Alpha to Become “Nasdaq of the North” (and why the North could really use one)

Reuters is reporting that Alpha — the stock exchange launched by the big banks a few years back to compete with TMX Group — will reinvent itself as the “Nasdaq of the North” by developing a niche in Canadian technology listings, a sector that’s already being served in part by the TSX-Venture exchange.

It’s an intriguing move from the exchange, which no doubt had to find a new raison d’être after its consortium owners, Maple Group, defeated the London Stock Exchange to pick up TMX Group (pending a review by the Competition Bureau). With TMX in its stable, Maple would have no need to continue supporting a direct competitor like Alpha. Hence, the new niche.

Alpha’s move couldn’t have come at a better time for the Canadian tech sector, where start-ups are undervalued and underfunded. According to a Deloitte report commissioned by Alpha, tech now accounts for just 1 per cent of the S&P/TSX Composite Index, compared to around 20 per cent of the S&P 500 in the U.S.

“The amount of capital invested in start-ups and the number of IPOs afterwards has been falling off the cliff in the last several years,” CEO Jos Schmitt said, referring to some of the report’s findings.

“At the same time, we don’t lack entrepreneurs. We don’t lack ideas, and we don’t lack good products and services for the future. We see it as a big opportunity,” Schmitt said.

Schmitt also called on the federal government to strengthen support for the tech industry, by instituting a national tax credit for angel investors similar to one already in place in British Columbia.

Lexpert technology columnist George Takach of McCarthy Tetrault LLP underscores Canada’s tech inadequacies in his latest column. In it, he cites a report by the World Intellectual Property Organization (WIPO) that reveals a dearth of patent filings in Canada.

In 2011, according to the report, the number of patent filings in Canada and the U.S. rose by 8 per cent, which seems respectable when compared to Germany (5.7 per cent), Sweden (4.6), the Netherlands (-14) and the UK (-1).

But there’s hardly any reason to gush over our domestic growth figures — not when a glimpse at the gazelles of intellectual property, namely China (at 33.4-percent growth) and Japan (21-per-cent) will leave you blinking your eyes in disbelief.

Takach, in his column, advocates for a stronger culture of innovation in Canada and he points to unflattering comparisons to back his argument. In Sweden, for example, 33 per cent of GDP growth is attributed to Internet/digital capability, according to the WIPO report. In the United Kingdom, 24 per cent. In Germany, 23 per cent. And in Canada? A measly 10 per cent.

This is unacceptable. We absolutely have to attend to the vigorous exploitation of our natural resources … but at the same time we have to get on with building the knowledge-based economy. And as we do so, our standing in the global patent rankings will improve, both confirming that we have arrived, as well as helping to ensure we have a steady flow of innovation helping to sustain the Canadian standard of living and quality of life we all cherish so much.

Takach says that the private sector needs to “lead the charge” toward a more advanced industry. Here’s hoping Alpha’s new identity will lend itself to that purpose.

-David Dias

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