TMX Group 2012 Trade Canada June 25, 2012 Remarks by Tom Kloet, CEO CHECK AGAINST DELIVERY Thank you, Johnny. Welcome to Trade Canada! My personal thanks to all of you for attending our event today. We are very pleased to host you and to share information about Canada, our company and the opportunities for the UK- based trading community. I am very pleased to be in London this week. I have spent a great deal of time here over my career and it is good to be back. London is a financial center of tremendous importance and innovation. It is a unique place and I enjoy that. We were very proud to open our office here in London in late 2010. It may not be terribly big in terms of size, but it is symbolically and strategically significant for TMX Group. It provides us with an important presence here that will help us explore and capitalize on new business opportunities. And more importantly, it will help us serve our UK clients more effectively. 1
In my role as TMX CEO, I often find myself a cheerleader for Canada and an unofficial ambassador for Canadian capital markets around the world. And that is my job here today! So before I tell you about our company, I am going to tell you a bit about Canada and how great it is. It is not difficult to paint a very compelling picture. Canada is routinely judged by the World Economic Forum as having the safest, most sound financial system in the world. It s a solid and reliable environment for the conduct of commerce. In fact, Canada was also recently ranked number one in Forbes annual review of the Best Countries for Business. Canada s financial industry from banking to capital markets to insurance is robust and resilient, and the approach to risk management is a prudent and productive one. Canada maintains a top- tiered credit rating and is ranked number one with the lowest net debt to GDP in the world. 2
Canada s economy is broadly diversified, with key strengths in mining, energy, technology, manufacturing and financial services. TMX Group spends a great deal of time traveling the world to spread the word about our country. And of course, we also spend a good amount of time describing TMX Group s strengths! Allow me to give you a quick tour of our operations TMX Group is a multi- asset class exchange group. We are best known as the owner of Toronto Stock Exchange our senior market. Our junior board is TSX Venture Exchange. We also operate an alternative trading system called TMX Select. In addition to these equity markets, TMX Group is active in other key business areas: Montreal Exchange Canada s derivatives exchange. MX is in turn the majority owner of the Boston Options Exchange. TMX Atrium our global connectivity provider. NGX Natural Gas Exchange a leading North American exchange for the trading and clearing of natural gas, crude oil and electricity contracts. Shorcan Canada's first fixed income inter- dealer broker. 3
TMX Datalinx our information services operation which matches TMX Group s diversification, providing market data on equities, derivatives and fixed income products. Razor Risk our recently- acquired risk management technology business. TMX Group also owns 47% of a centralized market for fixed income trading called CanDeal. TMX also provides investor relations and other technology products and services to the international financial community. We operate offices in New York, Chicago, Boston, Houston, Beijing and Sydney through which we serve clients, market our services and attract new capital and investment to Canada. In a world of finance without borders, we are proud of our ability to attract investment and issuers from around the world. So, as you can see, our company can rightly be viewed as a global exchange group with diversified operations and a wide variety of products and services. 4
That was the view of TMX Group from 30,000 feet. I would now like to focus a bit more closely on the parts of our business you will hear from this afternoon. I ll start with equities. Canada is a relatively small economy, but Toronto Stock Exchange and TSX Venture Exchange rank very strongly internationally. We are: #1 in listed mining companies #1 in listed oil and gas companies #1 in listed clean technology companies #2 in the world by number of listed companies 6 th globally in equity financing 7 th globally in market capitalization We built this leadership position by demonstrating our proven ability to attract and effectively serve companies in these sectors. Canada also has a very sophisticated finance, legal and analyst ecosystem to support these companies. 5
As I mentioned, TSX is our senior market. We offer 160 years of experience in helping companies access the capital they need to grow and achieve their business goals. It is home to some of the finest and biggest companies in the world. However, we also deliver a unique expertise at listing, working with, and serving mid- or smaller- cap companies. TSX Venture Exchange is dedicated to small- cap, early- stage companies. We are the only public venture capital exchange of this size and scope in the world. Companies that require funds to launch or expand find in our Venture Exchange a market opportunity that is unparalleled in the world. Companies can go public at an early stage on TSX Venture Exchange. Grow. Mature. And when they re ready, they can graduate to Toronto Stock Exchange. In total, well over 500 companies have graduated from TSXV to TSX over the last decade. We have built what we think is the best listing continuum in the world. 6
More than $22 billion in equity capital was raised on the two exchanges in the first five months of 2012; more than $51 billion was raised in 2011. For the third year in a row, we listed more new companies than any other exchange group in the world 415 new listings in 2011! Together our exchanges list more than 4,000 securities, including 33 from Europe. That represents a lot of choice for UK investors. These companies range in size from micro- cap exploration companies to multi- billion dollar international brands. Today, almost half of the trading that occurs on our markets comes from outside Canada. To ensure we are an attractive market place for both domestic and international trading clients, we work hard to be competitive on many fronts. We are a respected, well- regulated marketplace. And we invest heavily to ensure we meet the fast evolving technology requirements of the international trading community. Our latest technology initiative is to introduce a new equity trading platform that is based on next generation hardware acceleration technology. Once implemented, it will result in dramatically enhanced speed and capacity. 7
We also provide choice. Our ATS TMX Select offers unique pricing, expanded trading hours, and a simplified market structure. It will celebrate its first anniversary in July. I know Kevin Sampson and his panel have a detailed discussion about the equity landscape in Canada planned for you. Turning to derivatives now Montreal Exchange is, at its core, a provider of solutions and products to help manage risk. Since 2007, our volumes have increased by over 60%. Volume overall on MX is up 17% in the first five months of 2012 compared to last year, and our open- interest is up 11% in the same period. We ve set a series of new records for volume and activity in 2011 and 2012 and are driving our business forward. MX offers individual and institutional investors a wide range of risk management products for protecting their investments and ensuring growth. MX currently lists Canadian equity options, share futures contracts, options on ETFs, currency options, index derivatives and interest rate derivatives. 8
We are also continually working to develop new products to serve the market. One that the team is particularly proud of is our yield curve project. It is a $1 million dollar, five- year initiative to develop Canada s sovereign yield curve. I know Claude Cyr and his panel will tell you more about it this afternoon. MX also recently introduced new user- defined and inter- group strategy functionalities for the futures market specifically for fixed income products. These enhancements enable approved participants to create customized futures and options on futures strategies. In addition to our product excellence, Montreal Exchange is known as a leader in exchange technology. Developed by our in- house technology and financial experts, our derivatives trading and clearing platform called SOLA is widely recognized as one of the world s top platforms. Launched in 2005, it now represents the core technology for Montreal Exchange and Boston Options Exchange. Through a contract with London Stock Exchange, SOLA has become the infrastructure for Turquoise, the Oslo Derivatives Market and Borsa Italiana. 9
SOLA also powers the Canadian Derivatives Clearing Corporation, which is our highly- regarded derivatives clearing house. CDCC is the issuer, clearinghouse, and guarantor of equity, index and interest rate financial derivative contracts that are traded on MX. Recognizing the capabilities available at CDCC and MX, the Investment Industry Association of Canada chose our derivatives clearing house to develop the infrastructure for central- counterparty services to the Canadian fixed- income repo market. We delivered the solution to the market in February, and we re very pleased with its progress. This afternoon you will also hear about how to connect to our markets. TMX Atrium, which we acquired almost a year ago, provides ultra low latency connectivity solutions. It has network coverage in Europe as well as across Canada, the United States and South America. This network is also growing with new links to Russia, Japan and Brazil coming soon. But in terms of connectivity into Canada, Atrium makes it fast and easy. 10
TMX Atrium provides access to 100% of Canadian equity liquidity 70% of which is TMX Group markets as well as 100% of Canadian exchange traded derivative liquidity. TMX Group also offers co- location services, which provide an unmatched opportunity to maximize your trading strategies through low- latency access to the largest equity and derivative market places in Canada. In addition to low- latency access to the TMX Group equity and derivative exchanges, customers benefit from access to regional and international marketplaces, on- site financial technology service providers, and easy access to many global financial network services providers. We recently expanded our exchange- grade co- location facility to meet expanding domestic and international demand. Mike Ramsay will provide more information on accessing our markets later in the afternoon. 11
I know my colleagues are anxious to begin the session, so I ll wrap up my remarks TMX Group is the cornerstone of the Canadian capital markets and an important engine of the Canadian economy. Both our country and our company have excellent reputations. I hope my remarks have been a helpful introduction to both. I will now turn it back to Johnny to introduce our first panel. Thank you for your kind attention. I hope you find the rest of the afternoon informative. 12