What is the Toronto Stock Exchange (TSX)?
The term Toronto Stock Exchange (TSX) refers to a Canadian stock exchange located in Toronto, Ontario. Founded in 1861, the TSX is Canada's premier stock exchange with more than 1,500 listed companies, including those from the energy, mining, technology, and real estate sectors. The exchange is also home to international listings and exchange-traded products. It became fully electronic after closing its trading floor in 1997. In 2007, the TSX merged with the Montreal Exchange (MX) to form 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 theCanadian Derivates Clearing Corporation.
Understanding the Toronto Stock Exchange (TSX)
The Toronto Stock Exchange is one of the largest stock exchanges in the world and is the third-largest in North America after the New York Stock Exchange (NYSE) and the Nasdaq. The exchange's history dates back to the mid-1800s. It was established in 1861 and was officially incorporated in 1878 under the name Toronto Stock Exchange or TSE. It became known as the TSX after the company was rebranded in 2002.
The exchange operates Monday to Friday, except for statutory holidays. The market opens with regular trading activity taking place between 9:30 a.m. ET and 4:00 p.m. ET. Trading orders may be entered but not executed during the pre-open between 7:00 a.m. and 9:30 a.m. ET.
As noted above, the exchange eliminated its trading floor in 1997. Trades on the TSX became electronic, similar to the Nasdaq in the United States. Traded instruments include shares in companies, investment trusts, and exchange-traded products (ETPs). Other financial instruments such as bonds, commodities, futures, options, and other derivative products are also actively traded. All transactions are executed in the Canadian dollar. According to the 2020 Guide to Listing, there were 1,572 listed issuers on the exchange.
The exchange launched the TSE 300 Composite Index in 1977, which was similar to the S&P 500. Composed of the most influential stocks on the exchange, the name of the index was changed to the S&P/TSX Composite Index in 2002. The index is rebalanced on a quarterly basis in March, June, September, and December.
Interested in investing in Canadian companies? Try purchasing American depositary receipts (ADRs), which are available for larger Canadian corporations.
Special Considerations
In 1999, the TSX became Canada's only exchange for senior equities. Two years later, it acquired the TSX Venture Exchange, which primarily lists small-cap stocks. As noted above, the exchange is now operated by the TMX Group, a result of the merger between the TSX and the MX. In addition to the TSX, the MX, and the TSX Venture Exchange, the group also operates the TSX Alpha Exchange, Shorcan, which specializes in fixed-income products in Canada, and the Canadian Derivates Clearing Corporation (CDCC). The CDCC facilitates the clearing of Canadian exchange-traded derivative products and other financial instruments.
The TSX and the London Stock Exchange (LSE) explored the opportunity for a merger. The deal fell through in 2011 after it failed to receive the required two-thirds majority of votes from shareholders. TMX proposed the merger to avoid a takeover by Maple Group Acquisition Corporation, a consortium of Canadian investors including the Canadian Plan Investment Board, Scotia Capital, and TD Securities. The TMX Group agreed to the Maple Group takeover, which was completed in 2012.
FAQs
The TSX works like other stock exchanges: every day, investors trade TSX stocks, causing the prices of those stocks to fluctuate relative to investor demand. For investors, trading on the TSX usually starts with a broker. Once you've opened a brokerage account, you'll typically find the full range of TSX stocks.
How does the TSX index work? ›
The S&P/TSX Composite Index is a capitalization-weighted equity index that tracks the performance of the largest companies listed on Canada's primary stock exchange, the Toronto Stock Exchange (TSX). It is the equivalent of the S&P 500 index in the United States, and as such is closely monitored by Canadian investors.
How does the stock market work in Canada? ›
The stock market works by allowing buyers and sellers to trade stocks listed on a particular exchange, mostly online and through licensed brokers. Although some physical stock exchanges like the NYSE still exist, most markets operate and trade online, aided by computer automation.
What is TSX known for? ›
Toronto Stock Exchange TSX is recognized as a premier international stock exchange known for its standards of fairness and its innovative approach to trading. TSX is the right choice for companies with a solid track record of business management and operation.
How does the stock exchange work? ›
The stock market is where investors buy and sell shares of companies. It's a set of exchanges where companies issue shares and other securities for trading. It also includes over-the-counter (OTC) marketplaces where investors trade securities directly with each other (rather than through an exchange).
What is TSX in the stock market? ›
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.
How does the stock market work for beginners? ›
The most common way is through an auction process, where buyers and sellers place bids and offer to buy or sell. A bid is a price at which somebody wishes to buy, and an offer, or ask, is the price at which somebody wishes to sell. When the bid and ask coincide, a trade is made.
How is TSX calculated? ›
The new methodology uses a time weighted average price (“TWAP”) calculation over the last 10 minutes of trading to determine the TSX Last Bid, the TSX Last Ask, and, in the absence of a trade during those last 10 minutes of trading, the TSX Closing Price.
What do TSX points mean? ›
Index points refer to the level of an index. For example, if the S&P/TSX 60 is trading at 900, it is said to have a level of 900 points. Dividend points specifically refer to the level of index points that are directly attributable to the dividends of index constituents.
How does tax work on stocks in Canada? ›
Instead, you pay additional income tax on part of the gains that you make. In Canada, 50% of the value of any capital gains are taxable. Should you sell an investment or asset at a higher price than you paid (realized capital gain), you'll need to add 50% of that capital gain to your income.
You're not buying a stock; you're buying part of a company. The primary reason you invest in a stock is because the company is making a profit and you want to participate in its long-term success. If you buy a stock when the company isn't making a profit, you're not investing — you're speculating.
How does the stock market really work? ›
It's a network of all-stock trading where investors and traders buy and sell stocks. These trades determine stock prices, reflecting the company's perceived value and market conditions. The stock market is also where companies raise capital and from which investors can grow their wealth.
What is TSX used for? ›
tsx files is their support for JSX syntax. . tsx files are designed to include JSX code, which allows embedding HTML-like syntax directly within TypeScript code. This feature is handy when working with React components, as it enables a more natural, declarative style for defining UI components.
Can Americans buy on the TSX? ›
Can a U.S. citizen buy stocks listed on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV)? Yes. As a U.S. investor, how do I trade stocks listed on TSX and TSXV? These platforms allow U.S. retail investors to trade nearly all TSX- and TSXV-listed issuers.
What does TSX stand for? ›
The Toronto Stock Exchange (TSX; French: Bourse de Toronto) is a stock exchange located in Toronto, Ontario, Canada. It is the 10th largest exchange in the world and the third largest in North America based on market capitalization.
Can US citizens buy on the Toronto Stock Exchange? ›
Can a U.S. citizen buy stocks listed on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV)? Yes. As a U.S. investor, how do I trade stocks listed on TSX and TSXV? These platforms allow U.S. retail investors to trade nearly all TSX- and TSXV-listed issuers.
How do I buy shares on the Toronto Stock Exchange? ›
Any domestic U.S. brokerage can help clients trade securities of companies listed on both TSX and U.S. exchanges. Many U.S. brokerages also enable U.S. investors to directly buy and sell securities listed on the TSX, even if they are not listed on U.S. exchanges.
How do I get listed on the Toronto Stock Exchange? ›
To apply, companies must submit a TSX listing application and supporting documents such as the Personal Information Form. Resource companies must also submit geological reports in compliance with regulatory guidelines, as prepared by an independent and qualified third-party.
What is the minimum listing requirements for the Toronto Stock Exchange? ›
TSX – Industrial & Technology Companies Listing Requirements
| Requirements | Profitable Companies | Technology Companies |
|---|
| Minimum Free Trading Public Float | 1,000,000 | 1,000,000 |
| Value of Free Trading Public Float | C$4,000,000 | C$10,000,000 |
| Market value of Issued Securities to be Listed | N/A | C$50,000,000 |
| Minimum Cash in Treasury | N/A | C$10,000,000 |
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