What Is the NEX?
NEX is an exclusive board on the TSX Venture stock exchange that offers a special trading platform for companies that no longer meet the ongoing listing requirements of the TSX Venture. NEX caters to companies experiencing low business activity or those that have completely ceased operations. It provides these firms with liquidity and visibility, potentially attracting acquirers or investors. Companies on NEX are readily identifiable by an “H” or “K” extension in their trading symbols.
Key Takeaways
- The NEX serves companies failing to meet the TSX Venture Exchange’s listing criteria.
- It targets businesses with reduced or halted operations.
- NEX promotes liquidity and visibility, drawing in potential investors.
- Companies moved to NEX typically have a 90-day transition period.
- Listing on NEX entails lower fees and simplified regulations compared to the TSX Venture Exchange.
Understanding the NEX
Launched as part of the TSX Venture Exchange based in Calgary, Alberta, NEX is an initiative for investors focusing on small-cap and emerging companies. Before the NEX, companies not meeting the listing criteria were marked as ‘inactive’ and had 18 months to rectify or face delisting. With NEX, companies now have a continuous platform without the rigorous delisting deadline, giving them an opportunity to revitalize their business.
Costs for Listing on the NEX
NEX commands a quarterly listing fee of $1,250, payable on the first business day of each quarter. For comparison, TSX Venture charges annual fees between $5,200 and $90,000 based on filing reviews. The streamlined fees of NEX were designed to remain competitive with other emerging markets, offering a clear distinction for investors assessing risk profiles.
Advantages and Disadvantages of the NEX
NEX presents a lower barrier to entry with simplified listing rules. While TSX and TSX Venture Exchange fees can run significantly higher, NEX fees remain economical. Companies benefit from remaining publicly traded, contributing to reassessment of business strategies. However, maintaining required disclosure standards and posing higher investor risks are notable challenges.
Pros
- Provides liquidity for smaller, marginal companies
- Lower listing fees
- Simplified rules for listing
Cons
- Must meet public company disclosure standards
- NEX-listed companies are inherently riskier for investors
NEX Exchange Trading Hours
The trading hours for NEX are from 9:30 a.m. to 4:00 p.m. ET on business days.
NEX in the U.K.
The NEX Group, formerly ICAP, operates financial markets and post-trade services for financial institutions in the UK. Not associated with the TMX Group’s Canadian NEX, it specializes in electronic financial markets.
Market Value of NEX
As of December 2022, NEX Group’s market capitalization on the London Stock Exchange stood at GBP 4.23 billion. The TMX Group, which owns NEX in Canada, was valued at CAD $7.70 billion.
The Bottom Line
NEX serves as a component of the TSX Venture Exchange for companies that fail to uphold the required listing standards. It helps companies with a halt in active operations by enhancing their liquidity and spotlight, facilitating possible company turnarounds or acquisitions. Transitioning to NEX assists companies in maintaining market presence while outlining reduced listing fees and simpler regulations compared to the TSX Venture Exchange.
Related Terms: TSX Venture Exchange, small-cap stocks, liquidity, venture capital, Toronto Stock Exchange.
References
- NEX. “About Us”.
- NEX. “Introducing NEX”.
- Ontario Securities Commission. “Notice Commission Approval of the Toronto Stock Exchange Inc. Acquisition of Canadian Venture Exchange Inc”, Page 1.
- TSX. “Technical Guide to Listing”.
- Investing.com. “NXGN (LON)”.
