What Is the Toronto Stock Exchange (TSX)?
Let me tell you about the Toronto Stock Exchange, or TSX—it's Canada's main stock exchange based in Toronto, Ontario. It started back in 1861 and now lists more than 1,500 companies from sectors like energy, mining, technology, and real estate. You'll also find international listings and exchange-traded products here.
The TSX went fully electronic in 1997 when it shut down its trading floor. Then in 2007, it merged with the Montreal Exchange to create the TMX Group.
Key Takeaways
- The Toronto Stock Exchange is the largest exchange in Canada.
- The exchange is fully electronic, with more than 1,500 companies listed.
- All transactions are conducted in Canadian dollars.
- The TSX is owned by TMX Group, which also owns the Montreal Exchange, the TSX Venture Exchange, and the Canadian Derivatives Clearing Corp.
Understanding the Toronto Stock Exchange (TSX)
You need to know that the TSX ranks as one of the world's largest stock exchanges and the third-largest in North America, behind the NYSE and Nasdaq. Its history goes back to the mid-1800s—it was founded in 1861, incorporated in 1878 as the Toronto Stock Exchange or TSE, and rebranded to TSX in 2002.
The exchange runs Monday to Friday, excluding statutory holidays. Regular trading happens from 9:30 a.m. to 4 p.m. Eastern time. You can enter orders but not execute them during the pre-open session from 7 a.m. to 9:30 a.m. ET.
As I mentioned, the trading floor closed in 1997, making all trades electronic, much like Nasdaq. On the TSX, you trade company shares, investment trusts, and exchange-traded products. It also handles bonds, commodities, futures, options, and other derivatives, all in Canadian dollars. According to the 2020 Guide to Listing, there were 1,572 issuers listed.
The exchange introduced the TSE 300 Composite Index in 1977, akin to the S&P 500, featuring the most influential stocks. It became the S&P/TSX Composite Index in 2002 and gets rebalanced quarterly in March, June, September, and December.
Important Note
If you're interested in investing in Canadian companies, consider American depositary receipts (ADRs), which are available for larger Canadian firms.
Special Considerations
In 1999, the TSX became Canada's only exchange for senior equities. Two years later, it took over the TSX Venture Exchange, which focuses on small-cap stocks.
As I noted earlier, the TMX Group runs the TSX following the merger with the Montreal Exchange. Besides the TSX, Montreal Exchange, and TSX Venture Exchange, the group operates the TSX Alpha Exchange; Shorcan for fixed-income products in Canada; and the Canadian Derivatives Clearing Corp. (CDCC), which clears Canadian exchange-traded derivatives and other instruments.
There was an attempt to merge the TSX with the London Stock Exchange (LSE), but it failed in 2011 due to lack of shareholder votes. TMX pushed this to avoid a takeover by the Maple Group Acquisition Corp., a group of Canadian investors including the Canada Pension Plan Investment Board, Scotia Capital, and TD Securities. Eventually, TMX accepted the Maple Group takeover, completed in 2012.
