CDNX small-cap market blasts off

The Alberta and Vancouver stock exchanges have officially merged to form the Canadian Venture Exchange.

The new exchange, dubbed CDNX, came to life with just under 2,500 stock listings and began trading at the 2,000-point level. After spending most of its first day in positive territory, the CDNX lost 1.67 points, or 0.1%, to close at 1,998.33. About 62.3 million shares were traded, compared with the combined volume of 60.7 million shares traded on both the VSE and ASE on the previous trading day.

Although more than 55% of CDNX-listed companies are resource-based, the top five traders on opening day were technology-based. Leading the pack was Vancouver-based Broadband Systems, which traded 9.9 million shares and closed at $3.16, up 67.

The most actively traded mining stock was AG Armeno Mines & Minerals, with just over 1 million shares changing hands. AG Armeno finished the day flat at 13.

The CDNX, touted as the “Nasdaq of the North,” is designed to complement the Toronto Stock Exchange, home to the senior equities market, and the Montreal Exchange, which now caters to derivative products. By mid-2000, the operations of the Canadian Dealing Network and the Winnipeg Stock Exchange will also have been consolidated into the CDNX.

On opening day, Nov. 29, CDNX President William Hess and Chairman Dennis Burdett, addressed investors in Calgary and Vancouver via satellite.

“CDNX is a classic example of the whole being larger than the sum of its parts,” said Burdett, adding that that the new Canadian capital marketplace will be stronger and more globally competitive.

Hess affirmed that “enforcing high standards will be the top priority of the Canadian Venture Exchange” and went on to say that regulators are “stepping up their efforts to minimize the inappropriate risks associated with market misconduct.”

An offshoot of the launching of the CDNX is that member brokerage firms will no longer be regulated by the western exchanges but rather by the Investment Dealers Association. As a result, staff and resources at the western exchanges will be free to devote more time to market regulation.

CDNX, which is designed as a financing vehicle for small capitalizations of between $1 million and $20 million, operates on a two-tier system. Tier 1 is reserved for the most advanced issues; all other CDNX companies (that is, the majority) will trade on Tier 2.

Hess said CDNX acts as “an incubator and mentor,” assisting young companies with financing and moving them up to senior exchanges.

CDNX also offers a capital pool program for companies that are just getting off the ground.

So far, the exchange offers regional services in Vancouver, Calgary, Winnipeg and Toronto; more are planned.

The CDNX web site, http://www.cdnx.ca, features delayed stock quotations and outlines policies and procedures. The site also includes an on-line database that provides information on listed companies and direct links to their web sites.