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A Guide to the Toronto Stock Exchange (TSX)

Sometimes shortened to TSX, the Toronto Stock Exchange is based in Toronto in Canada, and is one of the biggest stock exchanges in the world. By market capitalisation it is 9th biggest in the world and it is operated and owned by the TMX group as one of its subsidiaries for the purpose of senior equities trading. The TMX Group is an exchange group which operates and owns numerous trading business throughout Canada and through its several subsidiaries it operates cash, derivative, equity and energy trading facilities as well as other financial services like clearing facilities and data products. With its headquarters based in Toronto, the TMX Group also has offices spread throughout the country. The Toronto Stock Exchange represents a broad spectrum of businesses that are both domestic and international. As well as listing traditional securities, there are split share corporations, exchange traded funds, investment funds, derivatives, futures, options, bonds, commodities and income trusts also listed on the exchange. One feature that makes the Toronto Stock Exchange (TSX) stand apart from other stock exchanges is that there are more oil, gas and mining companies listed on it than on any other. Overall, there are more than 1500 listings on the TSX, with the securities being denominated in Canadian Dollars. All trading carried out on the Toronto Stock Exchange is executed entirely electronically, and this has been the case since 1997 when the exchange closed its trading floor, which is analogous to the NASDAQ exchange in America. The TSX’s normal trading session takes place on weekdays between 9:30 am and 4:00 pm ET with a post market session being held between 4:15 pm and 5:00 pm ET. The TSX is closed for trading on Saturdays, Sundays and on any holiday that has been declared in advance by the Exchange. The main index of the Toronto Stock Exchange is the S&P/TSX Composite Index which is an index of the equity prices of the biggest companies listed on the TSX measured by their market capitalisation. As the Canadian stock market’s headline index, the S&P/TSX Composite is one of the most commonly watched indices in the world and acts as a barometer for the health of the Canadian economy as it measures the performance of stocks representing 10 different business sectors in the country including consumer staples, consumer discretionary, energy, healthcare, financials, industrials, information technology, materials, IT, utilities and telecommunications.

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A Brief History of the Toronto Stock Exchange

toronto stock exchange logoIt is most likely that the Toronto Stock Exchange originates from the Association of Brokers, which was a group that was formed in 1852 by a number of Toronto businessmen, however there are no surviving records of this group’s financial transactions. In 1861, a gathering of 24 men took place at Toronto’s Masonic Hall and there, the Toronto Stock Exchange was created. In 1878, the exchange became incorporated by an act passed by the Legislative Assembly of Ontario. Over the years, the Toronto Stock Exchange continued to grow in size and increased the number of shares that it traded. The only exception to its continuous development was during a 3 month period in 1914 at which time the exchange was closed down under fears of financial panic because of the First World War. The Toronto Stock Exchange and the Standard Stock And Mining Exchange, its primary competitor, underwent a merger in 1934, with the result that the name “Toronto Stock Exchange” was kept. Its new headquarters and trading floor were opened in 1937 in a building on Bay Street in the city. The TSX then introduced its Computer Assisted Trading System (or CATS) in 1977 which was an automated system that was used for quotations on less liquid equities. The Toronto Stock Exchange relocated into the Exchange Tower in 1983 and a major step towards modern style trading took place in 1997 when its trading floor closed in order to make the exchange the 2nd biggest in North America to opt for an electronic, floorless virtual trading environment. The Toronto Stock Exchange became the sole exchange in Canada for senior equities trading through a realignment plan, with the Montreal Exchange assuming responsibility for derivatives trading and a merger of the Alberta Stock Exchange and the Vancouver Stock Exchange into the Canadian Venture Exchange taking over the trading of junior equities. The Toronto Stock Exchange became a for profit company in 2000 and one year later, its acronym was altered to TSX instead of TSE. The Canadian Venture Exchange was acquired by the Toronto Stock Exchange in the same year and it was given the name of the TSX Venture Exchange in 2002 with the result of the parent TSX Group being created. The main index of the Toronto Stock Exchange, the S&P/TSX Composite index, traded over the 14000 point level for the first time in 2007, and in 2008, the exchange was closed down for a full trading day for the first time in its history because of technical problems. Although there were discussions about a merger of the TMX Group with the London Stock Exchange in 2011, this never came to pass due to lack of shareholder approval.

The Companies Listed on the Toronto Stock Exchange

There are around 1500 companies listed on the Toronto Stock Exchange from 7 different sectors including:

The Toronto Stock Exchange is also home to all of Canada’s 5 main commercial banks, the Bank of Montreal, the Canadian Imperial Bank of Commerce, the Bank of Nova Scotia, the Toronto Dominion Bank and the Royal Bank of Canada, and this makes the exchange the country’s centre for banking. Some of the best known companies that list on the TSX include:

The TSX Venture Exchange, or TSX-V holds listings for over 2000 companies that are considered to be too small to list on the main TSX.

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