Canada’s largest stock exchange, the Toronto Stock Exchange, is widely known as the TSX. This is a national exchange and is home to a large portion of the natural resources market.
Canada’s Toronto Stock Exchange(TSX)
Once just a place to trade shares, Canada’s stock exchanges have become regulatory agencies offering multiple services to investors. Each stock exchange has been given responsibilities under their respective province’s securities laws to oversee the fairness of their markets.
While trading in stocks was the primary service offered by Canadian stock exchanges, most now offer trading in options and futures as well. They also package and sell information about stock prices to aid investors in making better decisions. Although the Canadian stock exchanges all operate in a similar manner and based on the same principals, there are subtle differences between them.
The Toronto Stock Exchange also holds an important position in the global economy, as the seventh largest exchange in the world. The TSX currently trades senior equities and mutual funds. In 1997, they closed their trading floor, opting for a virtual, or electronic, trading environment.
In 1999, a major restructuring took place on the Canadian stock exchange scene. The Vancouver Stock Exchange merged with the Alberta Stock Exchange to form the new Canadian Venture Exchange, or CDNX, which became responsible for trading junior equities. The Montreal Exchange, or Bourse de Montreal, was assigned the task of trading derivatives. To summarize, each of the three major players had assumed responsibility for a different aspect of trading; the TSX handles senior equities, the CDNX junior equities and the Montreal Exchange the derivatives.
The junior equities available on the CDNX are typically companies whose assets and capitalization are too small to be listed on the Toronto Stock Exchange. This includes companies such as technology ventures and smaller natural resource exploration companies.
The derivatives available on the Montreal Exchange include futures contracts and options. It is unique in that in 2004, the Montreal Exchange became a support provider for the Boston Stock Exchange, making it the first foreign market responsible for the operations of an American exchange. The 1999 restructuring left some Quebecois shaking their heads, believing that the specialization of the Montreal Exchange meant less independence for the province as a whole as it became more intertwined with the other Canadian markets.
The restructuring of Canada’s stock exchanges resulted in each of the three major markets becoming a specialized exchange, creating an easier environment for Canadian investors to navigate.