It’s a tale as old as time. Companies that list their securities often do not realize how many options are out there. In part, this is because of the shift we have seen in stock exchanges over the past few decades. Instead of focusing on capital-raising companies and investors, which was the original purpose of exchanges, many began to make decisions in hopes of improving profitability for the exchange itself.
Attempts for exchanges to turn a profit have created disadvantages for long-term investors. These attempts have also removed millions of dollars in equity as stock exchanges facilitated predatory trading practices to try to earn a profit.
That’s why the NEO Exchange is so important.
The NEO Exchange: Taking the Financial World Back to Its Roots
Launched in 2015, the NEO Exchange takes the financial world back to its roots.
A recognized Canadian exchange, NEO strives to produce better opportunities for long-term investors. Gone are the days of predatory practices to earn a profit, as the NEO Exchange uses a unique structure to ensure fairness and liquidity, all while providing the market with an investor-driven platform for Canadian publicly-traded securities. To level the playing field, NEO has three distinct venues: NEO-L, NEO-N, and NEO-D.
The NEO Way
In addition to its desire to become investor-focused again, what drives the NEO Exchange is competition and innovation. “At NEO, our vision from day one has been to bring competition and innovation to all facets of the Canadian capital markets,” stated NEO CEO Jos Schmitt.
Without competition among stock exchanges, stagnation can occur. NEO works to avoid this by developing innovative solutions to drive affordable markets. For instance, NEO offers a randomized “speed bump” to halt predatory high-frequency trading, and different order matching models. The ideas were a first for Canadian capital markets.
NEO also has a visibility program that increases the reach of the audience, and it works to reduce the overall costs of being a public company. NEO does so by offering companies, investors, and dealers lower initial, annual, and transactional fees, while simultaneously offering added value for their money. That alone is another reason why the NEO Exchange stands out from the crowd: it re-engages the dealer community, something which stock exchanges have failed to do as of late.
For NEO, reliable liquidity is essential in connecting markets together. When there are liquidity and stability, long-term investors gain access to more investment opportunities. NEO executes this improved trading quality in several ways.
First, with 85% of volume traded deemed natural flow, NEO automatically presents an opportunity for reliable liquidity. Further, NEO executes this through its market-making program. The program allows market makers and listed companies to create a bond. It also leads to more market certainty for traders, helping them meet their needs.
Investors cannot meet their needs if they do not have all of the information. The NEO Exchange understands this and offers free real-time market data for all securities listed. Further, investors and companies can access real-time data of all TSX/TSX-V-listed securities traded on the exchange. When investors get a complete view of the market, they can make more educated trading decisions.
Hard Work Pays Off
On paper, the NEO Exchange sounds essential to the financial world. Innovation, better services, lower transactional fees—these are huge to investors and companies working to raise money for growth.
NEO’s appeals aren’t just on paper, though: NEO has executed its plans so well that in July 2019, the exchange became the third most active marketplace in Canada in volume trading (1.8 billion shares were traded). For perspective, this puts NEO’s trading volume higher than the CSE and very close to Nasdaq Canada.
“This is quite the feat to achieve after only four years of operating our marketplace, especially since our closest competitors have both been around for over ten years,” said NEO CEO Jos Schmitt. “It is very rewarding to see that doing what is right can lead to commercial success.”
The NEO Exchange is growing in other ways, too. In October 2019, NEO developed DealSquare in partnership with Silver Maple Ventures, Inc. DealSquare is a massive innovation for not just the NEO Exchange, but for Canada as well: it is the nation’s first centralized platform to simplify private placements. DealSquare does everything from managing the subscription process to supporting marketing investment opportunities.
“Together with the team from Silver Maple Ventures, we are making access to private markets easier, more efficient and with less operational risk through DealSquare,” explained CEO Jos Schmitt. “We are very proud to continue to deliver on our vision with the introduction of DealSquare.”
He continued:
“As of today, asset managers and capital-raising companies of all sizes can now partner with NEO to raise capital through multiple channels, whether through the public or private markets, on or off exchange.”
The Listings
In five years, the NEO Exchange has acquired corporate listings, Closed Ends Funds, and over 70 ETF listings, all of which it treats uniquely.
Whenever NEO has newly-listed companies, the exchange’s artist-in-residence Anand Jaggernauth creates a piece of art that reflects each organization’s personality, vision, and culture. NEO then presents the artwork at the launch of listings. Companies listed, for instance, include Halo Labs Inc. (NEO: HALO) (OTCQX:AGEEF), Starlight Capital (NEO: SCHG), Maple Leaf Green World Inc. (NEO: MGW) (OTCQB:MGWFF), and Ether Capital (NEO: ETHC) (OTC:DTSRF).
The artwork is a plus, but that’s not why more and more companies are listing on the NEO Exchange. Aside from its mission to create an investor-focused platform, trading securities on NEO is simple. It’s not overly complicated; it’s not going to cause a significant shakeup. Securities can keep trading under their existing symbols when being listed on NEO, a change in listing exchange has no impact on the ownership position of shareholders, and the cost of trading for investors does not change.
Get Involved
As the NEO Exchange ages, it has never lost sight of its goals. It has always focused on creating greater visibility and enhancing liquidity. Additionally, NEO has always remained steadfast in its desire to create opportunities so investors can build wealth, companies can raise money for growth, and society can see the creation of more jobs.
As long as NEO continues to reduce predatory trading behavior from exchanges, investors, companies, and dealers will have access to a more transparent stock exchange. As a result, now more than ever is the time for companies to consider listing securities on the exchange.
After all, as CEO Jos Schmitt expressed: NEO’s relentless focus on its mission is paying off; it’s the investors and companies that list with the exchange that are the real winners.
Featured image: Facebook
