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The early salvos in a North American trade war have been a boon to the operator of Canada’s largest derivatives exchange.
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Published Mar 15, 2025 • 2 minute read
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(Bloomberg) — The early salvos in a North American trade war have been a boon to the operator of Canada’s largest derivatives exchange.
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Investors are navigating the geopolitical jitters by flocking to financial products that feed off the uncertainty, with exchanges like Toronto-based TMX Group Inc. riding the wave.
Trading volumes are “off the charts” in rates futures and options on exchange-traded funds, Luc Fortin, global head of trading at TMX Group, said on March 10 at the Futures Industry Association conference in Boca Raton, Florida.
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Stocks across the world have swung wildly as trade-war anxiety has mounted, but in Canada, where the brunt of many of US President Donald Trump’s most caustic barbs and threats have been, the gyrations are particularly pronounced. A gauge of 20-day volatility in the nation’s benchmark index spiked to the highest level since 2022 on Friday, creating a spillover effect into the options markets. By comparison, recent price flunctuations in major developed markets’ indexes have been in line with their long-term trend, data compiled by Bloomberg show.
Like its bigger US rivals CME Group Inc. and Intercontinental Exchange Inc., TMX Group gives traders a myriad of ways to hedge or speculate on price movements across different asset classes.
Rising volatility has played in favor of shares of TMX Group. The stock is up 13% so far this year, bucking a 0.7% decline in the broader S&P/TSX Composite Index.
“TMX is well positioned for the evolving environment,” said Scotiabank analyst Phil Hardie in a note, referring to its recurring and transactional revenue mix. “What makes it unique among other Canadian Financial Services companies is its ability to outperform through periods of market volatility.”
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In February, transaction volumes on TMX’s Montreal Exchange were up by 35% from the same time last year, hitting a record high of over 20.3 million. Overall, TMX Group’s derivatives trading and clearing revenue increased 32% in 2024 to C$94 million, a figure that includes the Boston-based Box Options Exchange in the US.
ETF options trading volume on the Montreal Exchange surged 116% in February, compared with the same month last year. On the US options markets, by comparison, volume for such trades was up 10% in the same period, data from the Options Clearing Corporation shows.
“We are seeing a significant jump in demand for protection,” James Neals, national director of the structured products team at Desjardins Securities, said.
Nevertheless, while market volatility is currently a tailwind for TMX Group, how long the swings will last is anyone’s guess.
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