What is NEX
NEX is a separate board on the TSX Venture stock exchange that provides a unique trading forum for listed companies that no longer meet the TSX Venture's ongoing listing standards. The NEX is designed for companies that have low levels of business activity or have ceased to carry on active business. It benefits such companies by giving their stocks a degree of liquidity and providing visibility that may attract potential acquirers or investors. These companies are identified by an "H" or "K" extension to their trading symbols.
Breaking Down NEX
NEX was launched as a subset of the TSX Venture Exchange, a Canadian stock exchange headquartered in Calgary, Alberta. The TSX Venture Exchange is a public venture capital marketplace that allows investors to invest in small cap and emerging companies. The TSX Venture Exchange was formerly known as the Canadian Venture Exchange before it was acquired and renamed by the TSX Group in 2001. The TSX Group was renamed the TMX Group shortly afterward. Both the Canadian Venture Exchange and the TSX Venture Exchange focused on companies that were too small to be listed on the Toronto Stock Exchange, which is also owned by the TMX Group.
Prior to the launch of NEX by the TSX Group, companies that could not meet the TSX Venture Exchange's continuous listing criteria were designated as "inactive" and given 18 months to either meet the listing standards or be delisted. The introduction of NEX relieved such companies of the tremendous pressure of a delisting deadline, and gave their management and shareholders another opportunity to turn things around. Companies that do not meet the TSX Venture Exchange’s listing requirements are typically moved to the NEX Board after 90 days. They can remain on the NEX board indefinitely. Companies that have never been listed on TSX or TSX Venture Exchange cannot be listed on NEX.
Advantages and Disadvantages of NEX
NEX has lower listing fees and simplified rules, compared to the TSX Venture Exchange.
The companies listed on the NEX board tend to have low levels of business activity compared to those on the TSX Venture Exchange. Companies on the NEX board remain publicly traded even as they reassess their business strategy. However, some of these companies may not be able to do so successfully.
It is important to note that NEX companies must continue to meet the same disclosure standards applicable to all Canadian public companies, and must also maintain good standing with the relevant Canadian securities commissions.