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.
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 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.
How is the TSX value 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 is the biggest stock exchange in the world? ›
1. New York Stock Exchange (NYSE), USA. With a market capitalisation of US$26.2 trillion, the NYSE is the world's largest stock exchange. The NYSE is one of the oldest stock exchanges that was established in 1792 and has more than 2,400 listed companies.
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.
How does the Toronto Stock Exchange work? ›
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.
Is TSX the only Canadian Stock Exchange? ›
In 1999, through a major realignment plan, Toronto Stock Exchange became Canada's sole exchange for the trading of senior equities.
Selling your high-performing stocks or your cottage with a view can reap significant profits, and those moments are worth celebrating. But while you're enjoying the spoils of your investments, keep in mind that you'll eventually have to pay tax on them. In Canada, most gains on capital assets are taxed.
Is Canadian stock market different from US? ›
The US market is vast in size and has high liquidity, epitomized by institutions like the New York Stock Exchange, which provide a diverse array of sectors and companies to prospective investors. Conversely, Canada's market presents stability and a focus on industries such as banking, healthcare, mining, and energy.
How can a beginner buy stocks in Canada? ›
How to invest in stocks: A step-by-step guide for beginners
- Step 1: Open an online brokerage account. ...
- Step 2: Open a tax-sheltered investment account. ...
- Step 3: Fund your stock trading account. ...
- Step 4: Pick your investing approach. ...
- Step 5: Research stocks and ETFs to buy. ...
- Step 6: Make your trades.
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.
Why invest in the TSX? ›
Another reason to be optimistic about the TSX is the strong recent financial performance of some key sectors, such as technology and industrials. In the post-pandemic era, these sectors continue to benefit from a gradual global economy and trade recovery, with an improving supply chain environment.
Who is the owner of the TSX? ›
TMX Group
| Company type | Public |
|---|
| Total assets | $55,983.1 million (2022) |
| Total equity | $4,207.4 million (2022) |
| Number of employees | 1,693 (2022) |
| Divisions | Toronto Stock Exchange TSX Venture Exchange Montreal Exchange Boston Options Exchange Trayport |
11 more rowsThe big difference between the two comes down to the “old” economy versus “new” economy stocks. Technology and health care make up 43 per cent of the S&P 500 (versus nine per cent in the S&P/TSX composite), while financials and energy account for 48 per cent of the composite (compared to 16 per cent for the S&P 500).
Does the TSX index include dividends? ›
They do not account for dividends. Total return indices reinvest dividends back into the index on the ex-date of each dividend paying constituent.
What is the average return on the TSX composite index? ›
It was expanded to include 500 companies in 1957. Between 1957 and 2021, the index averaged an annualized rate of return of roughly 11.88%. If you look at the TSX Composite Index 1, over the 50 year period from November 30, 1971 to November 20, 2021, the average annualized return was 7.94%.
What are the 11 sectors on the TSX? ›
The order of the 11 sectors based on size is as follows: Information Technology, Health Care, Financials, Consumer Discretionary, Communication Services, Industrials, Consumer Staples, Energy, Utilities, Real Estate, and Materials.
