‘Market advantage’: TMX CEO says Canada should lower barriers for companies raising money

John McKenzie, CEO of TMX Group, shares his perspective on the IPO market and M&A activity amid tariff woes and the need to keep Canada competitive.

The CEO of TMX Group, the operator of the Toronto Stock Exchange, is recommending changes Canada’s next federal government should make to lower barriers for companies looking to raise money.

In an interview with BNN Bloomberg Monday, John McKenzie said that even before the U.S. election, Canada had been facing declining competitiveness and productivity. He added that Canada lists more companies for public trading than many other nations, saying there is a great domestic ecosystem, “but we’ve got to make sure we’re nurturing that.” He said some barriers for companies raising money should be eliminated.

“The U.S. is going to work to make their marketplace more competitive, attract more industries and more jobs. So, we need to make sure the Canadian market is even more competitive to ensure we’ve got that home market advantage and that we’re not just looking for ties, but we’re looking to even be stronger than the U.S.,” McKenzie said.

One of his recommendations is to allow Canadian companies to deduct the full capital costs of investments.

“If you want to reduce the friction of a company to invest in Canada, if they can deduct those capital investments immediately from day one, we will make this one of the most competitive jurisdictions to build factories, to build data centres, to open new mines, and to build infrastructure,” McKenzie said.

“So again, reducing the cost of investing in Canada, getting that capital off the balance sheet and into productive assets.”

A second recommendation McKenzie highlighted is to lower capital gains taxes on Canadian investments in domestic companies.

“This is one I’ve been calling on for years because if you really want to de-risk investing, a lot of our companies are small or mid-cap companies, it takes a risk investment to expand them. So, we want to make it so that that risk is actually subsided any way that we can and really incent that investment into Canadian companies, not global companies,” he said.

“So, we’ve actually said there’s a way to make this cost neutral, which is we create the incentive for Canadian-based companies. And do higher capital gains taxes on foreign companies very much like we do with dividends like we do with other things in our ecosystem.”

McKenzie’s third recommendation was making the Mineral Exploration Tax Credit (METC) permanent.

He said Canada leads the world in mining, listing more companies and doing more financing than any other country. However, McKenzie said Canada is the “slowest country to actually permit and get new mines to production,” with the process taking anywhere from 13 to 15 years.

“So, we’ve got these great programs like the mineral exploration tax credit, but they’re short term. And if it’s going to take you 10 years to build a mine, a two-year tax credit doesn’t get there. So again, this is that area of making these things permanent, so you give confidence to investors to invest long term,” McKenzie said.

Some of his other recommendations include expanding flow-through shares to other growth sectors, creating an investment friendly environment for major projects and providing equal access to innovation support.