5 Questions with Rob Cook - July 2007
Our first edition of 5 Questions is with Robert Cook, President of CNQ.
1. CNQ achieved some major gains in 2006 with listings increasing by 35%, trading volume increasing by 29%, average market capitalization increasing by 45% as well as an average financing of $3.8 million. What reasons would you attribute for these achievements?
In a nutshell it is due to the increasing recognition of the CNQ model, which was developed specifically for emerging companies. I have to also give credit to our dedicated staff whose goal it is to provide the best services to our clients - the listed companies, the participating investment dealers and investors.
I think our continued growth is also a result of CNQ listed companies spreading the news of their own successes.
These gains have continued to increase in 2007 because of some changes made this year and because of increasing participation by investment dealers in the CNQ market. I believe that we will see dramatic growth in 2007.
2. On February 16th, 2007 CNQ proposed rule changes to order entry rules and submitted the proposal to the Ontario Securities Commission. It has since been approved by the OSC. What does it mean to investors, dealers and CNQ's listed companies?
This rule change results in two significant changes for CNQ, investors and investment professionals. First, it enables our 50-plus participating investment dealers to configure their Order Management Systems (OMS) to be able to trade CNQ listed issuers more efficiently. This in turn will dramatically increase the trading of listed companies on CNQ, which will in turn stimulate listings activity.
Secondly, CNQ market makers no longer have to pay a trading fee when they are on the passive side of the bid/ask. What this means for the CNQ market is more liquidity. We developed unique rules to allow market makers to participate in a fully electronic central auction market because of our commitment to enhancing liquidity for listed companies.
We had positive comments regarding this rule change from investment dealers and look forward in assisting them in providing full access to their investors in all Canadian Equities.
3. In May 2004 the Ontario Securities Commission recognized CNQ as a stock exchange, the first in 70 years in Canada. What are the main differences between CNQ as a stock exchange and CNQ when it was a Quotation system?
Until May 2004 CNQ was a Quotation Trade and Reporting System, which required all companies to make an application to the OSC to become a reporting issuer before they were able to have their securities quoted on CNQ.
Since May 2004 any company that is a reporting issuer in any jurisdiction in Canada can list on CNQ and automatically become a reporting issuer in Ontario.
This has made the process easier for companies to list on CNQ from anywhere in Canada and also provide investors with a higher confidence level in CNQ companies since it is a bona fide Stock Exchange.
4. Can you elaborate on CNQ's Enhanced Disclosure and Streamlined Regulation?
Enhanced Disclosure provides investors with more information on CNQ listed companies than they would normally receive. It is a requirement of CNQ companies to post all press releases directly onto the www.CNQ.ca website. Secondly, each company has a profile page which provides investors with all the company’s press releases, CNQ filings, SEDAR Filings, contact information and market data. Third, CNQ requires all listed companies to provide a monthly report which is then posted on their profile page. This report not only provides investors with a summary of material changes in the last month but also gives a monthly update on management’s activities. The benefits to investors include more timely information, while listed companies benefit from an increased confidence level that investors receive with this enhanced disclosure.
Streamlined Regulation enables emerging companies on CNQ to focus on their business and not have to allocate a lot of resources and expense to maintaining their public listing. For example, CNQ does not perform transaction reviews of private placements or acquisitions. Companies merely complete the appropriate forms which are then posted on their profile page at www.CNQ.ca and, in some cases, they issue a press release. These forms were developed so that management of CNQ companies can fill them out quickly and easily, while also enabling them to maintain compliance with CNQ rules. As well, this system provides investors with more disclosure on the companies they have ownership in.
5. CNQ has a unique fee model for listed companies as well as for investment dealers. How does this model give CNQ a competitive advantage?
As CNQ was developed to assist emerging companies in achieving their goals we thought they should know in advance the kinds of costs they were up against. That is why we have a flat fee model. The costs for listing on CNQ are simple: a $10,000 initial listing fee and then a $300 per month sustaining fee.
There are no other fees for companies in good standing. It does not matter how many private placements you do in a month, or acquisitions, the maximum you will pay is $300 per month or $3,600 per year.
Knowing in advance what their fees are on CNQ, and keeping the fees low, permits companies to allocate funds to strategic business initiatives
