TMX Group’s John McKenzie on Making Markets Better

The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future? 

The way we work has indeed changed as a result of the COVID-19 pandemic. At TMX Group, we consider ourselves fortunate: our people have been very effective working remotely for much of the past two years. Since the outset of the pandemic, over 90% of TMX’s staff have been working online, adapting to the increased demands of a busy market and ensuring we continue to provide excellent service to our clients here in Canada and around the world. It’s proof positive of our commitment to our markets and a source of great pride for all of us at TMX.

Despite the ongoing challenges, the abrupt shift to a virtual business environment has given TMX - along with our capital markets industry stakeholders here in Canada and around the world - the opportunity to re-imagine the future of work. While our day-to-day focus remains on meeting the needs of the marketplace as the situation evolves, we are working internally to develop a new hybrid-working model, with a goal to finding a smart balance between in-office and remote working and a flexible solution that suits our business, clients, and people. Remote work has thus far been a success, but we also recognize the considerable benefits that come from a shared workspace, including inspiration, collaboration and teamwork. Accordingly, as part of our next-phase plans, our IT team is working to ensure employees have the right technology to help facilitate those valuable interactions, enabling employees to efficiently book space and connect with each other while in the office.

From an industry perspective, the COVID-19 pandemic has also advanced the trend of virtual conferences and meetings. While live, in-person events are important ways for the business community to interact and connect, we may see an increase in the adoption of virtual or hybrid events post-pandemic, which will help companies contain costs, broaden participation across the globe and reduce their carbon footprints.

What role do exchanges have in decarbonizing the future and promoting ESG action and disclosure?

TMX Group is a supporting organization to the Canadian Investor Statement on Climate Change, recognizing that climate change presents a significant threat to long-term growth and prosperity and that there is an urgent need to accelerate the transition towards a net-zero economy. Our equities and derivatives exchanges are also partners in the United Nations Sustainable Stock Exchanges (SSE) initiative to promote sustainable performance and transparency in capital markets.

Along with participating in these important global partnerships and industry groups, TMX aspires to be an organization that leads by example. Over the past year, we have made meaningful progress in our own sustainability journey, including enhanced disclosures, the recent release of TMX Group’s inaugural TCFD report, and achieving carbon neutrality for 2020.

We are also working to empower stakeholders across TMX’s market ecosystem, including issuers and investors, to become ESG leaders in their own right through educational tools, products and services, including:

• ESG 101, a portal of issuers support services and resources to help listed companies navigate the fundamentals of ESG reporting,
• A strategic alliance with IHS Markit to provide issuers with access to multi-framework ESG reporting and data distribution repositories, and
• The Voluntary Climate Marketplace, a collaboration between Trayport (a TMX Group subsidiary) and IncubEx to provide clients with efficient access to carbon offset trading via an electronic platform.

In our equities and derivatives markets, we have introduced several products designed to enable investors to gain exposure to sustainable investing, including ESG indices and associated index futures.

While we are pleased to report our progress, we recognize more work is ahead of us. Going forward, we have several sustainability initiatives underway across TMX, including enhanced reporting, further measures to reduce greenhouse gas emissions and new products and services designed to meet the ever-evolving needs of our client base.

As CEO, you’ve taken on an increased advocacy role to promote Canada’s capital markets in Canada and internationally. What types of initiatives are you calling for?

Canada presents a powerful, globally competitive value proposition. We believe we have the best markets in the world: deep and diverse, fair and liquid, innovative and responsive. And we stack up well versus the global competition. On a combined basis, TMX Group equities exchanges Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) ranked third among our international peers by number of new listings at the end of 2021 and third by number of new international listings.

But markets are not static - and must continue to evolve. TMX is taking a proactive role in ensuring Canada’s capital markets retain our competitive edge. Our advocacy effort aims to establish TMX as a prominent, consistent and effective advocate committed to making markets better and helping our clients succeed.

A healthy public company ecosystem fuels economic growth: spurring innovation, attracting global investment and creating jobs, and operating at the centre of this vibrant and vital ecosystem; we feel that this powerful story is ours to tell. As we enter the next stages of post-pandemic recovery and move to address the other global economic challenges —including rising inflation rates, supply chain bottlenecks, increasing environmental disasters, and labour shortages— TMX feels it is critically important to ensure we work to create a favourable environment for public companies to prosper, to keep this engine of opportunity thriving and driving growth.

We have begun to amplify our voice, working closely with our industry partners, to champion public policy to improve conditions and set the stage for enduring success, including calling for measures to simplify Canada’s tax system, ensuring public companies are treated fairly when it comes to federal government support and incentives, and promote issues that matter including, ESG, equity, diversity, and inclusion.

2021 was your first full year as CEO of TMX Group. What are you most proud of? What are you excited about for 2022? 

2021 was a tremendous year for TMX, highlighted by some strong performances and major accomplishments across our business units, along with significant progress in our growth initiatives. A few brief highlights include:

Capital-raising on TSX and TSXV, our two equities exchanges, was especially strong in 2021, with a record number of new listings and IPOs, and strength across our diverse stock list, including mining and technology.

TMX launched our revamped Market On Close facility, an important upgrade to a key feature of Canada’s equities markets and the broader financial services industry.

Montreal Exchange, Canada’s derivatives exchange, launched trading on Asia Pacific time. Extended trading hours sync us to the world’s premier financial centres, enabling sophisticated modern investors to trade Canada in all time zones: to execute cross-market trading strategies and manage exposure on their time.

Trayport, our London-based connectivity platform for European wholesale energy markets, acquired Tradesignal, a leading producer of rule-based trading and technical chart analysis software to enhance client decision-making and the overall trading experience.

As I look back on 2021, what I am most proud of is also the reason I am very excited for the future: the unwavering commitment of our people. Throughout the year and in every facet of our business, TMX employees continued to drive our success, delivering excellent service to our clients and stakeholders and rising to meet the day-to-day challenges of an extremely busy market. I am extremely confident that we are on the right track and look forward to the successes in front of us.