In January 2015, the Toronto Stock Exchange (the “TSX”) released proposed amendments to its rules setting forth a set of listing rules for a variety of products, including structured products and closed end funds.13
In issuing the proposal, the TSX noted that, at present, none of the leading Canadian banks that issue these products list them on an exchange. The TSX also determined that there are currently only three providers of listed structured products in Canada, with only six products listed on the TSX or on other Canadian exchanges. As a result, the TSX believes there may be benefits to public listings for this product class, and proposing a single set of listing rules.
Among other things, the TSX is proposing a capitalization requirement of CAD$1 million for structured product listings.
A Look to the U.S. Exchanges
In creating the proposed rules, the TSX reviewed the listing rules and practices on a number of international securities exchanges. The TSX noted that the products listed on Nasdaq and the NYSE are the most comparable to the products listed on the TSX.
What Is a Structured Product?
For purposes of the proposed rules, the term “structured product” means securities generally issued by a “Financial Institution” (or similar entity) under a base shelf prospectus and pricing supplement where an investor's return is contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates or cash flows. Structured products include securities such as non-convertible notes, principal or capital protected notes, index or equity linked notes, tracker certificates and barrier certificates. The TSX, in its discretion, may determine if a particular issuance of securities will be considered a structured product.
The TSX is publishing the proposed rules for a 60-day comment period, which expires on March 16, 2015.