Designated Stock Exchanges

Process of Designating Stock Exchanges


With the integration of global financial markets, the growth in assets held in savings plans registered under the Income Tax Act (ACT) and technological advances in securities trading systems, Canadian investors are increasingly looking to foreign securities listed on foreign stock exchanges for return enhancement and portfolio diversification. New domestic exchanges are also being created, expanding the range of publicly-listed Canadian securities available to Canadian investors.

In 2007, the Department of Finance updated the concept of "prescribed stock exchange", used for a variety of purposes under the Act, in order to make the prescription process more transparent and flexible to meet evolving market needs. In place of the two former lists of prescribed stock exchanges (domestic and foreign), there are now three categories of stock exchange: Designated Stock Exchange, Recognized Stock Exchange and Stock Exchange. For more detail on the 2nd and 3rd categories, please see the Annex.

Designated stock exchanges consist of stock exchanges that have been designated by the Minister of Finance, and include all stock exchanges that were prescribed in the Income Tax Regulations immediately before the designated stock exchange regime took effect on December 14, 2007. The Minister's designation, which is carried out by way of public notice, is both necessary and sufficient for a stock exchange to be a designated stock exchange.

This document presents some of the considerations by which exchanges will be evaluated for designation status as well as the process under which exchanges can seek to be designated by the Minister of Finance.

The Minister of Finance's role is to ensure that investments, given their tax-deferred status for policy purposes, trade on well-governed, regulated and transparent markets. Designated Stock Exchanges must therefore be explicitly designated, by public notice, by the Minister of Finance.

The benefits of listing a security on a designated stock exchange include:

The designation process and the kinds of considerations described below expedites the review of applications from exchanges and provide more transparency around the factors used to evaluate such applications. Designation status is not an endorsement or recommendation of individual securities listed and traded on the exchange.

Considerations to Qualify as a Designated Exchange

The Minister will consider all relevant information when evaluating an exchange's application for designation status. This will include the following considerations.

For domestic and foreign-based exchanges:

1. The exchange carries out the normal business of an exchange in listing securities, facilitating the trading, clearing, and settlement of these securities, monitoring and enforcing trades executed on its system, and offering transparent pricing information to the public.

2. The exchange has acceptable standards for new company listings, including standards that address the number of shareholders, the dispersion of ownership, and for the maintenance of a listing.

3. The exchange operates within a regulatory framework that meets acceptable standards in relation to investor protection, disclosure requirements, corporate governance, and market integrity, as may be espoused by the International Organization of Securities Commissions (IOSCO).

4. The exchange has an experienced management and governance team, a successful track record of operations, and sufficient financial resources to ensure long-term viability.

5. The exchange has a range of listings and adequate liquidity for investors to buy and sell securities at reasonable bid-ask spreads.

For foreign-based exchanges:

6. The host country of the exchange has commercial, legal and tax relations with Canada, for example, as demonstrated by having entered into a comprehensive tax information exchange agreement or a comprehensive tax treaty with Canada.

7. The host country is a member in good standing in the international financial community through membership in such organizations as the World Trade Organization, the International Monetary Fund, IOSCO, the Financial Action Task Force, or similar bodies.

8. The securities regulatory and juridical framework of the host country of the exchange provides rights and remedies to Canadian investors, including brokers acting on investors' behalf, which are comparable to those available to investors in Canada.

9. The exchange is recognized by the host government and other foreign governments, where applicable, for tax purposes comparable to those for designated exchanges under the Canadian Income Tax Act.

10. The host country of the exchange has a low risk of imposing capital restrictions or other impediments on the liquidation of investments and the repatriation of funds by foreign investors.

Designation Process

Request for Designation

Exchanges seeking designation should submit a written request from a senior representative of the exchange to the Minister of Finance at the address below. Submissions should include sufficient information about the exchange's governance, ownership, financial resources, trading systems and infrastructure, listings, listing standards, liquidity measures, regulatory framework, and other pertinent factors so as to enable the Department of Finance to assess the exchange's application using the considerations listed above. If an exchange operates more than one tier, submissions are to indicate for which tier(s) the exchange is seeking designation status. Additional information may be requested as needed.


All requests for designation will be acknowledged in writing. Following the assessment process, exchanges designated by the Minister of Finance will be notified and the official name of the exchange, or tier(s) of the exchange, will be published on the Department of Finance's website.

Where the Minister of Finance declines an application for designation status, the exchange will be notified in writing. Exchanges may resubmit a request for designation if their circumstances change sufficiently to address any deficiencies, errors, or omissions identified in their initial application.

The Minister reserves the right to re-evaluate the circumstances of a previously designated exchange and, where justified, revoke its designation status. Once designated the exchange should notify the Minister of Finance within 30 business days of any change to the exchange structure, governance, ownership, and/or operation that could impact the assessment of the exchange’s qualification with respect to the published criteria.


Minister of Finance

Department of Finance Canada
Hon. James Flaherty Building
90 Elgin Street
Ottawa, ON  K1A 0G5, Canada

c.c.: Assistant Deputy Minister, Tax Policy Branch; Assistant Deputy Minister, Financial Sector Policy Branch


With the introduction of three categories of stock exchange, most income tax provisions that previously referred to "prescribed stock exchange" will now refer to "designated stock exchange". Over time, the Government will review the appropriateness of using the second and third categories for certain of those provisions. This Annex provides further background on the Recognized Stock Exchange and Stock Exchange categories.

Recognized Stock Exchange

The term “recognized stock exchange” is used for limited purposes under sections 95 and 116 of the Act.

This category will consist of stock exchanges that are located in Canada or in another country that is a member of the Organisation for Economic Co-operation and Development and that has a tax treaty with Canada. This category will also include all designated stock exchanges. There will be no formal identification of recognized stock exchanges; a stock exchange is a recognized stock exchange based strictly on its location, and not (except in the case of a designated stock exchange) by any action on the part of the Minister.

Stock Exchange

This category will include any stock exchange, regardless of where located, and will include all designated and recognized stock exchanges. As in the case of a recognized stock exchange, there will be no process by which an entity is formally identified as a "stock exchange". Instead, it is intended that the general legal and commercial meaning of the term will govern. This category will be used for the purposes of the securities lending rules under the Act.

Designated Stock Exchanges (current from February 15, 2024)

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