TMX Group Limited

Thank you for standing by. This is a conference operator. Welcome to the TMX Group Limited third quarter 2026 financial results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. Following prepared remarks, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Amanda Tang, Director of Investor Relations. Please go ahead, Ms. Tang.

Thank you, Jason, and good morning, everyone. We are joining you today from our Montreal office to discuss the 2023-2026 third quarter results for TMX Group. Last night, we announced the results, which included our ninth consecutive quarter of double-digit revenue growth. Copies of our press release and the MD&A are available on investors.tmx.com. This morning we have with us John McKenzie, our Chief Executive Officer, and David Arnold, our Chief Financial Officer. Following remarks from John and David, we will have a question and answer session. Before we begin, I would like to remind you that certain statements made during this call may relate to future events and expectations and constitute forward-looking information within the meaning of the Canadian Securities Law. Actual results may differ materially from these expectations and additional information is contained in our press release and periodic reports that we have filed with the regulatory authorities. I will now turn the call over to John.

Well, thanks Amanda and good morning everyone. Thank you for joining us and we're delighted to be doing this call this morning from our Montreal office. Bonjour tout le monde et merci de vous joindre à l'appel d'aujourd'hui. C'est un plaisir d'être ici à notre bureau de Montreal. Happy Friday and happy Halloween all for everyone listening to the call today. And since it is Halloween this weekend, we promise only treats this morning, no tricks in our remarks today. And as Amanda mentioned in our introduction, we announced our Q3 financial results last night and are very pleased to report another excellent quarter for TMX. Building on the strong momentum of the first half of the year and marked by standout performances across the enterprise, we continue to deliver double digit year over year growth in overall revenue and adjusted earnings per share. Spurred by strong activity in key markets, TMX's results for the third quarter and the first nine months of 2026 stand as powerful evidence of an effective client-first strategy to diversify, innovate, and globalize, and a proven track record of execution. And our work to build on that track record continues. We closed two significant transactions during the third quarter, TMX Australia Exchange and Raffi Indices, and we are advancing on the approval process for the acquisition of CBOE Canada and the Memex Group Transaction. And subsequent to the close of the quarter, we announced TMX Vetify's acquisition of the Spade Defence Indices. At the outset, I want to state for the historical record just how much these quarterly calls sound like history already, even just a few weeks later. In an era of relentless innovation, you can't afford to rest on yesterday's successes for longer than an instant. The pace of technological change has never been faster and continuously defining and redefining the challenges and the opportunities in front of us. But what propels us forward is a shared unshakable team commitment to serving clients and stakeholders with excellence and integrity. And my thanks go to our fantastic employees around the world for bringing TMX's purpose to make markets better and empower bold ideas to life in their work every day. And with that, a warm, warm welcome to the newest additions to our powerhouse team, our employees at TMX Australia Exchange and Rafi Indices, who are quickly proving themselves tremendous assets to our TMX family. Now, turning to our results for the first nine months of the year. Strong performances across the enterprise drove 16% higher overall revenue compared with 2025, with sustained positive momentum in our domestic and international businesses, as well as our traditional markets and areas of recent expansion. Organic revenue, excluding last year's Global Insights acquisitions, the bond indices, ETF Stream, Verity, and the nuclear sector indices, and recent acquisitions, TMX Australia, Exchange, and Rappi indices, increased 13% when compared to the first nine months of 2025. And adjusted diluting earnings per share increased 25%. Capital formation revenue increased 17% compared to the first nine months of 2025, due to higher revenue from listing fees and TSX Trust. In our listing businesses, our results reflect the depth of the strength of our two-tiered public markets. Overall capital raised on Toronto Stock Exchange and TSX Venture Exchange increased 96% compared to the first nine months of 2025, led by a surge in corporate financings in the mining sector. And I'd like to specifically highlight the fantastic growth and activity by our TSX Venture listed companies with $9.2 billion in capital raised through the first nine months, a 68% increase year over year. Among the venture market highlights were a number of major mining investments, including three private placements in excess of $100 million in the third quarter, Talamore Mining, Benz Mining Corp., and Galantis Gold. Canada's capital markets industry draws strength from a vibrant junior company ecosystem, and our junior to senior market pipeline sets us apart from any other marketplace in the world. TSX Venture continues to be the number one source of new Toronto Stock Exchange listings. In the first nine months, 19 issuers graduated from TSX Venture to TSX compared to seven last year. And since 2001, 800 companies have made the jump from TSX Venture to TSX. These graduates represent one third of corporate issuers on the senior market. and 24% of the S&P TSX Composite Index and half the top performers recognized in the most recent edition of our annual TSX 30 program, all of which began their public current journey on TSX Venture. Now, turning to trading. The first nine months featured a robust activity on equities and derivatives markets. Revenues from equities and fixed income trading increased 19% year over year, largely due to 20% increase in volume traded on TSX and 23% increase in volume traded on TSX Venture. Derivatives trading and clearing revenue increased 25% compared to the nine months of last year and driven by robust trading activity on NX. Highlights during the first nine months include 39% year-over-year volume growth in the CRA, fueled by expanded liquidity further down the curve with two-year and three-year expiries. Investors have established the CRA as the short-term interest rate hedging tool of choice as they seek to navigate changing monetary policy outlooks. And Q3 was the second consecutive record quarter in activity and open interest across our suite of Canadian interest rate futures. Activity was strong to close the third quarter in equity options and ETF options, and momentum continued through October. Earlier this week, we hit a new record high, of almost 28 million contracts in ETF options open interest earlier this week. And MX set an all-new, all-time record in overall open interest of over 39 million contracts. Now, turning to Global Insights. Revenue increased 19% compared to the first nine months of 2025, reflecting higher revenue from all the component businesses, TMX Datalinks, TMX Vetify, and TMX Tradeport. TMX DataLynx revenue increased 24% year-over-year, reflecting the inclusion of Verity, which we acquired in October of 2025, and TMX Australia Exchange, acquired in July 31st of this year. Organic DataLynx revenue increased 7% due to higher revenue from subscriber and usage-based sources, co-location, and data feeds. TMX Betify's revenue increased 31% or 32% in U.S. dollars. driven by higher indexing revenue, reflecting organic growth in assets under indexing, as well as revenue from 2025 acquisitions, bond indices, ETF stream, and the nuclear sector indices, and the RAPI indices, which were acquired in mid-August of 2026. The first nine months revenue from TMX Trayport grew 7% when compared to last year, largely due to an increase in recurring revenue from an increase in the number of licensees. And overall, while we still have two months left and plenty of work to do this year, 2026 has been an extremely exciting year for TMX. And by many measures, it's been a great year, a winning combination of impressive performance, milestone achievements, and major steps towards building a stronger still organization for the future. And so our focus continues to be on what comes next. TMX has a longstanding history of leadership and innovation. and we've successfully delivered complex game-changing technology initiatives including just recently the 2024 transition to T plus one settlement and the implementation of post-trade modernization last year. And we've made significant progress in 2026 in close partnership with our industry stakeholders in assessing emerging opportunities and challenges across the rapidly evolving exchange ecosystem. And with that, we continue to aim to innovate with purpose. Now, looking at digital modernization and transformation, TMX's priority approach is driven by evolving institutional client needs and our role as a provider of trusted, systemically important financial market infrastructure. And with that, we've identified near-term opportunities to address client pain points related to transactional frictions and the slow movement of funds. TMX's post-trade business consists of a deep network of participants and over $8 trillion in custody. Last month, we convened a group of key industry stakeholders for a working session to evaluate evolving market needs and capabilities and aspirations. That engagement has helped to define a roadmap to build on our proven resilient foundation, making markets better by effectively bridging traditional and decentralized finance, deepening liquidity, and enabling greater interoperability. And while we're early in the process, Our aspiration is in developing an institutional-grade digital asset infrastructure integrated into a hybrid central securities depository designed to provide secure, stable access to digital asset markets while maintaining the high standards that we've already established. And we will continue to update the market on our progress as appropriate. Elsewhere, as we announced earlier this year, we've been working closely with our stakeholders on an extended hours trading initiative. pursuing a tailored competitive solution that works best for Canadian equity markets. We have the experience to inform our steps as well. We extended MX trading hours to sync with oversea markets a few years ago, which expanded the reach of our derivative product suite to institutional investors across their geographies. And a few weeks ago, we submitted our plan to launch extended hours on TSX Alpha in spring 2027 to securities regulators. The proposal is to extend the TSX Alpha trading session from 7 a.m. to 8 p.m. Eastern Time with a 6 a.m. pre-open. Now, I'd like to pause for a moment here to make a really important point. What should not be lost in all the talk about exchanges around the world extending trading hours is that extending trading hours is not necessarily for everyone, and it is not without risk. As with many instruments and strategies, investors need to understand the specific risks associated with trading during non-traditional hours, including potential market quality issues due to lower liquidity, increased volatility, and wider bid-ask spreads. And as with our other initiatives, we will continue to update the market when the approval process is complete and we move forward towards launch. In closing today, You know, we laid out an ambitious strategy in 2024 to accelerate growth across the franchise by leaning into serving a growing client base around the world. And at the time, I called it a moonshot. And as we move close to close on our recent initiatives and bring them into the TMX family, two years later, we are on course to deliver on the TM2X program well ahead of schedule. And that ambitious moonshot is now the outcome, not the objective. The foundation of the enterprise is strong. from our core domestic business to our global expansion areas. And importantly, what we've built gives us the confidence that this growth ambition doesn't stop here. We have elevated TMX's game. We are more diversified, more resilient, more responsive, and better able to solve complex challenges across our growing client base. And it really shows that our strategy is working. So I will look forward to updating you further on our progress at the end of the year. With that, I'll thank you and turn the call over to David.