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
In 1982, the Montreal Stock Exchange took a new name, the Montreal Exchange, to reflect the increased importance of financial instruments other than stocks – primarily options and futures – on its trading floor.
In 1999, the Vancouver, Alberta, Toronto and Montreal exchanges worked together to restructure Canadian capital markets along the lines of market specialization, resulting in the Montreal Exchange assuming the position of Canadian Derivatives Exchange for the following 10 years. Trading in the shares of large companies moved to the Toronto Stock Exchange (TSX). Meanwhile, trading of smaller companies moved to the new Canadian Venture Exchange (now: TSX Venture Exchange). This change, which reflected the economic reality that most equity trading had moved to the TSE, caused consternation among those in favour of political independence for the province of Quebec.
By the end of 2001, the migration was completed to a fully automated trading system, becoming the first traditional exchange in North America to do so. As part of this process, it modified the market model for trading, from a traditional specialist model to a competing market-making model for the equity option market.
In February 2004, the Montreal Exchange became the sole provider of electronic trading systems and support for the Boston Options Exchange (BOX), making it the first foreign exchange to be responsible for the day-to-day technical operations of an American exchange. That contract now provides the Montreal Exchange with a significant part of its revenue.
On December 10, 2007, TSX Group announced that it had acquired Montreal Exchange Inc. for C$1.31 Billion. The acquisition was completed on May 1, 2008, and the corporation subsequently was renamed TMX Group Inc. In 2008, Montreal Exchange Inc. and TSX Group Inc. merged to form TMX Group.