TSX Markets has issued a discussion paper regarding its use of ticker symbol extensions to single out firms that employ a dual class share structure.

The aim is to solicit input from market participants concerning the symbol extension initiative for subordinated voting issues that was implemented on September 30, 2004. It featured new stock trading symbol extensions designed to publicly disseminate non-conventional voting characteristics of a particular security offering. The TSX says it believed that the symbol extension initiative would augment market efficiency and price discovery by providing investors with increased information concerning share class structure.

A year after the symbol extension initiative was introduced, the TSX has begun a study to analyze the effects of symbol extension. After a six week comment period ends on October 7, it will review the feedback received and make recommendations.

The TSX is soliciting input on the following three options regarding the symbol extension initiative: maintain the symbol extension program with additional education by TSX; maintain the symbol extension program except for issuers inter-listed on a foreign exchange; or, develop an alternative program of education and disclosure concerning dual class share issues and permit all issuers to elect whether to retain symbol extensions.

The exchange notes that many market participants have applauded the increased transparency, but also expressed concern that the symbol extensions reduce the speed of order entry and increase the chance of error.

Some participants say that the introduction of symbol extensions has negatively impacted the ability to efficiently manage client order flow; that the benefit of symbol extensions from a transparency perspective has likely been offset by the inherent complexity of the extensions and resulting confusion of the investor; and, that symbol extensions do not achieve the objective of increased investor awareness.