How to Buy NEO Stocks

By Kirsteen Mackay

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Buy NEO stocks with ease as the NEO Exchange provides investors and traders with quality liquidity, efficiency and great customer service.

Want to know how to buy NEO stocks? Here you'll find all the info you need to get started. The NEO Exchange primarily features companies at the cutting edge of breakthrough technologies.

NEO Exchange is the third most active marketplace in Canada. Close to 15% of all volume traded in Canadian-listed securities takes place on NEO.

There are around 54 companies listed on NEO, along with 23 Canadian Depositary Receipts (CDRs) and 21 funds offering multiple exchange traded funds (ETFs). Investors can buy NEO stocks and other public listings, including Special Purpose Acquisition Companies (SPACs), Growth Acquisition Corporations (G-Corps™), and Closed-End Funds (CEFs).

What is the NEO Exchange?

The NEO Exchange is a relatively new arrival in Canada. Founded in 2015, the NEO Exchange was formed to provide traders with a fairer place to trade shares. The NEO trading platform includes speed bumps to discourage the destructive practice of high-frequency trading. 

NEO is not a venture exchange. It lists companies with a track record, and NEO securities must meet stringent, disclosure-based listing requirements. This transparency and quality liquidity give investors peace of mind.

Equity markets today are much cheaper and more efficient than in the past, but they're also more complex.

According to the NEO Exchange, it operates within a fair, liquid, efficient, and service-oriented environment. NEO puts investors first and provides access to trading across all Canadian-listed securities on a level playing field.

The Trouble with Liquidity

Liquidity is at the heart of NEO. It promises traders and investors access to quality liquidity to keep markets moving.

A liquid market means shares are bought and sold instantly at fair market value. In an illiquid market, the spread between the bid and ask grows, so shares are sold below fair value and bought above fair value. Illiquidity increases price volatility and erodes investor confidence in the stock. 

Large-cap stocks tend to be highly liquid because many people own them, while small caps are prone to a lack of liquidity.

The timing of market orders can prevent liquidity from quickly drying up. That's because simultaneous trades prevent quote fading (also known as latency arbitrage), which becomes a problem when market makers can see sequential trades coming down the line.

While electronic trading should, in theory, reduce liquidity problems, it can have the opposite effect.

The NEO Exchange prides itself on providing consistent liquidity and reduced volatility providing greater market certainty and increased investor confidence.

NEO Exchange Industries

Psychedelics, cannabis, and crypto-related firms all appear on the NEO exchange. NEO is a senior exchange that requires companies to comply with official listing requirements. 

Other industries include electric vehicle (EV), space exploration, food service, web3, decarbonization, critical minerals, plant-based foods and more.

Trade NEO Stocks

NEO offers three marketplaces to suit specific trading types. There are NEO-L, NEO-N, and NEO-D.

NEO-L uses trader IDs to classify long-term investors as NEO traders who are given priority over high-frequency traders in the order queue. NEO traders have their orders filled first regardless of when they arrive in the queue. This makes trading faster.

A typical marketplace executes trades based on the price, the broker, and the time. But NEO-L improves this offering by giving NEO traders (long-term investors) priority over high-frequency traders.

NEO-N operates similarly to NEO-L, but the trade execution is based on the price, the broker, and a weighted size/time ranking. Those investors willing to commit larger trades get priority over high-frequency traders making smaller short-term trades. Therefore, NEO-N's order process reduces order fragmentation and ensures larger fill sizes.

NEO-D is a dark trading venue launched in 2018. It allows participants to privately trade without disclosure until after the event. A dark pool such as the NEO-D enables institutional investors to trade large orders. NEO-D is an entirely hidden order book with several appealing features, such as no pre-trade transparency and a matching algorithm that prioritizes NEO trader orders over latency-sensitive trader's orders.

NEO's Crossing Facility supports the execution of trades that cross at the time of order entry in any of the securities traded on NEO Exchange free of charge.

The NEO Exchange also provides its market participants with access to free, real-time market data for retail investors and free data on NEO-listed securities for all investors.

NEO Trading Hours

  • NEO-L and NEO-D offer continuous trading between 9:30am and 4pm.

  • Continuous trading is available on NEO-N between 8am and 5pm.

  • Pre-market trading is available on NEO-L between 7am and 9:30am, and on NEO-D between 8am and 9:30am. 

  • NEO-L runs extended trading between 4:05pm and 5pm.

Can a US-Resident Investor Trade on the NEO Exchange?

Yes, US residents can trade Canadian-listed securities on the NEO exchange.

You don't need to live in Canada to trade on NEO. Many international brokers allow trading on the NEO exchange.

How to trade stocks listed on NEO

If you would like to purchase shares in a NEO-listed company, here are the steps to follow:

Choose Your Broker

NEO-listed securities are available to trade via many brokers. Some Canadian wealth management brokerages that have confirmed support for trading and real-time market data for securities listed on the NEO Exchange include:

  • Canaccord Genuity Wealth

  • National Bank Financial

  • Raymond James

  • Research Capital Corp

  • Scotia McLeod

  • TD Wealth

  • Questrade

  • Interactive Brokers

Additional platforms may be available to trade NEO-listed securities. If in doubt, ask your broker.

If you are an international investor, you can contact the NEO Exchange directly for more information on trading Canadian securities abroad.

Fix Your Budget

A NEO investment may be risky, and you shouldn't invest what you can't afford to lose. Treat any small-cap or micro-cap investment as a speculative outlay. Size your position carefully in a diversified portfolio.

Fund your account

Check if your broker will allow you to trade the NEO stock you are interested in. Then you can fund your account.

Fees

To buy NEO stocks you will incur fees. The fees are quoted in Canadian dollars and are based on the total number of shares traded per month. See NEO's trading fee schedule for up-to-date costs.

NEO-listed securities market data is available to all investors in real-time, at no cost. 

Ask for help

Executing the NEO trade may differ slightly from broker to broker. If you require help, your broker's customer service desk should be able to help you.

Buy your NEO stock

Like buying traditional stocks, you'll have the option of market or limit orders when you place the trade. NEO also offers many more order types such as fill or kill, market on open and limit on close. Check with your broker for the different options available.

History of the NEO Exchange

Formerly Named Aequitas Innovations Inc., NEO Exchange, Inc and NEO Connect comprise the NEO Group. As of June 2022, NEO Group is now part of the Cboe Global Markets, Inc.

Cboe Global Markets is an American company that also owns the Chicago Board Options Exchange and the stock exchange operator BATS Global Markets. Cboe Global Markets completed the acquisition of the Aequitas NEO Exchange in June 2022.

NEO Exchange CEO Jos Schmitt founded the Toronto-based NEO Group of companies. He previously founded the Alpha Group of companies which was subsequently acquired by TMX Group, which runs the Toronto Stock Exchange (TSX).

For more info, read our How to Buy TSX Stocks guide.

Jos Schmitt formed the NEO Group with the support of several blue-chip Canadian financial institutions. 

What is NEO Connect?

NEO Connect is a multi-asset distribution platform supporting mutual funds and private offerings.

What is NEO’s DealSquare?

In 2019, NEO launched DealSquare, in collaboration with Silver Maple Ventures. NEO’s DealSquare is Canada’s first fully-automated and centralized dealer platform for private placements. Its aim is to make private market investments more accessible and efficient. DealSquare gives registered users the ability to seamlessly find, analyze, and transact private market deals.

In essence, it gives the advisor the ability to invest in private securities as easily as public securities.

Any private or public company can use the NEO’s DealSquare platform to conduct private placement offerings. Moreover, any investor can buy NEO stocks on DealSquare through participating dealers.

NEO Exchange ETFs

NEO recently introduced its Canadian ETF Market, a user-friendly platform providing investors and advisors with one-stop access to ETF research and analysis, powered by ETF specialist Trackinsight.

Real-time, institutional-grade data allows users to compare, contrast, and explore the entire universe of 1,200+ Canadian ETFs, free of charge.

Not NEO Crypto

Not to be confused with the cryptocurrency and blockchain platform named NEO, the NEO stock exchange is Canada's Tier 1 stock exchange for the innovation economy.

NEO Exchange aims to match investors with capital raisers together with trust, liquidity, and access to broad market data.

How is the NEO Exchange Regulated?

The NEO Exchange is authorized by the Canadian Securities Administrators (CSA) to operate an exchange for listing and trading securities and certain financial products.

Additionally, the Ontario Securities Commission fully regulates the NEO Exchange. Plus, the Investment Industry Regulatory Organization of Canada (IIROC) is contracted to act as a regulation services provider for NEO.

Read our guides on how to invest in NYSEOTCCSE and TSX stocks.

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Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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