TMX Group (TSE:X) CEO John McKenzie told attendees at a UBS event that the company continues to reposition its business mix toward recurring, data-driven revenue while maintaining growth in its core trading and post-trade operations. McKenzie described TMX as spanning “all parts of the Canadian capital markets ecosystem,” including senior and junior equity exchanges, derivatives through the Montréal Exchange, clearing and settlement infrastructure, and issuer services such as transfer agency and trustee operations. He added that the company also has a growing international footprint through businesses such as Trayport in the U.K. and VettaFi in the U.S.
McKenzie said about half of TMX’s business is now outside Canada, and that more than half of revenue is recurring and “data type” in nature. However, he noted the company’s recurring revenue mix came in closer to 52% last year, down from the prior year’s level, driven by unusually strong performance in trading-related businesses rather than weaker recurring revenue growth.
Targets for recurring revenue and Global Insights
In addition to recurring revenue, McKenzie highlighted two other mix objectives:
- International revenue: He said the company is now about 51% outside of Canada.
- Global Insights contribution: TMX targets 50% of revenue from its Global Insights segment and is currently around 44%, according to McKenzie.
Trayport growth drivers and regional expansion
McKenzie addressed questions about Trayport’s growth rate, emphasizing that while part of the business is “more mature,” it remains a long-term growth engine. He said Trayport’s core market—European energy—has been built over decades and remains supported by tailwinds such as increasing energy demand, product expansion as markets fragment, and the eventual return of volatility that can attract more trading activity. He characterized Trayport as a “high-growth” business in the company’s framework—high single digits to low double digits—while noting it has delivered double-digit growth every year since TMX acquired it in 2017.
McKenzie also pointed to longer-run growth levers outside Europe, including:
- U.S. expansion: He said the U.S. gas and power market is a “good market” where TMX is adding new players and growing run-rate faster than the rest of the firm.
- Asia (Japan): He described Japan as early-stage, with utility increasing as the market gains more participants.
- Oil markets: He said oil remains more “old-school telephone-based” and could transition on-screen over time.
VettaFi: organic growth, acquisitions, and AUM expansion
Discussing VettaFi, McKenzie said TMX’s approach combines organic product development with targeted acquisitions to broaden index capabilities, asset classes, and geographic reach. He cited a recent year where VettaFi delivered roughly 25% year-over-year growth, split between organic contributions and inorganic additions.
McKenzie highlighted several platform additions, including bringing in a fixed-income suite from Credit Suisse and other fixed-income index acquisitions, as well as a European ETF distribution capability called ETF Stream. He said these assets can be commercialized more effectively within TMX than within banks, where index products are often harder to monetize.
Since becoming majority owner, McKenzie said VettaFi’s assets under management grew from roughly CAD 32 billion to more than CAD 80 billion, driven by new products, net inflows, market performance, and acquisitions. He said potential future deals must meet three criteria: an attractive growth profile, sensible valuation economics, and the ability to integrate and scale on the platform.
AI, derivatives momentum, and capital formation outlook
McKenzie argued TMX is positioned as a net beneficiary of AI, citing the proprietary nature of data in platforms like Trayport and Datalinx, and pointing to opportunities to commercialize data that has historically been difficult to clean and standardize. He said TMX has already been shifting certain data pricing models away from seat-based approaches, including site licenses in Trayport, and expects broader market data models to evolve toward enterprise usage over time.
On the operational side, McKenzie said TMX is using AI tools to accelerate software development and testing. He pointed to Trayport, noting that after years of adding developers annually, the company did not need to add a developer in 2026 because of improved productivity. He also said TMX has deployed generative AI tools broadly, with more than 90% adoption across the company, and that the company aims to measure productivity impact during the year.
In derivatives, McKenzie acknowledged difficult comparisons after a very strong prior year. He cited January volumes down roughly 5–6% year-over-year, while open interest was up about 20%, which he presented as a signal of continued product adoption. He highlighted continued growth in options on ETFs, potential upside from regulatory work to expand market-making capacity, and new option-eligible products such as Canadian Depositary Receipts tied largely to U.S. names. He also discussed fixed-income product development, revenue-per-contract opportunities as market-making agreements roll off, and plans to replatform clearinghouse risk systems to enable more OTC-cleared products.
On capital formation, McKenzie said financing activity strengthened in the back half of the year, with total financing up 60% year-over-year, including 44% on the senior market and more than 100% on the junior market. He said TMX’s pipeline of “go-ready” companies is the deepest in a decade across sectors including financials, resources, and technology, while cautioning that market uncertainty can still disrupt issuance windows.
McKenzie also outlined a disciplined expense philosophy aimed at inflation-like expense growth—around 5% year-over-year on a comparable basis—while reinvesting in the franchise and targeting positive operating leverage. He said TMX typically identifies CAD 10 million to CAD 20 million of savings opportunities annually that can be recycled into investment.
On M&A, McKenzie said acquisitions are an “accelerator” rather than the strategy itself, focused on Global Insights, capital formation, and trading and clearing. He pointed to the Verity acquisition as adding a buy-side channel and AI-enhanced insider-data signal capabilities, and said TMX evaluated AI disruption risk during due diligence, concluding that customers may still prefer a third-party “source of truth” rather than building everything in-house.
McKenzie also provided an update on AlphaX US, TMX’s U.S. ATS, saying the platform has met expectations with continued records in engagement, fill size, and participant growth, and describing it as among the fastest-growing recent U.S. ATS launches by adoption.
About TMX Group (TSE:X)
TMX Group Ltd is a company that operates several global markets to provide investment opportunities for its clients. TMX Group’s key operations include Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montreal Exchange, Canadian Derivatives Clearing Corporation, and Trayport, which provides listing markets, trading markets, clearing facilities, depository services, technology solutions, data products, and other services to the global financial community.
