The number of firms participating in the Canadian securities industry has risen significantly since 1990 (see Chart 1). At the end of 2001 there were 198 securities firms operating in Canada. The seven largest integrated securities firms, which include those owned by the six major domestic banks and one major U.S. dealer, accounted for 71 per cent of total industry revenues. Retail firms accounted for 20 per cent of revenues while foreign and domestic institutional firms accounted for 9 per cent. In 1999 Canada’s established exchanges underwent a major realignment in order to operate along lines of market specialization and to better compete with exchanges abroad and new electronic entrants penetrating the Canadian market. The Toronto Stock Exchange (TSE) became the sole senior equities exchange, the Montreal Exchange (ME) became the derivatives exchange (options and futures contracts), and the former Alberta and Vancouver exchanges became the Canadian Venture Exchange (CDNX), assuming control of junior equities. Another important structural change took place in April 2000, when the TSE became the first stock exchange in North America to demutualize and continue operations as a for-profit corporation. This business model was developed to provide the TSE with greater flexibility to address the challenges of global competitors and technological changes. In May 2001 the TSE acquired full ownership of the CDNX, bringing all of Canada’s equity trading under one organization for the very first time. The CDNX subsidiary, which continues to handle Canada’s junior market, remains a separate marketplace, with its head office in Calgary and operating branch offices in Vancouver, Toronto, Winnipeg and Montréal. In December 2001 the management of the CDNX index was aligned with th ...