The Toronto Stock Exchange (TSX) is the largest in Canada and the 11th largest exchange in the world based on market capitalization.1 The exchange represents a broad range of Canadian businesses as well as businesses abroad. It includes securities, ETFs, split-share corporations, income trusts and investment funds.
Let’s learn more about the TSX and what you need to know as an investor about the market.
What is the Toronto Stock Exchange (TSX)?
Founded in 1861, the TSX is an exchange based in Toronto, Ontario, Canada. It opened with 18 stock listings and currently has more than 1,500 listed issuers.2
In addition to being a major stock exchange, the TSX is also considered an innovator in securities trading technology.1 They were one of the first major exchanges to adopt electronic trading, in 1997, when they traded in their trading floor for a fully digital system.
TSE vs. TSX
When researching the TSX, you may also come across the acronym TSE. This is because, originally, the TSX originally went by “TSE.” But that all changed in 2001, when the exchange acquired the Canadian Venture Exchange, renamed it the TSX Venture Exchange, and created the TSX Group, which managed both the TSX and the TSX Venture Exchange. With its new name, TSE became TSX.3 Today, the exchanges are managed by the TMX Group, the TSX’s parent company.
What Companies Are Listed on the TSX?
As of August 2019, the TSX had 1,569 listed issuers, and at the end of 2019, it had a total market cap of over $3.2 trillion.4
It’s important to know that the exchange houses all of Canada’s five major commercial banks, including Canadian Imperial Bank of Commerce (CIBC), Bank of Montreal (BMO), Bank of Nova Scotia (Scotiabank), Royal Bank of Canada (RBC), and the Toronto-Dominion Bank (TD).
The exchange also lists several Canada’s top energy companies, including Enbridge, Suncor, TC Energy, and Canadian Natural Resources.
The S&P/TSX Composite Index
Index funds are funds that track a certain market index. One of the most popular index funds in the United States is the S&P 500. The TSX has a similar index, called the S&P/TSX Composite Index. This index is a capitalization-weighted equity index, which means that each individual component of the index is weighted based on its own market cap. For example, companies with a higher market cap will receive a higher weighting in the index, while smaller market cap companies will have less of an impact on the overall index.5
The index tracks about 250 of Canada’s largest companies and is a good barometer of the economy in general. Not only is it a benchmark equity index, but it’s also an investable index. Individual investors can access it through ETFs and mutual funds that track the S&P/TSX Composite Index.6
Canada is a huge player in the global economy, so it’s no surprise that they’re home to one of the world’s largest exchanges. The TSX is important for investors and investing in it can be a major part of many Canadians’ portfolio strategies.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.