Toronto Stock Exchange Seeks End to Quarterly Earnings Reports

The Toronto Stock Exchange operator is working with Canadian regulators to allow all companies to report earnings twice yearly instead of quarterly. The initiative mirrors similar efforts in the United States and aims to revive Canada's struggling IPO market.

The operator of Canada’s primary stock exchange is working with national regulators to establish new regulations that would permit all publicly traded companies to issue earnings reports twice annually rather than every three months, following a comparable initiative taking place in the United States.

TMX Group, which runs the Toronto Stock Exchange, is pursuing this change as Canada works to revitalize its initial public offering market and halt the ongoing decline in publicly traded companies caused by delistings and corporate acquisitions.

Late last year, the Canadian Securities Administrators, the nation’s primary securities regulatory body, released a proposal allowing smaller companies with annual revenues under $10 million to substitute quarterly earnings reports with semi-annual filings.

According to CEO John McKenzie, who spoke during an interview at the Futures Industry Association’s annual conference in Florida, TMX believes these proposed regulations should extend to larger publicly traded companies as well.

Former U.S. President Donald Trump advocated last year for eliminating quarterly reporting requirements and transitioning to semi-annual earnings schedules. The Securities and Exchange Commission indicated it would prioritize Trump’s recommendation.

Companies across Europe, Asia, and Australia have been issuing earnings reports every six months for multiple years.

“We have recommended that (CSA) should actually take it all the way, and we should actually consider making it optional for all public companies,” McKenzie stated. “Then the companies will decide with their shareholders. If the shareholders need more information, they will tell them or they won’t provide capital.”

To attract more companies to list on stock exchanges, Canada has recently lowered tax obligations for smaller businesses while reducing burdensome financial disclosure requirements for companies seeking public market access.

“Last year, at one point, Trump said (getting rid of quarterly reporting) was a good idea. If it gets traction in the U.S., we’ve already had engagement with the Canadian regulators who said we have to follow it immediately, like there could be zero lag time,” McKenzie explained.

TMX anticipates significant growth in IPO activity this year, fueled by mining industry recovery that has helped counterbalance market instability from conflicts in Iran and recent technology sector declines.

Multiple companies, including AGT Food and Ingredients and pharmaceutical company Apotex, plan to enter public markets this year.

McKenzie said the Toronto Stock Exchange is positioned to reclaim its position as the global leader in mining listings, following recent sector revival driven by increasing worldwide demand for essential minerals over the past year.

Approximately 1,100 mining companies currently trade on Canadian stock exchanges.

“With what the U.S. administration is actually doing in terms of kind of onshoring or creating mineral relationships to counter the Chinese market, which is actually also trying to do the same thing, you’re creating more and more opportunities for prospectors and developers to build out these mines. So it’s a very pro-mining economy,” McKenzie noted.