What is NEO Exchange?

NEO Exchange (NEO) is an equity trading platform based in Canada. It is said to offer free market information for all securities listed on it in real time.

Located in Toronto, Ontario, NEO started its operations in mid-2015. It is reportedly one of the most active marketplaces in the country, representing about 10 per cent of Canada’s total trading volume.

NEO claims to place a strong emphasis countering inappropriate trading behaviors. It uses a third-party technology platform and is said to focus on senior companies.

Companies can obtain a listing on NEO Exchange using the following methods:

• Initial Public Offering (IPO): IPO is the process of offering a private entity’s shares or ownership to the investors.
• Reverse Takeover (RTO): In RTO, a private company goes public without offering its ownership to the public via IPO.
• Direct Listing: it a method to get publicly listed, where investors and employees can directly sell their shares in the market.
• Qualifying Transaction: In Canada, a capital pool company (CPC) acquires a private company and makes it public.

Publicly listed companies trading on other exchanges can move to or get dual-listed on NEO Exchange by meeting its listing requirements. In case of migration, the securities can continue to trade under the same ticker, and the ownership positions of existing shareholders remain unchanged.

What are the benefits of getting listed on NEO Exchange?

NEO Exchange offers the following advantages to companies getting listed on it:

• A company can access to long-term partnerships, as NEO claims to offer services such as strategic advice, ongoing insights, etc.
• NEO Exchange’s trading services is said to enhance liquidity.
• It also claims to work closely with companies to increase investor awareness and help in maximizing the outreach.
• It offers free data on all listed securities on a real-time basis to ensure the broadest visibility among the audience.
• NEO has a team of expert legal assists that seeks to offer their services in identifying the best way of going public.

Frequently Asked Questions (FAQs)

1. What is DealSquare?

DealSquare, powered by NEO’s technology, is a centralized dealer platform where one can find, analyze, and transact private market deals. It digitally connects capital raisers to investment dealers, investors, and advisors. It aims to make raising capital on the private market more efficient and accessible.

DealSquare offers solutions such as:

• Access: It seeks to expand the access to the investing community beyond the conventional private placement audience like existing business relationships, friends, and family. Both accredited and non-accredited investors can participate in the raising proceeds through the participating dealers.
• Efficiency: Any public or private company, small or large, can use the DealSquare platform to perform private placements.
• Simplicity: DealSquare claims to assist through the private placement process, including marketing investment opportunities, managing due diligence and subscription process electronically, etc.

2. What are the various initiatives taken up by NEO Exchange?

In order to provide its listed issuers and investors the best possible experience in trading, NEO Exchange claims to have come up with the following initiatives:

• Trusted Service Providers: NEO Exchange has come up with a process to recommend service providers to its clients. These service providers are said to be committed to meet the needs of companies looking to generate capital.
• NEO Commissioning Program: NEO Exchange partnered with OCAD University’s Centre for Emerging Artists & Designers to create the NEO Commissioning Program in 2020. Every year, NEO selects and retains three emerging artists from the OCAD University.

3. Why was there a need for a new stock exchange in Canada?

NEO Exchange is said to have been launched with the intention to re-focus on the fundamental values of stock trading. It aims to reverse the harmful behaviors of most for-profit stock exchanges and offer entities and investors access to a transparent and stronger stock exchange.

NEO offers solutions such as:

• Free market statistics in real time

The incumbent exchanges were charging high market data fees. In contrast, NEO claimed to provide free or low-cost market data to all TSX, TSXV, or CSE listed companies that are listed on NEO. Also, when TMX faced an outage and the Canadian markets came to a grinding halt, NEO’s services supported traders.

• Listing companies who are ready to list

Companies were paying high listing fees to the incumbent exchanges. NEO Exchange is said to have made the process of listing much affordable.