What Is the Montreal Exchange (MX)?

The Montreal Exchange (MX) is a Canadian, fully electronic derivatives exchange. The MX currently lists equity derivatives, currency options (options on the U.S. dollar), index derivatives, and interest rate derivatives (bond and money markets). It is Canada's oldest exchange and Quebec's main financial derivative market.

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

The liquidity of the MX continues to rise mainly because of trading from different countries; there are more than 90 approved participants from London, New York, Chicago, and Montreal connected directly to the MX electronic trading system.

Key Takeaways

  • The Montreal Exchange (MX) is a Canadian, fully electronic derivatives exchange.
  • The MX currently lists equity derivatives, currency options (options on the U.S. dollar), index derivatives, and interest rate derivatives (bond and money markets).
  • The MX is Canada's oldest exchange and Quebec's main financial derivative market.
  • The Montreal Exchange was acquired by the TSX Group on Dec. 10, 2007; the resulting merger led 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. One year later, it became the first Canadian exchange to offer stock options.

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

The Canadian securities market reorganized in 1999; the Montreal Exchange was renamed the Canadian Derivatives Exchange for 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 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: TMX Group. This acquisition effectively combined Canada's equity and derivatives exchanges. Other countries, such as Australia, have also combined stock and derivatives trading on a single exchange.

Today, the equity options trading on the MX covers most of the larger Canada-traded companies, but it 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 10-year Canadian Government Bonds. The index futures and options cover the S&P Canada 60 index and several S&P/TSX sector indexes.

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

Trading Hours

The regular trading hours for the MX are 9:30 a.m. and 4:30 a.m. ET. Each option class opens for trading when a trade occurs on its underlying issue on a recognized Canadian exchange. If no such trade has yet occurred, the option class will open for trading at 9:35 a.m. ET.

Automation Process

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. TMX also owns a stake in the Boston Options Exchange.