STRATEGY AND OUTLOOK⁶

We have identified a number of trends that have important implications for our strategy and outlook. Technology is enabling and accelerating change by providing capital markets with the tools to improve efficiency and to pursue new avenues of growth. This is clearly evident as exchanges become fully electronic, as increased processing power is available at a lower cost, and access widens with rapid internet adoption as well as wireless connectivity. Innovation is driving growth in new areas as well. This can be seen in the rapid acceleration into electronic trading of additional asset classes (fixed income and derivatives), the development of increasingly sophisticated investment products (ETFs, income trusts and structured products) and the proliferation of more complex trading practices (program, quantitative, basket and algorithmic trading). Opportunities are developing to standardize Over the Counter (“OTC”) products, which is often a precursor to trading on electronic exchanges.

Our corporate objectives are to achieve profitable growth and to maximize shareholder returns by capitalizing on our competitive advantages and strengths (as outlined under our Vision) and pursuing the principal strategies described below, organically and through acquisitions, strategic alliances and investments. Our goal is to achieve long-term annual earnings per share growth in the ten to twelve per cent range although growth rates will vary both on a quarterly and annual basis. 

Enhance the Core Business
To maintain our pre-eminent position in the Canadian equity capital market, we intend to further expand our product and service offerings to address the changing needs of issuers, intermediaries and investors as we strive to maintain the highest quality marketplace. 

Listings 
We have re-organized the listings operations of Toronto Stock Exchange and TSX Venture Exchange to maximize our use of resources and expand our focus on growth. This includes consolidation of the business development function into one team to improve efficacy of sales efforts. This team will focus on:

• Promoting Toronto Stock Exchange and TSX Venture Exchange as listings destinations.
  
• Developing influencers that will also promote Toronto Stock Exchange and TSX Venture Exchange as listing venues.
  
• Identifying targets and converting inquiries into listings.
  
• Reducing the hurdles to listing. 
  

Toronto Stock Exchange, specifically, will:

• Continue to focus on listing alternative equity products, such as structured products, income trusts, and ETFs, which expand its reach into the investment marketplace.
  
• Offer value-added products by developing a web-based foundation and partnering with industry leaders.
  
• Foster a customer-centric approach by tailoring listings standards to reflect the variety of equity products available on TSX.
  

TSX Venture, specifically, will:

• Focus on pursuing initiatives that drive new listings, such as expansion of its Capital Pool Company program and execution of its Public Venture Capital Campaign.
  
• Offer mentoring programs designed to enhance existing issuers’ probability of success as public companies.
  
• Pursue growth in Central and Eastern Canada, where public venture capital markets are relatively less developed.
  
• Pursue growth in untapped non-resource sectors.
  

Trading 

• Through upgrades to our trading system, we intend to continue to deliver the reliability, scalability, low cost and high speed of execution, which underpins us as one of the world’s leading electronic marketplaces. 
  
• We are keenly aware of the importance of speed of execution due to the rapid growth of algorithmic trading and will continue to take the necessary steps to enhance capacity and performance. 
  
• We will continue to develop and offer new customized trading products and services, such as those introduced in 2004 and 2005 (TSX MOC, Multiple Broker Give Up, and FOX) designed to meet the distinct needs of various investors and intermediaries and bring more liquidity and efficiency to the marketplace. 

^{6 The “Strategy and Outlook” section above contains certain forward-looking statements. Please refer to “Forward-looking Statements, Risks and Uncertainties” for a discussion of risks and uncertainties related to such statements.}