TMX Group’s May Equities Volumes Bounce off 2017 Lows

Activity was higher in May across TMX's marketplaces, with geopolitical risks influencing Canadian markets.

TMX Group Limited, operator of the Toronto Stock Exchange and the marketplaces TSX Venture Exchange, Alpha, Montreal Exchange (MX) and NGX, has reported its aggregated trading metrics for May 2017. The latest figures reflected a bounce off 2017 lows, with market drivers and volatility in North America helping yield strong equities activity for the month.

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TMX Group and its subsidiaries operate both cash and derivative markets and clearinghouses across multiple asset classes, including equities, fixed income and energy. North American markets were influenced by several factors including an uptick of volatility but also jitters in the United States, which impacted Canadian markets as well.

Despite failing to register a sizable net change in the month, Canadian markets were much more active in May, with specific regard to equity markets and the TSX. During the month of May 2017, TMX and all of its marketplaces reported an average daily volume (ADV) ‎of 541.8 million contracts, which represented a decrease of -10.0 percent month-over-month from 576.0 million back in April 2017. This decline was attributed to the differential in trading days between May (22) and April.

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Markets Heat Up After Slow April

TMX’s total volume in May 2017 came in at 11.9 billion contracts, rising by 9.1 percent month-over-month from 10.9 billion contracts the month prior. This was a rebound off of a 2017 low at TMX, given a relative lack of market drivers in April. Unlike its neighbors south of the border, the Canadian stock market was unable to threaten its all-time high in May, though larger swings during the month did contribute to higher volumes on average. The results corroborate that of other exchanges and indices in North America, as most volumes bounced off of April lows.

Comparing with its 2016 results, TMX’s performance continued to worsen, as May 2017 represented a decline of -10.4 percent year-over-year from 604.6 million contracts back in May 2016. In terms of total volume, May 2017 registered a drop of -6.3 percent year-over-year from 12.7 billion contracts in May 2016.

Across all of its exchanges, the total cash value in May 2017 at TMX rebounded off of a recent 2017 low last month, rising to $155.1 billion, or +18.0 percent month-over-month from $131.4 billion in April 2017. The latest cash value in May 2017 across the exchanges also moved higher when measured against its 2016 equivalent, growing 22.1 percent year-over-year from $127.0 billion in May 2016.

Looking ahead to June, the trading month has already resumed a more moderate tone relative to the month prior. The focus is likely to turn to the US as markets will be digesting any potential moves in the Federal Reserve’s interest rates. However, there have been a number of warning signs emerging from the Canadian housing market, which could also drive market activity across domestic stock exchanges.

Last month, TMX moved forward with its development of a blockchain-based prototype that will be utilized by its energy exchange subsidiary NGX. The new prototype service was made in tandem with digital infrastructure provider Nuco Inc., and is being constructed using Distributed Ledger Technology (DLT).

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