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Letter from the Interim Co-CEOs

We are proud to report on an historic year for TSX Group. The 2007 financial results once again reflected impressive performance in our core business of issuer services, trading and market data. Revenue increased 20%, net income increased by 13% and diluted earnings per share was up 14% over 2006.

In 2007, we again broke records in terms of volumes traded on our equity and energy exchanges. Toronto Stock Exchange and TSX Venture Exchange combined volumes were over 149 billion securities in 2007, up 25% over 2006. NGX traded or cleared a record 11.2 million terajoules in natural gas and electricity contracts, a 14% increase over 2006. In market data, our fastest growing revenue stream, we set a new record with over 160,000 subscriptions to our real-time data at the end of 2007. In our listings business, we added a record 49 new international listings, including graduates, to our equity exchanges last year.

While some of the market conditions that drive activity are beyond our control, one of the ways in which we can directly impact that activity is by enhancing our relationships with our customers.

Competition in today’s markets is without borders. Consolidating exchanges across the world are aggressively seeking out new listings and sources of liquidity. We continue to work to strengthen our competitive position by anticipating market needs and providing flexible, innovative products and solutions while reducing frictions to listing and trading on our exchanges.

For instance, buy-side institutions are demanding faster, cheaper, more complex trading. We have responded by continuously upgrading our trading systems, investing more than $50 million in technology every year from 2002 to 2007. And in December 2007, we began the phased roll-out of our new trading engine known as TSX Quantum. This new trading system will provide our customers with even greater speed and more capacity. The roll-out will continue throughout 2008.

In market data, we announced in October that we will be launching a consolidated market data feed of pre- and post-trade data for equity marketplaces in Canada. This will reduce the time-to-market and costs of moving to multiple feed formats for stakeholders, and will help facilitate best execution for our customers.

Over the past five years, we have delivered on our commitment to reducing the overall cost of trading Canadian equities. In November 2007, we again revised our trading fees to incent more trading in the central limit order book and increase order flow from global participants. According to an Elkins/McSherry study conducted as at the second quarter of 2007, the cost of executing a trade on our exchanges was tied for third lowest in the world at 0.20 basis points.

With our advances in technology, innovative product offerings and low trading fees, we are confident we will continue to meet the demands of an evolving competitive landscape and attract even more liquidity.

In our energy business, we announced two important new initiatives in 2007. In March, we announced an arrangement to combine NGX’s strengths in physical clearing with the advanced technology capabilities of IntercontinentalExchange Inc., or ICE, which was launched in February 2008. We are excited about the opportunity that this represents for NGX to gain access to thousands of trading screens, technology expertise and a global footprint for natural gas and electricity contracts. In September, we purchased an option from Enbridge Inc. and Circuit Technology Ltd. to acquire all the shares of NetThruPut Inc., or NTP, a leading Canadian electronic platform for trading and clearing crude oil. NTP is a natural fit with our NGX gas and electricity business and will further strengthen our presence in the North American energy space.

The competition for listings has taken our business development efforts world-wide. We have focused on entrenching our position as a preeminent global resource exchange and a leading exchange for small to medium sized enterprises, or SMEs.

We are telling our story in the key mining markets of Australia, South Africa, and South America. We are actively pursuing listing opportunities in the new economic powers such as China and Brazil. And we are present in Israel where there is a burgeoning demand for financing in the high-tech sector.

In 2007 alone, 219 new resource companies listed on TSX Group exchanges, including 13 from the U.S., 9 from Australia, 2 from South America, 2 from China and 2 from the U.K.

We also enjoyed business development successes targeting SMEs in the United States. Our nine-city 2007 U.S. Campaign concluded at the end of November. We added 23 new listings from U.S.-based companies in 2007, including 6 graduates from TSX Venture. Our 2008 U.S. campaign began in April.

In an effort to expand our service offering to listed issuers, last June we acquired The Equicom Group Inc., a leading provider of investor relations and related corporate communications services to public companies in Canada.

But, in a year of full of records and operational accomplishments for TSX Group, we think 2007 will be remembered most for an important step we took to prepare for the future – our agreement to combine with Montréal Exchange Inc. to create the new TMX Group Inc., which we announced on December 10, 2007. The combination is not only significant in terms of our company’s strategy, but will also be a benefit to the future of Canada’s capital markets. Together we will not only better serve our stakeholders’ needs, but we will also strengthen our ability to compete globally.

The creation of a combined cash equities and derivatives operation strengthens and diversifies our revenue base and will allow us to realize both cost and revenue synergies.

We believe a fully integrated Canadian capital market will allow us to excel in the new exchange world and to build on our combined strengths and the capabilities that we have developed over the years.

The past year has been an exciting and rewarding one for TSX Group. We look forward to the new opportunities that lie ahead.

Rik Parkhill Interim Co-CEO	Michael Ptasznik Interim Co-CEO and CFO