What is Montreal Exchange

A Canadian derivatives exchange that facilitates the trading of stock options, interest rate futures and options, as well as index options and futures. Located in Montreal, Quebec, it is the country's main financial derivative market, while the Winnipeg Commodities Exchange in Manitoba is the home to Canadian commodity derivative trading.

BREAKING DOWN Montreal Exchange

The equity option trading on the Montreal Exchange covers most of the larger Canada-traded companies but is not as broad as the U.S. options markets. The interest rate derivatives cover short-term banker's acceptances ranging from the overnight rate to the three-month rate and two- and ten-year Canadian Government Bonds. The index futures and options cover the S&P Canada 60 index and several S&P/TSX sector indexes.

History of the Montreal Exchange

The exchange has a very long history. The first set of stock trades took place in Montreal in 1832 at the Exchange Coffee House, but it wasn't until 1874 that the Montreal Stock Exchange was established. In 1974, it merged with the Canadian Stock Exchange, and a year later, became the first Canadian exchange to offer stock options.

The Montreal Stock Exchange underwent an identity change in 1982, when it shortened its name to the Montreal Exchange. The name was changed to reflect the variety of financial instruments available for trade other than stocks. Options and futures trading was also executed on the floor.

The Canadian securities market reorganized in 1999, with the Vancouver, Alberta, Toronto, and Montreal exchanges banding together to each specialize. At this time, the Montreal Exchange adopted the moniker of Canadian Derivatives Exchange for the next decade, while the Toronto Stock Exchange (TSX) became the place to trade stock in major companies. A new exchange, the Canadian Venture Exchange—now called the TSX Venture Exchange—was created to trade shares in smaller companies.

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

The Montreal Exchange was acquired by the TSX Group on Dec. 10, 2007, but the acquisition wasn't completed until May 2008. The total price for the merger was recorded as $1.31 billion CAD. The resulting merger led to a new name for the group: the TMX Group.