The Toronto Stock Exchange (TSX) is proposing a new rule that would allow for the creation of (SPACs) in Canada.

SPACs have become very popular capital raising vehicles in the United States They are similar to capital pool companies in that they involve raising money for a shell company that then acquires an operating business of some sort. The major difference is that while capital pool companies often raise just a few hundred thousand dollars, the SPACs that are common in the U.S. are much larger, typically raising tens, or hundreds, of millions of dollars.

According the TSX, at April 30, 94 SPACs had completed initial public offerings in the US, raising US$18.6 billion, but had not yet completed their qualifying acquisition. Another 87 SPACs were in the process of registration. The American Stock Exchange has been the leading venue for SPACs, but NASDAQ and the New York Stock Exchange have both proposed to adopt SPAC rules too.

The TSX notes that the NYSE’s SPAC rules came into effect on May 6. And, it says that global financial institutions, such as Goldman Sachs, Citi, UBS, Deutsche Bank, Merrill Lynch, JP Morgan and Morgan Stanley have acted as investment bankers for SPACs. “As a result of the growing market acceptance of SPACs in the United States, and building on the CPC concept, TSX is proposing to provide a framework for the listing of SPACs on TSX.”

“Recent SPAC offerings have included a wide range of investor protections that mitigate TSX’s previous concerns about listing SPACs,” it adds. “The proposed SPAC rules take into account SPAC rules recently adopted by the New York Stock Exchange and currently proposed by NASDAQ, while also incorporating best commercial practices observed in the SPAC market in the United States.”

The TSX is seeking comments by Sept. 15 on a rule that would allow the creation of SPACs here. Its proposed rule sets out: the original listing requirements which must be met by the SPAC; the continued listing requirements that a SPAC must meet prior to the completion of a qualifying acquisition; and, the process relating to the completion of a qualifying acquisition, or failing that, liquidation distribution of the SPAC.