What Is the Montreal Exchange (MX)?

The Montreal Exchange (MX) is a Canadian derivatives exchange that facilitates the trading of stock options, interest rate futures, as well as index options and futures. Currencies and exchange traded funds (ETFs) are also traded on the exchange.

Previously known as the Montreal Stock Exchange, it is the country's main financial derivative market and is located in Montreal, Quebec. The MX is part of the TMX Group, which also includes the Toronto Stock Exchange (TSX), the TSX Venture Exchange, and others.

Key Takeaways

  • The Montreal Exchange is a Canadian derivatives exchange that facilitates stock options, interest rate futures, as well as index options and futures trading.
  • The equity options trading on the Montreal Exchange covers most of the larger Canada-traded companies but is not as broad as the U.S. options markets.
  • In 2004, the MX began to provide the Boston Options Exchange with electronic trading systems and support.
  • The exchange was acquired by the TSX Group in 2007, resulting in a name change to the TMX Group.

Understanding the Montreal Exchange (MX)

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 specializes. At this time, the Montreal Exchange adopted the moniker of the Canadian Derivatives Exchange for the next decade, while the Toronto Stock Exchange became the place to trade stock in major companies. A new exchange, the Canadian Venture Exchange—now called the TSX Venture Exchange (TSXV)—was created to trade shares in smaller companies.

The equity options 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 10-year Canadian Government Bonds. The index futures and options cover the S&P Canada 60 index and several S&P/TSX sector indexes.

Trading Hours

Trading hours for the Montreal Exchange were extended as of Oct. 9, 2018. The trading session begins at 2 a.m. ET. The early session takes place between 2 a.m. and 9:15 a.m. ET, while the regular session takes place between 9:30 a.m. and 4:30 a.m. ET. This was in response to efforts to grow its market, to allow trading, and to manage risk. The exchange is closed on major holidays.

In 2018, the exchange extended its trading hours to be at 2 a.m. ET.

Special Considerations

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.

According to the MX website, the exchange's liquidity continues to rise mainly because of trading from different countries. The MX states that more than 90% of traders from major cities like New York, London, and Chicago are able to connect directly to the exchange's trading system.