The Toronto Stock Exchange is widely considered to be the most important Canadian stock exchange in operation today. First established in 1852, the Toronto Stock Exchange has grown to become the third-largest stock exchange in North America in terms of capitalization, only behind the Nasdaq composite and the New York Stock Exchange.
In terms of the number of securities listed, the Toronto Stock Exchange is currently the largest in the world. For those who are interested in purchasing stocks listed on the Toronto Stock Exchange, also referred to as TSX, this can be accomplished relatively easily. Fortunately, a large number of domestic brokerage firms in the United States allow individuals to purchase stocks found on TSX using their online trading platforms.
The Toronto Stock Exchange is one of North America's most active and diverse financial marketplaces. Individuals who are interested in investing in the wide variety of energy, finance and natural resource-focused companies listed on the TSX can do so using online brokerage firms.
Basics of the TSX Exchange
Much like any U.S.-based stock exchange, the TSX allows investors to buy and sell securities during their standard hours of operation, those being 9:30 a.m. to 4:00 p.m. Eastern Standard Time. Investors who buy and sell stocks on the NYSE and the Nasdaq will note that the TSX operates within an identical time frame.
In order to be listed on the TSX, a company may be required to meet a series of different regulatory benchmarks depending specifically on the nature of their business. For example, technology companies that are seeking a listing on the TSX must first demonstrate a minimum of $50,000,000 in market value for future issued securities. Companies specializing in research and development must demonstrate a minimum of $12,000,000 in market value for future issued securities. Additional parameters with specific benchmarks that must be met include net tangible assets, sponsorship requirements, pretax income and operational history, among others.
Buying Canadian Stocks
Canadian markets have long been considered accessible investment platforms for American investors. In fact, it is not uncommon for stocks listed on the TSX to also be listed on major U.S. exchanges such as the NYSE. That being said, investors can still choose to invest directly in TSX-listed securities if they so choose.
In order to do so, U.S.-based investors will most likely need to enlist the services of an online brokerage that has enabled access to the TSX. Some examples of eligible brokerages include TD Ameritrade and E-Trade. Much like an individual can purchase stocks from the NYSE through these online platforms, TSX stocks will also be available.
Purchasing stocks online will likely require individuals to pay a commission fee for each eligible trade. Regardless of which particular index an individual is purchasing stocks from, commission fees will likely accrue for each trade made.
Deeper Research Into TSX Listings
The TSX is currently home to nearly 60 percent of the securities attached to mining companies on a global level. With that in mind, many investors choose to use this particular exchange to invest in related companies that may not qualify for listing on U.S. exchanges such as the NYSE. It is also interesting to note that a majority of the companies listed on the TSX are based within Ontario, Canada. That being said, many of the companies contributing to the market's natural resource offerings are located in Alberta, Canada.
Although TSX does feature a larger number of securities that are not found in major U.S. indexes, investors should continue to engage in due diligence and extensive research before making their investment decisions. Investors should always remember that international exchanges such as TSX do not necessarily share the same listing requirements or regulatory oversight that are found in the U.S. marketplace. This does not mean to imply that they are any less secure, but rather that volatility may lead to unexpected price action.
For those who are not interested in purchasing shares of single companies but would rather profit from the market as a whole, exchange trade funds are also available. Additional security offerings include income trusts, standard investment funds and split share corporations.
Comparing Available Market Opportunities
In the event that you have a variety of options available to you when it comes to international markets, you may be interested in determining which particular exchanges are most compatible with your needs. After all, if a particular security is available for purchase through a major exchange such as the NYSE, you may have no need to purchase it through TSX.
By and large, TSX has gained a reputation for providing unparalleled access to companies specializing in the energy, natural resources and the commodities markets. In order to better understand the scope of TSX's offerings, the S&P/TSX 60 Index may be beneficial. The S&P/TSX 60 Index provides a current listing of the 60 largest companies within the TSX by market capitalization. This information could prove to be an excellent launching point for investors who are beginning to get acquainted with the TSX and are interested in learning more about popular investments within the marketplace.
For those who wish to invest within the TSX market but are still unsure of what particular options to pursue, the S&P/TSX 60 Index Fund may be an excellent place to start. This particular fund tracks the value of the Index and allows investors to profit from net positive price momentum within this collection of companies. When the Index loses value, however, investors will also bear the brunt of this downturn.
Introducing the TSX Venture Exchange
For those who are exploring some of the "up-and-coming" listed companies within the TSX marketplace, the TSX Venture Exchange is an excellent destination. This particular exchange lists companies that have not yet met the requirements to achieve a listing on the standard TSX exchange.
In many ways, the TSX Venture Exchange is similar to the over-the-counter markets found in the U.S. Many of the companies listed in the TSX Venture Exchange have not yet proven themselves as long-term investment vehicles, but nevertheless remain appealing speculative explorations for those who have a desire to get in on the ground floor of a potentially rewarding asset over time.
Much like the OTC marketplace, however, the TSX Venture Exchange may introduce a higher degree of risk than some investors are willing to pursue. With that in mind, it is always important to thoroughly research all potential investments through both the TSX and the TSX Venture Exchange in order to ensure that the particular security in question matches your expectations and risk profile. All investments pose some degree of risk, and failure to properly acknowledge this can lead to frustration for many investors – irrespective of the particular index they have chosen to use.
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- TSX: Toronto Stock Exchange
- Katipult: What is the TSX Venture Exchange (TSX-V) and How to Invest on TSX-V?
- TSX: Trading