Summary of TMX Group FY Conference Call - September 08, 2025 Company Overview - **Company**: TMX Group (OTCPK:TMXX.F) - **Industry**: Financial Services, specifically focusing on exchanges, asset management, and trading. Key Points Macro Environment and Market Performance - Global uncertainty and interest rate outlook are driving elevated trading volumes across TMX's marketplaces, with open interest growth of approximately **60% year-to-date** on the Montreal Exchange [2][3] - Equity volumes have increased by **14% year-over-year**, indicating strong market activity [2] IPO Market and Listings - There are signs of a global resurgence in IPO activity, with Canada traditionally following the US market trends [4] - The current IPO pipeline is robust and diverse, with over **50%** of the pipeline consisting of companies outside Canada, particularly in the innovation sector [5][6] Trading Business and Derivatives - TMX has seen strong growth in Canadian derivatives, particularly in longer-term contracts, with the two-year and five-year contracts showing growth rates of approximately **27%** and **30%** respectively [11] - The company categorizes its derivatives trading and clearing business as a strong grower, with a **CAGR of about 11%** over the last ten years [10] Technology and Innovation - TMX launched a new ATS in the US, which has shown solid trading volume growth, leveraging in-house technology from both the Montreal and Toronto Exchanges [12][14] - The company is exploring opportunities to port this technology back to Canada to enhance existing trading platforms [16][17] Post-Trade Modernization - TMX's post-trade modernization project has successfully gone live, allowing for the introduction of new products like SGC Notes and CCMS, which are expected to generate meaningful revenue moving into 2026 [21][22] Global Insights and Trayport - The Trayport business is experiencing strong growth driven by client renewals and geographic expansion, particularly in Japan and the US [24][29] - TMX added **82 new client logos** in the last year and a half, indicating ongoing market expansion [25] ETF Growth and Vedify - ETFs are one of the fastest-growing subsectors in asset management, with Vedify focusing on creating bespoke indices and launching ETFs based on client needs [36][37] - Vedify has been growing at a pro forma basis of **15%** since its acquisition, indicating strong performance [40] M&A Strategy - TMX is open to pursuing acquisitions that align with its growth strategy, with a focus on maintaining a leverage ratio within the target range of **1.5 to 2.5 times** [56][58] - The company is interested in both small tuck-in acquisitions and larger, more impactful acquisitions if they align with strategic goals [62] Digital Assets and Market Trends - TMX is monitoring the evolving landscape of digital assets and tokenization, with a cautious approach based on regulatory developments in the US [63][64] - The company is prepared to support Canadian banks in meeting client demand for crypto-related services, contingent on market conditions [66] Retail Engagement - Canadian retail investors are generally more conservative compared to their US counterparts, with limited engagement in options trading [72] - TMX is willing to create markets if there is sufficient demand, indicating a responsive approach to market needs [74] Data Links and Revenue Growth - Data Links is experiencing growth driven by increased demand for colocation services and cross-selling opportunities following the acquisition of Vedify [75][76] - The company is exploring additional datasets to complement its trading data, aiming to enhance the quality and value of its offerings [78][79] Conclusion TMX Group is navigating a complex macroeconomic environment while capitalizing on growth opportunities in trading, technology, and asset management. The company is focused on innovation, strategic acquisitions, and responding to market demands, positioning itself for continued success in the financial services industry.