The Toronto Stock Exchange (TSX), notable for its comprehensive array of listed stocks, serves as a cornerstone of Canadian finance. Positioned in Toronto, Ontario, and established in 1861, the TSX hosts over 1,500 companies from various sectors including energy, mining, technology, and real estate, as well as international listings and exchange-traded products. Transitioning to a fully electronic trading system in 1997, this historic exchange merged with the Montreal Exchange in 2007 to create the TMX Group.
Key Takeaways
- The TSX is Canada’s leading stock exchange.
- It hosts over 1,500 companies and operates entirely electronically.
- Transactions are conducted in Canadian dollars.
- Owned by TMX Group, the TSX shares ownership with the Montreal Exchange, TSX Venture Exchange, and the Canadian Derivates Clearing Corporation.
Understanding the Toronto Stock Exchange (TSX)
As one of the world’s largest stock exchanges and the third largest in North America, the Toronto Stock Exchange dates back to the mid-1800s. Incorporated in 1878 and later rebranded as the TSX in 2002, its operating schedule spans Monday to Friday, barring statutory holidays, with regular trading from 9:30 a.m. to 4:00 p.m. ET.
The transition to electronic trading in 1997 saw the elimination of its physical trading floor. Now, the TSX supports the trading of shares, investment trusts, and exchange-traded products (ETPs), along with bonds, commodities, futures, options, and other derivatives—transactions all executed in Canadian dollars.
The exchange introduced the TSE 300 Composite Index in 1977, later renamed the S&P/TSX Composite Index in 2002. This index, which includes the most significant stocks, is rebalanced quarterly in March, June, September, and December. For those seeking to invest in Canadian companies, American depositary receipts (ADRs) provide a viable option.
Noteworthy Developments
In 1999, the TSX became the sole Canadian exchange for senior equities, eventually acquiring the TSX Venture Exchange in 2001, focusing on small-cap stocks. As of now, the TSX falls under the TMX Group’s umbrella, following its merger with the Montreal Exchange. TMX Group also oversees the TSX Alpha Exchange, fixed-income specialist Shorcan, and the Canadian Derivatives Clearing Corporation (CDCC), which manages the clearing of derivative products and other financial instruments.
A potential merger with the London Stock Exchange (LSE) fell through in 2011, failing to obtain the necessary two-thirds shareholder votes. Nonetheless, the TMX Group did merge with Maple Group Acquisition Corporation in 2012, a consortium comprising the Canadian Plan Investment Board, Scotia Capital, and TD Securities.
Related Terms: TSX Venture Exchange, TMX Group, Montreal Exchange.
References
- TMX. “Listing With Us”.
- Financial Post. “Timeline: 160 years of the Toronto Stock Exchange”.
- Statista. “Largest stock exchange operators worldwide as of March 2020, by market capitalization of listed companies”.
- The Strategic CFO. “Toronto Stock Exchange (TSX)”.
- TMX. “Trading Hours”.
- TMX. “Sector and Product Profiles”.
- Toronto Stock Exchange and TSX Venture Exchange. “2020 Guide to Listing”, Page 7.
- S&P Dow Jones Indices. “S&P/TSX Composite: Factsheet”. Downloaded Feb. 5, 2021.
- TMX. “TMX Group”. Feb. 5, 2021.
- TMX. “About Shorcan”.
- TMX. “Canadian Derivatives Clearing Corporation”.
- The Wall Street Journal. “TMX, LSE Terminate Merger Deal”,
- The Globe and Mail. :“Maple Group wins control of TMX, with 91 per cent of shares tendered”.
