The Canadian Securities Exchange’s proposed acquisition of the National Stock Exchange of Australia (ASX:NSX) could be beneficial for junior companies, Lion Selection Group (ASX:LSX) Managing Director Hedley Widdup says.
Widdup thinks the deal is “generally a good thing” and having a specialist small company exchange looking to operate in Australia beneficial. In particular, the CSE could become a voice for companies often not heard in the market – namely junior resource stocks, he tells this news service.
As reported by Mining.com.au, the NSX has entered into a scheme implementation deed with CNSX Markets (CNSX), for the operator of the CSE to acquire the 88-year-old Australian bourse.
The NSX unanimously recommends shareholders accept the offer and each NSX director intends to vote all of the shares they own or control in favour of the scheme.
The first court date is on 1 August 2025 and the implementation of the scheme is expected on 15 September.
“They (CSE) stand a chance of being a lobby voice that can have impact on matters that affect small companies who can’t singularly have much of a voice and collectively struggle to get organised,” Widdup tells Mining.com.au.
“A great example is the proposed taxing of unrealised profits in SMSFs (self-managed super funds). This will smash small companies. The big super funds wouldn’t stand for it but the only way it will affect them is more members and inflows.
“So who will stick up for the companies it affects? I dare say CSE would see that as a threat to its market and might develop a voice eventually. The concept of a focused venture style exchange is very appealing and I don’t mean to say NSX wasn’t this – just that CSE looking to buy NSX makes me think they approach with a reinvigoration in mind.”
The bid for the NSX comes amid growing frustrations by many junior resource companies with the larger Australian Securities Exchange (ASX) and its enforcement of the rules, particularly the varied interpretation of those that relate to disclosure.
Widdup notes there is probably also a level of frustration by small companies at some heavy handedness from the exchange around their ability to stay listed or to acquire a project, if they find themselves as a ‘shell’.
“I get the impression a lot of this is driven by regulators rather than market operators so I don’t know that a different exchange would necessarily change that. However, if company size thresholds are different it may create a different playing field and could get around some of that,” Widdup continues.
“I think where CSE has been successful in Canada is being a small company exchange with rules that suit a venture, sub-venture, seed (pick your pre-fix) scale of company exchange that facilitates a market for trading shares and capital raising in companies that are at an early stage of commercialising their endeavour. This suits exploration very well, at least to the extent that there are a lot of companies that want to be able to access public markets at that scale.
“For an exchange to have the mindset of dealing with small companies means they can adopt appropriate listing fees and broader requirements that enable entrepreneurial companies to list. I think that the ASX might not see CSE as a threat by getting to these companies earlier, because it’s a small part of their overall revenue.”
It’s uncertain that if the CSE is successful, whether it opens the door for other market operators to create niche or specialist exchanges, which has been seen in North America but has never really been a thing in Australia, Widdup continues.
As reported in the recent May Two-Four series, James Cross, CEO of Canadian explorer E-Power Resources (CSE:EPR), believes the premier bourse for mining is the Canadian Securities Exchange. Cross says the TSX-V is a legacy brand “that used to be great for junior companies, but is now more burdensome than juniors can handle”.
“It started as a great idea, but has deteriorated into a bureaucratic nightmare. On the other hand, the CSE is growing, and far less burdensome. The CSE treats companies like customers, rather than targets. In the first quarter of 2025 alone, the CSE had seven new listings, and six of those are mining,” E-he says.
Nine Mile Metals (CSE:NINE) CEO Patrick Cruickshank agrees but adds that like Australia, Canada has a very educated and traditional resource investors market.
“So you’re seeing some more access and that’s what the CSE, TSX, and the ASX is for small caps, focused on resource stocks. They’re fantastic exchanges to have that kind of size and scale,” Cruickshank says.
“You know the US doesn’t have it or they have the pink sheets and OTC, which do not have the same protections for the investor so I’m very, very happy to be on the CSE.”
Self-managed funds
From 1 July 2025, the federal government proposes increasing the concessional tax rate on super account earnings in the accumulation phase from 15% to 30% for balances above $3 million.
Those likely to be affected the most by the proposed changes are Aussie battlers, such as people who own a business interest in their super because that was the only way they could fund themselves.
There are concerns that SMSFs, which are the target of the tax, represent over 50% of the buying and selling of junior resources stocks, which depend on that capital to fund themselves. The proposed tax is poised to disrupt a foundational structure that can invest in startups in Australia.
About 80,000 super account holders (0.5% of the total) will continue to benefit from the existing concessional tax rate on earnings on the first $3 million of their super balance. They will also be able to carry forward any loss as an offset against their tax liability in future years.
However, there are concerns the reform implies the taxation of unrealised capital gains on assets held in super accounts, such as shares, even if they have not been sold. At present, Australian Prudential Regulation Authority (APRA)-regulated funds and SMSFs are only required to pay capital gains tax once the asset is sold and the gain crystallised.
Widdups says the move to tax unrealised capital gains is sure to prove particularly onerous for SMSFs.
Why? Because the typical industry super fund has a diversified portfolio of assets of varying liquidity, including significant cash holdings, yet SMSF portfolios are often dominated by a large and illiquid asset, such as a farm or business property.
As a result, an SMSF facing a large unrealised capital gain, such as from an increase in property values, may not have sufficient cash flow to pay the associated tax bill. This could then force the SMSF trustee to prematurely sell assets to meet the fund’s tax liability.
Wilson Asset Management does not believe it is the government’s initial intention to tax unrealised gains. Instead, the proposed tax is being applied to unrealised gains so that the calculation is easier where an individual with a balance over $3 million has multiple funds.
“In reality, the majority of individuals with a balance of this size only have one fund or could easily rearrange their superannuation affairs by the time the legislation commences so that they have only one fund,” the firm says in a recent discussion paper.
“If an individual only has one fund, the taxation of realised earnings could be easily calculated on balances over $3 million, therefore removing the requirement to tax unrealised gains. We propose that taxpayers who have only one superannuation interest should be able to elect to have this additional tax applied to that one fund, and as a result, only pay tax on actual realised taxable earnings.”
Superannuation assets were valued at $4.2 trillion at the end of 2024, with $1.5 trillion in industry superannuation funds, $1.1 trillion in self-managed superannuation funds (SMSFs), $800 billion in retail superannuation funds, and $800 billion in public sector defined benefit schemes.
Write to Adam Orlando at Mining.com.au
Images: NSX & Stock
