Maverick businessman Ned Goodman has bought a minority stake in CNSX Markets and wants to transform it into a true competitor to the Toronto Stock Exchange.
Goodman, CEO of the Toronto-based holding company Dundee Corp., has reportedly teamed up with CNSX chairman Thomas Caldwell and his Urbana Corporation and purchased a 33 per cent interest in the rival exchange. He will also join the board as deputy chairman.
Goodman said he believes entrepreneurs have been underserved by the TSX and its venture counterpart and wants to transform the CNSX into a real competitive alternative to Canada's dominant exchange — at least for the smaller companies that are at the greatest disadvantage on the TSX.
"The real problem comes for the junior companies that have to be listed in order to raise money, and more than half of their money has to go to a lawyer, and it takes a long time," Goodman said in an interview with CBC's Lang & O'Leary Exchange.
"We will be very competitive because we will not be part of the complicated legal machinations that [the TSX] requires."
TSX owned by bank 'cartel'
His plan has been dubbed the Nasdaq of the north, but Goodman admits he faces stiff competition to make it happen.
The CNSX has 200 listed companies to the more than 2,300 on the TSX venture exchange. It also runs Pure Trading, which operates an auction market where securities listed on other Canadian stock exchanges can be traded.
Goodman says the TSX has a set of rules and regulations beyond what the Ontario Securities Commission requires that make it too difficult and expensive for startup firms to get listed on the exchange.
And he argues that the big banks that own the TSX make up a "cartel" that owns everything from the investment firms that handle listings to the channels for retail investing.
"The [TSX] is owned by five of the six large banks in the country, and the sixth, not wanting to be left out, is forming its own stock exchange [Aequitas], and so it's all the big guys," Goodman said.
"And the big guys own the private client business as well and are gradually taking over the mutual fund business. It's a fight, no question about it."
Goodman says there are many unhappy players, including retail investors and small companies, that will be attracted to the smaller exchange.
The CNSX was recognized as an exchange by the Ontario Securities Commission in 2004 and started operating Pure Trading in 2007. Goodman said he plans changes over the next few months to attract more listings.