In Canada, we have only two “boards” where a company can list their shares for public sale, the TSX and TSX Venture. They are distinguished by the market capitalization of the shares traded on each of their exchanges and other considerations. So after meeting all filings with the exchange commissions, the prospective IPO must file disclosure documentation which meets the approval of the exchange.
The “big board” or TSX has 500 or so fewer listings than the TSX Venture Exchange, but these account for a much greater daily volume than the 2100 Venture listings. It is the senior market, reserved for well established businesses with management teams having more experience in public markets. The TSX does have some micro cap companies (market capitalization under $50million), most are small cap (market capitalization over $50million but less than $500 million) and some medium and large cap.
The TSX Venture Exchange offers companies a flexible, two-tiered system. The tiers have minimum listing requirements based on a company's financial performance, resources and stage of development. The industry segments within each tier recognize the different financial and operating needs of companies operating in different industry sectors. Tier 1 is for senior companies with the most significant resources. Tier 2 issuers have fewer filing requirements.
The switch from institutional buyer to seller
Most attractive new IPOs are taken up in large blocks from the underwriter by institutional buyers who might hold some of the stocks and put some on the market for individual buyers. The number of shares they will let go of depends upon the movement of the shares in the market. Remember, just like you, institutional sellers are looking to make the best possible profit from new IPOs they have purchased at a most attractive price point.
There is a sizeable group of investors who concentrate their investment efforts toward following upcoming new IPOS. They love the excitement and the prospects. As we have seen earlier, most of the good opportunities are gobbled up by investors having the rail position. Speculators can still get in on early trading and satisfy their appetite.
The TSX Venture Market in Canada and the Over The Counter Bulletin Board Market in the US is almost totally ignored by the institutional buyers and their security blanket clients. Canada and the TSX-V happens to be a world favourite opportunity for speculating in mining stocks. It is a penny stock haven where, untouched by inflation, penny stocks are still a penny stock. The IPOS in this market are of interest to individual investors because individual investors are the life blood of the issuing companies. They are out to woe you and convince you any way they can within the framework and governance of the securities commission system. For speculators herein lies the excitement.