Toronto Stock Exchange (TSX): What It Is and How It Works

Overview

The Toronto Stock Exchange (TSX) is Canada’s largest stock exchange and one of the biggest in the world. Founded in 1861 and fully electronic since 1997, the TSX lists more than 1,500 companies across sectors such as energy, mining, technology, and real estate. All transactions are denominated in Canadian dollars.

Key facts

• Location: Toronto, Ontario
• Ownership: Operated by TMX Group (which also runs the Montreal Exchange, TSX Venture Exchange and other related entities)
• Listings: 1,500+ issuers, including domestic and international companies and exchange-traded products (ETPs)
• Trading model: Fully electronic since 1997
• Market hours: Regular trading 9:30 a.m. to 4:00 p.m. ET (pre-open order entry period begins earlier)
• Major index: S&P/TSX Composite (rebalanced quarterly)

How trading works

• Market days: Monday–Friday, except statutory holidays.
• Pre-open: Orders can be entered before the open but are not executed until trading begins.
• Currency: All trades settle in Canadian dollars.
• Clearing: Exchange-traded derivatives and other instruments are cleared through Canadian clearing organizations to manage counterparty and settlement risk.

Instruments listed

The TSX supports a wide range of instruments:
* Common and preferred shares
Investment trusts and income trusts
Exchange-traded funds (ETFs) and other ETPs
Bonds and fixed-income securities (through affiliated fixed-income desks)
Derivatives such as futures and options (cleared via the Canadian derivatives clearing infrastructure)

S&P/TSX Composite Index

Originally launched as the TSE 300 Composite Index, the benchmark was rebranded as the S&P/TSX Composite Index. It tracks the largest and most liquid stocks on the exchange and is rebalanced quarterly (March, June, September, December).

Ownership and related markets

TMX Group operates the TSX and several related markets and services, including:
* Montreal Exchange (derivatives-focused)
TSX Venture Exchange (small-cap listings)
TSX Alpha Exchange (alternative listing venue)
Canadian Derivatives Clearing Corp. (clearing)
Specialist desks for fixed-income and other products

Historical notes and notable events

• Founded in 1861; incorporated later in the 19th century and rebranded to TSX in the early 2000s.
• Trading floor closed in 1997 when the exchange moved to a fully electronic model.
• TSX and Montreal Exchange combined under TMX Group in the 2000s.
• Proposed merger discussions with international exchanges and subsequent ownership changes shaped TMX’s modern structure and governance.

How investors access TSX securities

• Canadians and international investors can buy TSX-listed stocks through brokerages that offer Canadian market access.
• Larger Canadian companies may also issue American Depositary Receipts (ADRs), which trade on U.S. exchanges and simplify access for U.S.-based investors.

Key takeaways

• The TSX is Canada’s primary equities market and operates electronically with broad sector exposure.
• Trades occur in Canadian dollars and cover equities, ETPs, and a range of derivatives.
• TMX Group manages the TSX alongside several complementary exchanges and clearing services, providing infrastructure for both senior and small-cap markets.