, they are designed to turn a profit.

Decisions made to improve profitability can compromise decisions that should be made in the public interest. Over the past few decades, stock exchanges have made more and more decisions designed to improve their business results at the expense of supporting long-term investors and public companies. In this quest for profit, they enabled predatory trading practices which have changed the nature of capital markets around the world, creating a disadvantage for long-term investors, and removing millions of dollars in equity from the markets every day.

We continue to develop new, innovative solutions that help drive more efficient and affordable markets. The use of different order matching models, the randomized “speed bump” to slow down predatory HFTs and anonymized public market data are just a few bold new ideas we brought to Canadian capital markets where the incumbent exchange failed to take action”.

These are all hopeful signs for us all, and I remain optimistic that in the post-COVID-19 world — the push for Fintech ESG will deliver the outcomes benefitting all the stakeholders, not just a few…


1) I am in the business of joining Advisory Boards of open-minded and innovative companies. And to me, Business Model Innovation is as disruptive as Technology Innovation. So, I help companies developing unique & opportunistic growth strategies with the focus on bringing RAPID & SUSTAINABLE revenues

2) I did it with Verizon already 20 years ago! It is all about RESULTS — or I do not get paid. Hence, I turn promising Unicorns into proud stallions, instead of little ponies… And it starts with learning about where the companies are now, where they want to be in the future, and how I can help such companies to get there

3) To overcome the challenges, I deliver RapidRevenues™ and SustainableProfits™ with surgical precision. And to make the process smarter & cheaper, we structure JVs to tap into huge pools of nonconventional funding. I am at that stage in my life where I don’t care about BOD politics and water-cooler gossips. Nor do I offer fake flatteries to CEOs. All I care about is how to solve CEOs’ problems & deliver results

4) So, I join Advisory Boards to do so! And it is not about how to score one hit — it’s a process to optimize the performance & beat the odds, repeatedly. As one of the ultimate BusinessAI™ veterans on the planet w/ over 30-yr hands-on AI expertise, I also bring supreme business savvy to separate the wheat from the chaff…

Stay safe, stay healthy! I look forward to hearing from you…

Oleg Feldgajer — BASC, MASC, MBA & EMBA, President & CEO — Canada Green ESCO Inc. “BODs serve investors, Advisory Boards are CEOs’ best friends”



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