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A self-confessed stock nerd recommends that investors swallow the NEO Exchange red pill

I am a self-confessed stock nerd. Digging through a company’s quarterly MD&A, Annual Information Form and corporate presentation entertain me, at least when I’m not fishing, playing hockey or drinking beer. The latest example of this geekiness was when I was recently asked if I had heard about the NEO Exchange. I’m guessing the person who asked was anticipating that, like most people they had brought it up with before, I would have no idea and they would go on to give me some quick insight into this unique, but not so new Canadian Tier 1 stock exchange. Instead, their question may have backfired, as I went on to talk about the first stocks I bought, things I liked about the exchange and other innovations I found interesting, which may or may not interest others. At that point, the tables were turned on me and I was challenged to ask everyone I knew (and yes I have plenty of friends) if they had heard of the NEO Exchange. I was both surprised and not surprised at how little virtually all my acquaintances knew about this subject, so that has inspired today’s article.

In case you are wondering, my first exposure to the Aequitas NEO Exchange, which was their name back in 2018 (fortunately they rebranded to something a little easier to remember and spell), was a new issue as part of an RTO transaction whereby Ethereum Capital Inc. (NEO: ETHC) became public and the new issuer moved over from the TSX Venture. That was February 2018 and my exposure and interest in the NEO Exchange were born. Sadly, I didn’t have the patience to turn that particular investment into the healthy gain it would be if I still held it today. Instead, I eventually booked a 44% loss and moved on. Nevertheless, I’m very happy that this transaction introduced me to this exchange and I’ve watched it grow ever since. Granted the exchange itself was launched in 2015, but until 2018 it was mostly ETF offerings with ETHC and Halo Collective Inc. (NEO: HALO) being some of the first actual stock listings. I know that because I also owned HALO and I did make money on that trade.

But enough about my NEO trading history, you need to know why you should have a look at the NEO Exchange today. For starters, it’s the second Tier 1 exchange in Canada, along with the TSX, which means that NEO-listed securities meet stringent, disclosure-based listing requirements you can trust. This gives potential qualified Canadian issuers a legitimate option to list with an alternative, much like U.S. equity issuers can choose between the NYSE and Nasdaq. Choice is almost always a good thing.

Then there are NEO’s founding principles of fairness, liquidity, efficiency and service, where NEO is making waves as a bold and disruptive capital markets technology firm. A great example of fairness is the NEO speed bump and unique order-matching technology that give long-term investors a fair chance to participate in trading without being continuously outpaced by predatory High-Frequency Trading (HFT). It also rejects any traders willing to pay fees for additional trading advantages, including co-located trading technology and access to faster market data. You may recall the Robinhood scandal about selling customers order flow. All examples of the kind of questionable behavior that NEO is trying to protect investors from.

However, what really got my attention the first time I went to the website to get a quote on ETHC was the fact that it was real-time data AND there was depth of market information. For frugal, do it yourself traders this is the holy grail of information. Both of these data sets typically cost a reasonable amount of money for subscriptions or access. I refuse to do a cost/benefit analysis on what having real time data may or may not have cost me over the years because it would probably highlight that I should have broken out my wallet and paid the fees. But with the NEO Exchange website, I can stick to my frugal trading ways and have all the information I want at my fingertips.

Then there is the newest innovation that has also garnered my interest – Canadian Depositary Receipts (CDRs). You may or may not be familiar with American Depositary Receipts (ADR). An ADR is a negotiable certificate issued by a U.S. depositary bank representing a specified number of shares, typically one share, of a foreign company’s stock. The ADR trades on U.S. stock markets like any domestic share. It offers investors a way to purchase stock in overseas companies that would not be available otherwise. Being the disruptive innovator they are, the NEO Exchange has fashioned (along with their partner CIBC) a Canadian equivalent. The first listing is a company you may have heard of before – Amazon. In this example, it is a fractional share (so you don’t have to cough up US$3,375/share) and exposure to U.S. Dollar currency risk is minimized through built-in currency hedging, allowing you to own the company, not the currency. It’s 1/200 of an Amazon share and it closed yesterday at C$21.20. So almost no currency risk and a bite sized version….let me get out my list of U.S. stocks I want CDRs done for.

The NEO Exchange is not publicly listed, so there is no investment thesis here. Just some insight into an exchange I think everyone, even non-stock nerds, should be aware of. So take the red pill and get on with your journey (there is no way I could spend a whole article talking about NEO and not eventually make a reference to “The Matrix”).




The NEO Exchange’s Erik Sloane on being the Tier 1 stock exchange for the ‘innovation economy’

In a recent InvestorIntel interview, Chris Thompson speaks with Erik Sloane, Chief Revenue Officer of the NEO Exchange about being the Tier 1 stock exchange for the ‘innovation economy’ of Canada.

In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Erik went on to say that NEO is Canada’s second Tier 1 stock exchange and is backed by some of the most reputable financial organizations in the country. As one of the only two senior exchanges in Canada, Erik explained how NEO Exchange provides companies a choice which they didn’t have before. He also provided an update on the launch of the first-ever Canadian Depositary Receipt (CDR) on the NEO Exchange allowing Canadians to invest in global companies through fractional share ownership with a built-in currency hedge. Referencing the rise in the Canadian Special Purpose Acquisition Companies (SPACs) market Erik told InvestorIntel that “NEO has been the listing exchange of choice for 10 SPACs in Canada.”

To watch the full interview, click here

About the NEO Exchange

The NEO Exchange is a Canadian Tier 1 stock exchange for the innovation economy, bringing together investors and capital raisers within a fair, liquid, efficient, and service-oriented environment. Fully operational since June 2015, NEO puts investors first and provides access to trading across all Canadian-listed securities on a level playing field. NEO lists companies and investment products seeking an internationally recognized stock exchange that enables investor trust, quality liquidity, and broad awareness including unfettered access to market data.

To learn more about the NEO Exchange, click here

Disclaimer: This interview, which was produced by InvestorIntel Corp. (IIC) does not contain, nor does it purport to contain, a summary of all the material information concerning the Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete. 

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation.  Forward-looking statements are based on the opinions and assumptions of management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken,  as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please email info@investorintel.com.