May 18, 2009 - 5:00am
The Toronto Stock Exchange (TSE) which is now known as the "TMX Group" is the largest stock trading marketplace in Canada, the third largest stock exchange in North America and the seventh largest in the world by market capitalization. As of 31 December 2007, the TSX had 3,951 listed companies with a combined market capitalization of $2.2 trillion.
A wide range of businesses represented on the exchange comes from Canada, the United States, Europe, and other countries. Apart from traditional securities the exchange lists various exchange-traded funds, split share corporations, income trusts and investment funds. The TMX is the leader in the mining and oil & gas sector. According to some sources more mining and oil & gas companies are listed on the TMX than any other exchange in the world.
TMX Group poses itself this way: “TMX Group has a comprehensive strategy that is guiding our business activities. Our strategy is to expand our integrated business, both domestically and internationally, by offering innovative cash and derivatives products across multiple asset classes. Our continuing priorities are to Integrate, Enhance and Innovate.”
You can trace here the history of development of TSE and those steps it undertaken to comply with its own priorities “to Integrate, Enhance and Innovate”.
From $5 membership to the largest market
It was not earlier than in 19th century the trading of Canadian stocks took place in Canada itself. Before this time much of the capital for the Canadian companies was raised in the London market with public shares of the large companies of the time, such as Hudson's Bay Company, (the oldest commercial corporation in North America, founded in 1670) held in Great Britain.
Starting from the middle of 1800s as a result of increasing supply of financial instruments, such as railway bonds and mining stocks, a great number of the local financial brokers emerged on the stage.
May sources report that the initial formation of the Toronto Stock Exchange (TSX) dates back to July 26, 1852, when Toronto businessmen gathered together to form a group known as Association of Brokers. Unfortunately, no official proofs of any transactions performed by the group have survived to the present time.
Later on October 25, 1861 twenty-four men gathered at the Masonic Hall to officially create the Toronto Stock Exchange. The TSX was formally incorporated by an Act of the Ontario Legislature in 1878, becoming the second official stock exchange in Canada, after the Montreal Exchange.
Trading at the stock exchange was limited to half-hour sessions with only 18 securities at the time. In order to participate at the exchange businesses were required to pay $5, but by 1871, the cost of membership had risen to $250 per seat, at which point the TSX had 14 member firms.
Eventually by 1901 the number of companies traded on the TSX had reached 100 with a yearly trading volume standing for about one million shares. In 1913 TSE built its own offices on Bay Street and moved there.
1914 that brought financial panic due to World War I was year when the TSX was shutdown for a three month period. Canada could no longer rely on the British market for raising capital. To finance the war effort, the Canadian government raised billions of dollars by issuing bonds, which were sold to its own citizens, as well as on the New York bond market. The war also stimulated Canadian industrialization, thereby generating a demand for capital. Financings and trading volumes rose appreciably during the 1920s, with the number of shares traded annually on the TSX rising from just over 900,000 in 1924 to over 10 million in 1929.
During the Great Depression of the 1930s, the value of stocks fell substantially. However, these were not very hard times for Canadian stocks as no TSX members defaulted on their obligations to clients. In a move to wrestle the economic crisis the exchange merged with its rival the Standard Stock and Mining Exchange, with the merged markets adopting the Toronto Stock Exchange name. Thus, by 1936 the TSX had become the third largest exchange in North America with annual trading volume exceeding $500 million.
With the initial membership fee which in 1800s was only $5 TSX raised its membership price to $100,000 by 1955 while annual trading volume had reached a record one billion shares. Then in 1958 the board of TSX adopted tight requirements for listing at the exchange. Now the companies were required to file statements disclosing any change in the company's affairs that might affect the price of its shares.
In 1977 TSX launched the world's first Computer Assisted Trading System (CATS). In the same year it also created the TSE 300 index, an indicator similar to the Dow Jones Index for the New York Stock Exchange, comprising 300 representative stocks that are reviewed on a regular basis. By 1980, the TSX was accounting for 80% of all equity trading in Canada, with annual trading volume of 3.3 billion shares worth close to $30 billion.
In 1987 when the world's stock markets "crashed," pushing all major indices into a freefall the TSE 300 dropped by more than 300 points and the TSX overall lost $37 billion, or 11.3 percent of its value. Yet, the value of stocks traded during the year exceeded $100 billion for the first time.
In 1996 TSX became the first North American stock exchange to introduce decimal trading (switching from fractions). On April 23, 1997, the TSE's trading floor closed, making it the second-largest stock exchange in North America to choose a floorless, electronic (or virtual trading) environment. Above all TSX was the first exchange to appoint in 1999 a female president, Barbara G. Stymiest, who immediately embarked on a major reorganization of the exchange's activities.
Through a realignment plan, Toronto Stock Exchange became Canada's sole exchange for the trading of senior equities. The Bourse de Montréal/Montreal Exchange assumed responsibility for the trading of derivatives and the Vancouver Stock Exchange and Alberta Stock Exchange merged to form the Canadian Venture Exchange (CDNX) handling trading in junior equities. The Canadian Dealing Network, Winnipeg Stock Exchange, and equities portion of the Montreal Exchange later merged with CDNX.
In March 2000, monthly trading on the TSX rose above $100 billion for the first time; two months later, daily trading volume topped a record $15 billion. In April 2000, the demutualization process that was started in 1999 was completed, enabling the TSX to become a for-profit company.
In 2001, the Toronto Stock Exchange acquired the Canadian Venture Exchange, which was renamed the TSX Venture Exchange in 2002. This ended 123 years of the usage of TSE as a Canadian Stock Exchange. In 2002, Standard & Poor's (S&P) took over management of the TSX 300 Composite Index, which was renamed S&P/TSX Composite Index. In April of that year, the Toronto Stock Exchange was rebranded as TSX. On May 11, 2007, the S&P/TSX Composite, the main index of the Toronto Stock Exchange, traded above the 14,000 point level for the first time ever.
At the end of June 30, 2007, there were 434 oil & gas companies with a total market capitalization of $544.9 billion listed on Toronto Stock Exchange and TMX Venture Exchange. Oil & gas companies continue to raise equity on these exchanges with $5.56 billion raised in the first half of 2007, and $10.5 billion raised in 2006. Over 10 billion oil & gas shares, valued at $169.2 billion, traded on Toronto Stock Exchange and TMX Venture Exchange in the first half of 2007.
On June 11, 2008 at a meeting of shareholders of TSX Group Inc a resolution to change the name of the corporation to TMX Group Inc. was put forward. As of March 2009 All electronic signage, the companies website, and associated materials and programming fed to the media now use the name "TMX" for the exchange.
Listing
In order to list and retain its position at the stock exchange a company must have at least one million shares that can be traded freely with a market value of at least $4 million ($10 million for a "Technology Company"). The shares in turn should be held by at least 300 shareholders who must hold a minimum number of shares, a so-called "board lot."
Besides, companies should also furnish references and, if they belong to a certain industry, meet additional, industry-specific requirements. Today listing fees for Canadian companies are between $15 000 and $150 000 per class of share a company wishes to list. In case of successful listing companies need to further pay fees on a regular basis to maintain their listing. But these are not the only fees to be covered by the companies. There are also commissions payable to investment dealers, provincial securities commissions, and professionals such as lawyers or accountants.
Those companies who wish to list early in their existence and having need in capital to boost their further development and extension are admitted to participate on the TSX Venture Exchange. This is a market where companies can access legal, financial and other professionals that can help them to meet the listing requirements. The TSX Venture Exchange has its own fee schedule and, on an aggregate basis, the fees are lower than for companies wishing to list on the main exchange.
A wide range of businesses represented on the exchange comes from Canada, the United States, Europe, and other countries. Apart from traditional securities the exchange lists various exchange-traded funds, split share corporations, income trusts and investment funds. The TMX is the leader in the mining and oil & gas sector. According to some sources more mining and oil & gas companies are listed on the TMX than any other exchange in the world.
TMX Group poses itself this way: “TMX Group has a comprehensive strategy that is guiding our business activities. Our strategy is to expand our integrated business, both domestically and internationally, by offering innovative cash and derivatives products across multiple asset classes. Our continuing priorities are to Integrate, Enhance and Innovate.”
You can trace here the history of development of TSE and those steps it undertaken to comply with its own priorities “to Integrate, Enhance and Innovate”.
From $5 membership to the largest market
It was not earlier than in 19th century the trading of Canadian stocks took place in Canada itself. Before this time much of the capital for the Canadian companies was raised in the London market with public shares of the large companies of the time, such as Hudson's Bay Company, (the oldest commercial corporation in North America, founded in 1670) held in Great Britain.
Starting from the middle of 1800s as a result of increasing supply of financial instruments, such as railway bonds and mining stocks, a great number of the local financial brokers emerged on the stage.
May sources report that the initial formation of the Toronto Stock Exchange (TSX) dates back to July 26, 1852, when Toronto businessmen gathered together to form a group known as Association of Brokers. Unfortunately, no official proofs of any transactions performed by the group have survived to the present time.
Later on October 25, 1861 twenty-four men gathered at the Masonic Hall to officially create the Toronto Stock Exchange. The TSX was formally incorporated by an Act of the Ontario Legislature in 1878, becoming the second official stock exchange in Canada, after the Montreal Exchange.
Trading at the stock exchange was limited to half-hour sessions with only 18 securities at the time. In order to participate at the exchange businesses were required to pay $5, but by 1871, the cost of membership had risen to $250 per seat, at which point the TSX had 14 member firms.
Eventually by 1901 the number of companies traded on the TSX had reached 100 with a yearly trading volume standing for about one million shares. In 1913 TSE built its own offices on Bay Street and moved there.
1914 that brought financial panic due to World War I was year when the TSX was shutdown for a three month period. Canada could no longer rely on the British market for raising capital. To finance the war effort, the Canadian government raised billions of dollars by issuing bonds, which were sold to its own citizens, as well as on the New York bond market. The war also stimulated Canadian industrialization, thereby generating a demand for capital. Financings and trading volumes rose appreciably during the 1920s, with the number of shares traded annually on the TSX rising from just over 900,000 in 1924 to over 10 million in 1929.
During the Great Depression of the 1930s, the value of stocks fell substantially. However, these were not very hard times for Canadian stocks as no TSX members defaulted on their obligations to clients. In a move to wrestle the economic crisis the exchange merged with its rival the Standard Stock and Mining Exchange, with the merged markets adopting the Toronto Stock Exchange name. Thus, by 1936 the TSX had become the third largest exchange in North America with annual trading volume exceeding $500 million.
With the initial membership fee which in 1800s was only $5 TSX raised its membership price to $100,000 by 1955 while annual trading volume had reached a record one billion shares. Then in 1958 the board of TSX adopted tight requirements for listing at the exchange. Now the companies were required to file statements disclosing any change in the company's affairs that might affect the price of its shares.
In 1977 TSX launched the world's first Computer Assisted Trading System (CATS). In the same year it also created the TSE 300 index, an indicator similar to the Dow Jones Index for the New York Stock Exchange, comprising 300 representative stocks that are reviewed on a regular basis. By 1980, the TSX was accounting for 80% of all equity trading in Canada, with annual trading volume of 3.3 billion shares worth close to $30 billion.
In 1987 when the world's stock markets "crashed," pushing all major indices into a freefall the TSE 300 dropped by more than 300 points and the TSX overall lost $37 billion, or 11.3 percent of its value. Yet, the value of stocks traded during the year exceeded $100 billion for the first time.
In 1996 TSX became the first North American stock exchange to introduce decimal trading (switching from fractions). On April 23, 1997, the TSE's trading floor closed, making it the second-largest stock exchange in North America to choose a floorless, electronic (or virtual trading) environment. Above all TSX was the first exchange to appoint in 1999 a female president, Barbara G. Stymiest, who immediately embarked on a major reorganization of the exchange's activities.
Through a realignment plan, Toronto Stock Exchange became Canada's sole exchange for the trading of senior equities. The Bourse de Montréal/Montreal Exchange assumed responsibility for the trading of derivatives and the Vancouver Stock Exchange and Alberta Stock Exchange merged to form the Canadian Venture Exchange (CDNX) handling trading in junior equities. The Canadian Dealing Network, Winnipeg Stock Exchange, and equities portion of the Montreal Exchange later merged with CDNX.
In March 2000, monthly trading on the TSX rose above $100 billion for the first time; two months later, daily trading volume topped a record $15 billion. In April 2000, the demutualization process that was started in 1999 was completed, enabling the TSX to become a for-profit company.
In 2001, the Toronto Stock Exchange acquired the Canadian Venture Exchange, which was renamed the TSX Venture Exchange in 2002. This ended 123 years of the usage of TSE as a Canadian Stock Exchange. In 2002, Standard & Poor's (S&P) took over management of the TSX 300 Composite Index, which was renamed S&P/TSX Composite Index. In April of that year, the Toronto Stock Exchange was rebranded as TSX. On May 11, 2007, the S&P/TSX Composite, the main index of the Toronto Stock Exchange, traded above the 14,000 point level for the first time ever.
At the end of June 30, 2007, there were 434 oil & gas companies with a total market capitalization of $544.9 billion listed on Toronto Stock Exchange and TMX Venture Exchange. Oil & gas companies continue to raise equity on these exchanges with $5.56 billion raised in the first half of 2007, and $10.5 billion raised in 2006. Over 10 billion oil & gas shares, valued at $169.2 billion, traded on Toronto Stock Exchange and TMX Venture Exchange in the first half of 2007.
On June 11, 2008 at a meeting of shareholders of TSX Group Inc a resolution to change the name of the corporation to TMX Group Inc. was put forward. As of March 2009 All electronic signage, the companies website, and associated materials and programming fed to the media now use the name "TMX" for the exchange.
Listing
In order to list and retain its position at the stock exchange a company must have at least one million shares that can be traded freely with a market value of at least $4 million ($10 million for a "Technology Company"). The shares in turn should be held by at least 300 shareholders who must hold a minimum number of shares, a so-called "board lot."
Besides, companies should also furnish references and, if they belong to a certain industry, meet additional, industry-specific requirements. Today listing fees for Canadian companies are between $15 000 and $150 000 per class of share a company wishes to list. In case of successful listing companies need to further pay fees on a regular basis to maintain their listing. But these are not the only fees to be covered by the companies. There are also commissions payable to investment dealers, provincial securities commissions, and professionals such as lawyers or accountants.
Those companies who wish to list early in their existence and having need in capital to boost their further development and extension are admitted to participate on the TSX Venture Exchange. This is a market where companies can access legal, financial and other professionals that can help them to meet the listing requirements. The TSX Venture Exchange has its own fee schedule and, on an aggregate basis, the fees are lower than for companies wishing to list on the main exchange.