STATEMENT OF CORPORATE GOVERNANCE PRACTICES

Overview
Recognizing the leadership role that TSX Group has played in shaping corporate governance practices in Canada, our Board of Directors (Board) and management continue to be committed to remaining at the forefront of good governance and to ensuring the highest standard of corporate governance. TSX Group’s corporate governance policies and practices are designed to support the Board in discharging its responsibilities and to enhance shareholder value. We regularly review these policies and practices.

TSX Group’s corporate governance system complies with National Policy 58-201—Corporate Governance Guidelines (NP 58-201), National Instrument 58-101—Disclosure of Corporate Governance Practices (NI 58-101) and Multilateral Instrument 52-110—Audit Committees (MI 52-110). In addition, we continue to review our corporate governance practices with reference to corporate governance guidelines recommended by institutional and other shareholder organizations.

Board Responsibilities
The Board is responsible for TSX Group’s governance and stewardship and overseeing its corporate strategy, affairs and management. The Board discharges this responsibility, either directly or, where appropriate, through committees, and by selecting and holding management accountable for TSX Group’s operations and for implementing its corporate strategy. The Board sets clear policies and direction for management’s responsibilities and authority. Among its many specific duties, the Board annually monitors the performance of the Chief Executive Officer (CEO) against corporate objectives (established by the Board with the CEO), and sets the CEO’s compensation. The Board also approves strategic plans and corporate objectives that the CEO is responsible for meeting, provides advice and counsel to the CEO, oversees ethical and legal conduct of senior management, and assesses financial performance of TSX Group. In addition, the Board approves the adequacy and form of compensation paid to members of the Board (Directors). The Board Charter that describes the Board’s responsibilities is available on our website.

At each regularly scheduled Board meeting, Directors and senior management examine, review and discuss a broad range of issues
relevant to TSX Group’s strategy, business interests and growth initiatives. In addition, management provides the Board with timely and periodic reports on operational and financial performance. During fiscal 2005, the Board held ten regular and four special meetings. Attendance by Directors at these meetings was more than 95 per cent, either in person, by teleconference or by video conference. The Board plans to hold ten meetings in 2006. At each of these meetings, the Board will meet without management and non-independent Directors to ensure it provides independent assessment and oversight. Each of the Finance and Audit Committee, Human Resources Committee and the Governance Committee can, in its discretion, retain an outside advisor or expert. An individual Director or any other committee of the Board can retain an outside advisor or expert with the approval of the Governance Committee.

Board Independence and Composition
The Board has a non-executive Chair and knowledgeable and experienced Directors, and 12 out of 14 members of the Board, including the Chair, are “independent” within the meaning of section 1.4 of MI 52-110 and our recognition order issued by the Ontario Securities Commission (Recognition Order). The Recognition Order requires at least 50 per cent of Directors to be “independent”, within the meaning of section 1.4 of MI 52-110. Furthermore, pursuant to the Recognition Order, the Board adopted in 2005 more restrictive standards than that imposed by MI 52-110 to determine whether individual members of the Board are independent from TSX Group. Those standards are set out on our website.

The Board also derives strength from the background, qualities, skills and experience of its Directors. The Governance Committee recommends candidates to the Board who are suitable for nomination to the Board on an annual basis. Nominees are selected for qualities such as integrity, business judgment, financial acumen, independence, business, professional or board expertise and capital markets experience. The Board also takes into consideration representation from geographic regions relevant to TSX Group’s strategic priorities.

Director Education and Access to Management
We provide new Directors with a Directors’ Manual, which serves as a corporate reference, as well as with orientation materials describing our business, strategy, objectives and initiatives, so new Directors understand the nature and operations of our business and the role of the Board and its committees, as well as the contribution individual Directors are expected to make. Furthermore, Directors are invited to spend time at our offices and also have timely and periodic one-on-one meetings with the CEO and key members of the senior management team. The Chair sets the agenda for Board meetings and Directors receive a comprehensive package of information prior to each Board and committee meeting. As well, each committee delivers a report to the full Board on its work after each committee meeting. TSX Group also provides the Directors with a variety of other materials on an ad hoc basis, to keep them informed about internal developments as well as developments in, or which affect, our industry. All of these materials and other corporate materials are also accessible by Directors on a permanent, secure intranet.

Board Evaluation
The Board annually evaluates its performance and effectiveness through a Board Assessment Survey and addresses any issues that are raised in the evaluations. The Board conducts a peer review of the Directors, including the Chair of the Board, to assess individual Director performance. The Chair of the Board with each Director, and the chair of the Governance Committee with the Chair, conducts formal one-on-one interviews based on the results of the survey and the peer review.

Code of Conduct
The Board’s Code of Conduct (Board Code) for Directors, which was updated in February 2006, sets standards for ethical behaviour of the Board. The Board monitors compliance with the Board Code and is responsible for considering and granting waivers from compliance with the Board Code, if any. No waivers have been granted nor have there been any violations of the Board Code. A copy of the Board Code is available on our website.

Committees
The Board has four standing committees with specific areas of responsibility to effectively govern TSX Group: Finance and Audit Committee, Human Resources Committee, Governance Committee and Public Venture Market Committee. All of the members of the Finance and Audit Committee, Human Resources Committee and Governance Committee and more than a majority of the members on the Public Venture Market Committee are independent. All of the committees also consist solely of non-management Directors. The Board believes that the composition of its committees ensures that they operate independently from management to protect all shareholders’ interests. The Board also believes that the members of the Finance and Audit Committee are financially literate, given their education and experience. Each standing Board committee has a formal written Charter, approved by the Board. These are reviewed at least annually and are available on our website.

Majority Voting
The Board has adopted a policy that provides that if a director of TSX Group does not receive the support of a majority of the votes cast at an annual meeting of the shareholders, the director will tender his or her resignation to the Board, to be effective when accepted by the Board. The Governance Committee will consider the director’s offer to resign and make a recommendation to the Board whether to accept it. The Board will have 90 days following the annual meeting to make its final decision and announce it by way of press release. This guideline is in effect for the 2006 annual shareholders’ meeting.

Risk Management
TSX Group recognizes that risk management is integral to its business performance, and we follow a comprehensive integrated risk management program to identify, assess and prioritize principal business risks, and consider the likelihood and potential impact of each risk. We develop strategies to manage each identified risk. In addition, we have a business continuity plan to protect personnel and resources and to enable us to continue critical business functions if a disaster occurs. The Board provides oversight with respect to our risk management program and our strategies to mitigate such risks. Also, we have an internal audit function, which reports to the Finance and Audit Committee, and which independently assesses the adequacy and effectiveness of internal controls and recommends corrective action.

Communication
TSX Group and the Board are committed to open and proactive communication. Our investor relations staff provides information to current and potential investors and responds to their inquiries. We broadcast quarterly earnings conference calls live and archive these calls on our website. We also make recordings available via telephone to interested investors, the media and members of the public for three months after each call. Audio webcasts of such recordings are also available on our website for six months after each call. We promptly make available presentations from investor conferences on our website. We also make material disclosure documents available on our website.

Additional Information
For a full report on our corporate governance practices, please refer to our Management Information Circular, which may be accessed through www.sedar.com or through our website at www.tsx.com. The Circular also contains our corporate governance practices with respect to NI 58-101, information about Directors, and the composition, responsibilities and activities of the Board’s standing committees. All information about corporate governance practices in our Annual Report and in the Management Information Circular was adopted and approved by our Board.