Baffling the industry, Ned Goodman is investing in a small Canadian stock exchange to counter the "bank cartel" that owns the country's biggest stock market.
Through Dundee Corp., Mr. Goodman has invested an undisclosed amount in CNSX Markets Inc., the parent company of the Canadian National Stock Exchange, a nice listing venue, and Pure Trading, a small trading platform that has struggled to pick up market share.
The move comes after Tom Caldwell invested in CNSX and became chairman. Mr. Goodman will now join him in the boardroom and take on the role of vice-chair.
The latest investment, regardless of its size, is a rare one for Mr. Goodman, who is best known for dabbling in real estate and junior resources. Better yet, Pure, the trading platform, has failed to inspire because its technology is a bit dated, so Pure isn't the best venue for high frequency traders who rely on speed. Plus, CNSX, the exchange, is dominated by junior mining companies, who are struggling in this market to say the least.
Given those prospects, there is industry speculation that somehow Mr. Goodman made the investment for tax loss purposes. If CNSX is losing money, he could use the tax loss to offset gains in other investments. Asked about that theory, Mr. Goodman joked that "if I wanted to buy more tax losses, I could buy something that's a lot less regulatory."
"There is a desire… to become the exchange for the entrepreneurs for our country," he countered. By entrepreneurs, he means junior miners. "I think it's time that Canada had a proper stock exchange," he argued. While the TSX Ltd. runs the Venture Exchange for smaller companies, Mr. Goodman said it's "very costly" to list there. TSX declined to comment.
His interest also runs deeper. Mr. Goodman has long attacked the banks, and he hates that a number of them now co-own the TSX, after Maple Group Acquisition Corp. acquired its parent company in 2012. And while a new exchange, Aequitas, has been proposed, Royal Bank of Canada is one of its major backers.
"It's scary that our entire exchange facilities are owned by banks," he said. "The banks are a cartel." Classic Ned.
However, Mr. Goodman is also realistic about the prospects of this new play. "It's the worst time in the world to do it," he said, acknowledging that junior miners have been slaughtered in the markets. Even top-tier miners can barely raise money. "But I'm a contrarian."
(Tim Kiladze is a Globe and Mail Reporter.)
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