Stock options

Established in 1852, the Toronto Stock Exchange (TSX) is one of the top-10 exchanges in the world. Thirty-four Chinese companies and 22 corporations with main businesses related to China are currently listed on the TSX and its second board TSX Venture (TSXV).

Richard Nesbitt, CEO of TSX Group spoke to China Business Weekly reporter Guo Zhuo at a recent seminar held by Xinhua-08 News Wire under the official Xinhua News Agency. The CEO shares his group's goals and strategy in the country and his views on China's capital market.

Q: What kind of Chinese companies are favored by the TSX?

A: First of all we are looking for high-growth companies. We focus on companies ranging from $50 million to $1 billion. Instead of large State-owned enterprises, we target entrepreneurial and private companies.

TSX is an exchange for the world's mining industry. Today, we have 60 percent of world mining companies listed on TSX and TSXV. Canada, as an oil-producing country, has four Canadian oil and gas companies listed as well. Mining, oil and gas are our main industries. That is what we are good at, so that is what we are focused on. We are competing every day with NASDAQ, Hong Kong and London, so we have to focus on what we are good at.

Q: Does the TSX have special policies for a Chinese company to list?

A: No, we don't. The policies are open and are the same for Canadian companies. That is important because we must make sure listed companies have the same quality as local Canadian companies as well as the same accounting principles and the same governance.

There are 125 US companies listed on the TSX. We have 34 Chinese companies and 22 companies with main business related to China listed on the TSX. We also have 25 companies from Australia, 25 from Brazil and 25 from Europe. The rule is the same, but our focus is on China- it is our priority.

Q: Compared with other stock exchanges, what's the advantage of TSX in attracting Chinese companies?

A: It depends on what kind of companies. We start from mining and oil and gas companies. In Canada, we have 60 analysts specialized in mining stocks, more than any other country in the world. You are likely to get good analysis in mining, oil and gas if you are listed on the TSX. As well, the Sarbanes-Oxley Act in the US made listing there expensive for companies. But in Canada, the cost is much lower.

Q: What is the major challenge for a Chinese company to list on the TSX?

A: I think the only major issue is to understand our market, to educate CEOs and CFOs about how the process works, what they need to do to be successfully listed and how they can continue to be successful after listing.

It does take a lot of work to be a public company. You need to ensure your financial report is in time and is well prepared. The fastest listing process takes three or four months. Sometimes it takes a year. That's really an educational process the management of the company has to go through.

Q: In your eyes, what are the unique characteristics of Chinese capital market compared with Canadian market?

A: I think China's stock market is in a different development stage. The Canadian stock market has a 150-year history. The Shanghai Stock Exchange, for instance, as one of the members of the World Federation of Exchanges, is still in earlier stage of development. But it is catching up very quickly.

(China Daily 12/01/2007 page4)