Summary: The Toronto Stock Exchange is a fascinating market. This section of the site discusses the way in which the market is comprised, including the impact that natural resources and commodities have. Whilst Canada may not be home to the most important markets in the world, they are certainly interesting.
The Toronto Stock Exchange provides a liquid market for senior equities. Listed issuers on the senior exchange represent a broad range of businesses from across Canada, the United States and other countries.
It has offices in Vancouver, Calgary, Winnipeg, Toronto and Montreal which enables it to offer a range of services across the country. Toronto has the third largest exchange in North America.
TSX Group is a cornerstone of the Canadian financial system and economy and is at the centre of Canada's equity capital market. The company owns and operates Canada's two national stock exchanges - Toronto Stock Exchange serving the senior equity market, and TSX Venture Exchange serving the public venture equity market.
It also owns the Natural Gas Exchange (NGX), a leading North American exchange for the trading and clearing of natural gas and electricity contracts.
It is believed that the TSX grew from an 'Association of Brokers' formed by Toronto businessmen on July 26, 1852. However, no official records remain of this group's transactions.
On October 25, 1861, twenty-four men gathered at the Masonic Hall to officially create the Toronto Stock Exchange, which then became formally incorporated by an Act of the Legislative Assembly of Ontario in 1878.
The S&P/TSX 60 Index is a list of the 60 largest companies on the Toronto Stock Exchange as measured by market capitalization. This Canadian index offers exposure across 10 economic sectors. It is the third most active stock exchange in North America, behind the New York Stock Exchange and the NASDAQ.
The fully automated Toronto Stock Exchange generally accounts for approximately 95% of all equity trading in Canada.
There are a number of indices used: TSE 300 Composite Index® Stock Index, TSE 300 Capped Index, Toronto 35 Index® Stock Index, TSE 200 Index, TSE 100 Index® Stock Index, S&P/TSE 60 ® Stock Index, S&P TSE 60 Capped Index, S&P/TSE SmallCap ® Stock Index and the S&P/TSE MidCap ® Stock Index.
As with all bourses, the TSX has developed rapidly to keep up with the times and changing technology. It's North American location means that it is a part of the high tech algorithmic trading world occupied by the big hedge funds and investment banks.
As is described elsewhere in this section, the nature of the Canadian economy and the natural resources that lie within Canada means that there are more commodities related companies listed than would be normal in other countries.
A Mining Disaster
The disaster that was Bre-X Minerals is now the stuff of investor legend.
In the eyes of investors, it is one of the biggest corporate collapses of all time. However, there was much more to it than just a falling stock price. By the time the fraud was uncovered in May 1997, investors had lost in the region of 6 billion Canadian dollars!
Bre-X had been included in the top 300 companies which meant that
mutual funds and many ordinary investors had bought, not fully
appreciating the risks involved. This, of course, had taken the stock
price higher and when panic selling began, the exchange's electronic
trading systems crashed.
As you might imagine, it did not take long for mining information and corporate disclosure procedures to be tightened for the entire Canadian stock market.
All in all, Bre-X was a disaster for the Toronto stock exchange and dented much of the credibility that the exchange had taken so long to build.
The story of Bre-X is actually quite fascinating and is retold in a number of places including a very well written 'Bre-X: The Inside Story of the World's Biggest Mining Scam' by Jennifer Wells.
It is, frankly, a cautionary tale for all investors that no matter how much research and analysis you may to understand a stock or investment, if company management decide to deceive, there is very little an outsider can do to spot or stop it.
To read more about the TSX, please visit the following pages:Understanding The Canadian Stock Exchange