Definition of Montreal Exchange (MX)


What is Montreal Exchange (MX)?

Montreal Exchange (MX) is a fully electronic Canadian derivatives market. The MX currently lists equity derivatives, currency options (options on the US dollar), index derivatives, and interest rate derivatives (bonds and money markets). It is the oldest exchange in Canada and the main market for financial derivatives in Quebec.

Formerly known as the Montreal Stock Exchange, the MX is part of the TMX Group, which also includes the Toronto Stock Exchange (TSX) and the TSX Venture Exchange. TMX Group is headquartered in Toronto, with derivatives operations in Montreal.

The liquidity of the MX continues to increase mainly due to the trade of different countries; there are over 90 approved participants from London, New York, Chicago and Montreal directly connected to the MX e-commerce system.

Key takeaways

  • Montreal Exchange (MX) is a fully electronic Canadian derivatives market.
  • The MX currently lists equity derivatives, currency options (options on the US dollar), index derivatives, and interest rate derivatives (bonds and money markets).
  • The MX is the oldest exchange in Canada and the main market for financial derivatives in Quebec.
  • The Montreal Stock Exchange was acquired by the TSX Group on December 10, 2007; the resulting merger gave rise to a new name for the group: TMX Group.
  • MX clearinghouse, the Canadian Derivatives Clearing Corporation (CDCC), provides all clearinghouse services for exchange participants.

Understanding the Montreal Exchange (MX)

The Montreal Stock Exchange was founded in 1874. In 1974, it merged with the Canadian Stock Exchange. A year later, it became the first Canadian exchange to offer stock options.

In 1982, the Montreal Stock Exchange shortened its name to the Montreal Stock Exchange. The name was changed to reflect the variety of financial instruments (other than stocks) that were available at the time, including options and futures trading.

The Canadian stock market reorganized in 1999; the Montreal Stock Exchange was renamed the Canadian Derivatives Exchange over the next decade, and the Toronto Stock Exchange became the place to trade the stocks of major companies. A new exchange, the Canadian Venture Exchange, now called the TSX Venture Exchange (TSXV), was created to facilitate the trading of shares of smaller companies.

The Montreal Stock Exchange was acquired by the TSX Group on December 10, 2007, but the acquisition was not completed until May 2008. The total price of the merger was recorded at $ 1.31 billion CAD. The resulting merger gave rise to a new name for the group: TMX Group. This acquisition effectively combined the Canadian equity and derivatives exchanges. Other countries, such as Australia, have also combined trading in stocks and derivatives on a single exchange.

Today, stock option trading on the MX covers most of the larger companies listed in Canada, but it is not as broad as the US option markets. Interest rate derivatives cover the short-term bank acceptances, ranging from overnight rate to three-month rate and Canadian government bonds for two and ten years. Index futures and options cover the S&P Canada 60 Index and various S & P / TSX sector indices.

MX clearinghouse, the Canadian Derivatives Clearing Corporation (CDCC), provides all clearinghouse services for exchange participants. The CDCC manages the risk exposures of the stock market while maintaining a superior investment rating and a strong reputation. The CDCC also offers risk management services to partners in the OTC market.

Business hours

The usual MX trading hours are at 9:30 a.m. M. And at 4:30 a. M. ET. Each class of option is opened for trading when a trade occurs on its underlying issue on a recognized Canadian exchange. If such a trade has not yet taken place, the option class will open for trading at 9:35 am ET.

Special Considerations

Automation process

The exchange reached a milestone in 2001 when it became the first traditional exchange in North America to complete the automation process. Three years later, the Montreal Stock Exchange became the first foreign exchange exchange to provide an American exchange, the Boston Options Exchange (BOX), with electronic trading systems and support. TMX also owns a stake in the Boston Options Exchange.

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Mark Holland

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