STRATEGY AND OUTLOOK⁶

Our corporate strategy has evolved through our assessment of the exchange sector and of our business. We have identified trends that have important implications for our strategy and outlook.

Our corporate objectives are to capitalize on our competitive advantages (as outlined under our Vision) and to pursue the principal strategies described below, organically and through acquisitions, strategic alliances and investments to achieve profitable growth and maximize shareholder returns.

Global industry consolidation accelerated over the last twelve months, culminating in regional consolidation and trans-Atlantic merger proposals to create “super-exchanges”. In our view, a strong driver of industry consolidation is cost synergies. We believe consolidation will continue. We expect to see multi-asset consolidation between large and small players, and exchanges to look abroad to broaden distribution and expand their offerings.

After March 16, 2009, when the memorandum of agreement with the Bourse de Montréal comes to an end, we plan to enter the derivatives market. In our view, Canada needs a strong player that provides an integrated equities and derivatives offering to compete globally in the consolidating world of exchanges. We believe that a strategic partnership, an acquisition or some combination of these alternatives is preferable to building the platform ourselves. We are encouraged by the number of parties who are interested in working with us.

Going forward, we plan to invest our cash as we pursue the many opportunities that surround us for enhancing our core business, extending our pre-eminent domestic position in Canada through diversification and expanding internationally.

Enhance the Core Business
To maintain our pre-eminent position in the Canadian equity capital markets, 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 organized the listings operations of Toronto Stock Exchange and TSX Venture Exchange to increase our focus on growth. This includes expanding the business development function to improve the efficiency of its sales efforts. The team will focus on:

• Promoting Toronto Stock Exchange and TSX Venture Exchange as listings destinations.
• Enhancing relationships with influencers that will also promote Toronto Stock Exchange and TSX Venture Exchange as listing venues.
• Identifying targets and converting inquiries into listings.

Toronto Stock Exchange, specifically, will:

• Continue to focus on listing structured equity products, such as ETFs, which expand our reach into the investment marketplace.
• Offer value-added products by collaborating 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 expanding its Capital Pool Company^® program and executing 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. In 2007, we plan to upgrade our trading system with the next generation of servers. We expect to enter into new operating leases that will replace existing leases.
• We are keenly aware of the importance of speed of execution due to the rapid growth of algorithmic trading and plan 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 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. ATX™, a high-speed TSX trading facility to match firm order flow against in-house liquidity as well as liquidity from other market participants, is currently in development and is scheduled to be launched in 2007***.

Market Data

We will focus on:

• Increasing penetration of existing customers and up-selling them to premium content products.
• Continuing to work with market data vendors to upgrade their data delivery capabilities.
• Continuing to provide direct distribution to clients (TSX Direct) to meet their needs for reduced data latency.
• Leveraging existing data capabilities and infrastructure (LinxPointOne™) to add new content, such as Over-the-Counter (OTC), fixed income, foreign exchange, and other premium data.
• Building on our agreement with The Canadian Press to provide fact-based, non-biased journalist generated news.

^{*** Subject to regulatory approval.
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.}