the Toronto Stock Exchange (TSX) is the largest exchange in Canada and one of the 10 largest exchanges in the world. It has been in service since 1852. The TSX is part of the TMX Group, which also operates the TSX Venture Exchange (TSXV), an exchange for small growth companies, the Montreal Exchange and several other securities-related companies. The TSX is notorious for listing more mining-related securities than any other exchange, with approximately 60% of all mining-related issues traded on its exchange. Investing in non-US securities can improve your returns, but an overview of financial advisers first will help you avoid the pitfalls.
The TSX has over 1,500 listed companies with a total market value of approximately C $ 3.2 trillion (C $) for an average market capitalization of C $ 2 billion. TSXV has even more companies, close to 1,700. TSXV companies have a much smaller market capitalization, however, totaling only C $ 45 billion combined for an average market capitalization of less than C $ 27 million.
How the TSX works
The TSX, which is based in Eastern Canada in Toronto, Ontario, operates at the same times as the New York Stock Exchange. Trading on the TSX and TSXV takes place from 9:30 a.m. to 4:30 p.m. Eastern Standard Time.
In order to be listed on the TSX, companies must have net tangible assets of at least C $ 7.5 million. Companies listed on the TSX must also report pre-tax income of at least CAN $ 200,000.
TSXV has two levels of listing requirements. The more restrictive level 1 requirement is for net tangible assets of C $ 1 million and pre-tax income of C $ 100,000. Level 2 companies require CAD $ 500,000 in net tangible assets and CAD $ 50,000 in pre-tax profit to qualify for listing.
Companies that are not eligible for listing on major US stock exchanges such as the NYSE and NASDAQ may be eligible for listing on the TSX and TSXV. This makes Canadian stock exchanges places where investors look for opportunities to invest in newer, less established and riskier companies.
Biggest TSX stocks
Despite the large number of publicly traded mining companies, the largest companies by market capitalization on the TSX are mostly financial institutions. And the largest market-capitalization company on the TSX is a technology company serving small and medium-sized ecommerce businesses.
Shopify (SHOP), an e-commerce platform company
Royal Bank of Canada (RY), a diversified global financial company
Toronto-Dominion Bank (TD), a bank serving Canada and the United States
National Railway of Canada (CNR), railway and transport company
Bank of Nova Scotia (BNS), a banking company serving the Americas
Special considerations at TSX
Canada is one of the largest economies in the world and the largest trading partner of the United States, which has the largest economy of any country. Canada is also notable for having an exceptionally stable economy and has not experienced the rapid expansions and downturns that many other countries are experiencing. The stability of the Canadian economy attracts investors to the stocks of companies that base their activities there.
Stability means investors are less likely to experience sharp market declines, but also that growth prospects may be limited compared to other more volatile economies.
How to invest on the TSX
Many companies listed on the TSX are also listed on US stock exchanges such as the NYSE and NASDAQ. This makes it as easy to trade in hundreds of Canadian companies listed on the TSX as it is to trade in US public companies. Any American brokerage firm can help clients negotiate company securities listed on both the TSX and the US stock exchanges.
Many US brokerage firms also allow US investors to buy and sell securities listed on the TSX directly, even if they are not listed on the US stock exchanges. A number of major online trading platforms offer similar capabilities. A client of one of these brokers or platforms can trade TSX securities as well as trading securities of US companies.
It is also possible to invest in exchange-traded funds (ETFs) that invest in securities of the TSX, including index funds. For example, the S & P / TSX 60 Index includes the 60 largest TSX companies by market capitalization, weighted by sector. A number of ETFs are linked to this index.
At the end of the line
The Toronto Stock Exchange is one of the largest exchanges in the world and the largest in Canada. It places a special emphasis on mining companies, with more mining-related titles than any other exchange. It is open at the same times as the NYSE and NASDAQ, and many companies listed on the TSX are also listed on the US stock exchanges and can be traded by US investors using domestic brokers and online platforms. TSXV is a division aimed at growing small businesses.
Tips for investing
Before investing in Canadian companies through the TSX or TSXV, consider consulting an experienced financial advisor who can help you assess whether trading on these exchanges is a good fit for you and your goals. Finding a financial advisor doesn’t have to be difficult. Free SmartAssets Tool connects you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you reach your financial goals, start now.
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