TSX Owner Drives U.S. Growth via $800M MEMX Acquisition
Three years after Canada’s largest stock exchange operator first embarked on a U.S. expansion plan, TMX Group Ltd. is dramatically accelerating its American growth strategy.
The owner of the Toronto Stock Exchange and the TSX Venture Exchange announced a US$800-million cash investment late Thursday in New York-based exchange operator and market technology provider MEMX. The company is also merging BOX, the U.S. equity options market it controls, with MEMX to create a US$2.3-billion entity that will be 59-per-cent owned by TMX.
“This is a substantial building block for us,” TMX chief executive officer John McKenzie said in an interview. “We shouldn’t think about it any differently than when the Canadian banks make moves into the U.S. in terms of when they acquire, you know, regional banks or regional products.”
“That’s what we’re building the capability to do.”
Once the transaction closes in 2027, MEMX is expected to have a roughly 10-per-cent share of the U.S. equity options market and 2 per cent of the overall U.S. equities market. Mr. McKenzie said those figures should be considered “our starting points, not our finish points.”
TMX has been increasingly shifting its strategic focus south of the border since September, 2023, when the company hired Wall Street veteran Heidi Fischer as its first president of U.S. equity trading. Since then, TMX has made several investments and acquisitions to bolster its U.S. business.
In two transactions spanning 2023, the company spent more than US$1-billion acquiring VettaFi, which develops and maintains stock indexes. That division scaled up rapidly through several follow-on acquisitions, the largest of which was announced last month when TMX agreed to pay US$490-million for RAFI Indices.
VettaFi has proved to be a key growth driver for TMX overall, with that division’s revenue up 40 per cent in its latest quarter compared with the same three-month period in 2025.
The MEMX transaction could ultimately prove to be far more lucrative for TMX. In early 2025, TMX launched a U.S. alternative trading system, or ATS, which allowed the Canadian company to compete to be the venue of choice for the buying and selling of securities, though ATS platforms cannot directly list securities.
With MEMX, however, TMX will have the ability to rival major U.S. operators such as the New York Stock Exchange or the Nasdaq in terms of the ability to publicly list operating businesses and exchange-traded funds as well as the ability to facilitate various other trading activities.
Mr. McKenzie said the goal is not to challenge the incumbent players directly – “it’s not about taking from somebody else, it’s about building” – and his long-term aspiration is to bring Canada’s venture model to other jurisdictions.
“There are things that we do in Canada, though, that are unique and special. And it’ll be a question mark as to whether they are replicable in the U.S. or not. But think about things like the venture market in Canada. Nobody in the world does the venture market like we do,” Mr. McKenzie said.
“That’s a platform that we think there’s replicability in other jurisdictions – U.S. being one, Australia being another. But it’ll take time to see if we can develop the ecosystem around that.”
TMX is also in the process of acquiring the Canadian and Australian assets of Chicago-based Cboe Global Markets Inc., which it bought for US$300-million in April. The Australian deal is set to close “imminently,” Mr. McKenzie said, with Cboe Australia president Emma Quinn and her team due to join the company as a subsidiary called TMX Australia.
The Canadian assets, which consist of the MATCHNow platform and the NEO Exchange that Cboe bought in 2020 and 2021, respectively, are expected to take longer to pass regulatory scrutiny. Because acquiring Cboe Canada would allow TMX to consolidate its already dominant position in the domestic market, critics have raised competition concerns about the deal.
Mr. McKenzie said the federal Competition Bureau review of the transaction is well under way, adding that the deal “is designed to improve efficiency and reduce costs” for the trading community.
This article was first reported by The Globe and Mail
