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How to Trade on the Toronto Stock Exchange

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The Canadian economy has traditionally been based on Canada’s natural resources such as oil and natural gas and mining products like gold. The Toronto Stock Exchange (TSX) lists many of Canada’s largest companies that include resource based enterprises. 

While such companies make up the bulk of major stocks traded on the TSX, many other large companies’ stocks trade on the exchange, as well as cannabis industry stocks. The TSX is 1 of the world’s largest stock exchanges, ranking as the 8th largest in the world by market capitalization. 

The TSX is also the stock exchange with the most mining and oil and gas companies’ stocks listed. Read on for more information about the TSX and how to get started trading.

About TSX

Learn about TSX history and where they stand today.

History

The TSX is the largest stock exchange in Canada. It originally arose out of an Association of Brokers formed by a group of Toronto businessmen in July 1852. A group of 24 brokers from that association later met at a Masonic Hall in Toronto to create the Toronto Stock Exchange (TSE) in October 1861. 

In the exchange’s more recent history, the TSE became a for-profit business in 2000. The exchange was then rebranded as TSX and became a publicly-traded company. The TSX became the TSX Group after acquiring the Canadian Venture Exchange in 2001. It then acquired the Montreal Exchange in December 2007.

The TSX Group rebranded in May 2008 as the TMX Group Ltd (OTCBB: TMXXF) that now serves as the Toronto exchange’s current holding company. In 2011, TMX Group Ltd became the subject of a takeover bid by the London Stock Exchange Group (LSEG), which was abandoned after a failure to get a two thirds majority of TMX Group Ltd shareholders to approve of the deal. 

A competing bid from the Maple Group resulted in that organization taking control of TMX Group Ltd in July of 2012 after 91% of shares were tendered to the group. In September 2015, the TSX launched their Alpha Exchange (TSXA), which has minimum order size requirements and a “speed bump” of 1 to 3 milliseconds to discourage high frequency traders. 

The TSX Today

Today the TSX is the primary holding of TMX Group Ltd and serves as Canada’s main equity market. TMX Group Ltd also services the Canadian venture equity market through the TSX Venture Exchange (TSXV), and the holding company also operates the Montreal Exchange and the Boston Options Exchange (BOX) that was founded in 2002. 

Trading hours on the TSX run from 8 a.m. to 5 p.m. ET Monday through Friday. The exchange supports electronic trading on the TSX, TSXV and the TSXA. According to the TSX, over 40% of all trading on the TSX and TSXV originates outside of Canada. 

The S&P/TSX Index serves as the primary benchmark index for Canadian stocks. The market capitalization weighted index tracks the top 250 Canadian companies listed on the TSX. The index was originally called the TSE300 when it debuted in 1977 and became the S&P/TSX as part of Standard & Poors in 2002. 

Futures on the S&P/TSX 60 track the top 60 companies of the S&P/TSX and trade on the TSX exchange. Futures contracts are for 200 times the index price and have a tick value of 20 with 1 point = C$200. Contracts trade on the March (H), June (M), September (U) and December (Z) cycle. You can trade these futures through any reputable broker with access to the TSX.  

Open a Brokerage Account

To begin trading on the TSX, you’ll want to open a brokerage account with a reputable and duly regulated stock broker. Some account types may have minimum deposit and withdrawal amounts. You may also be charged a fee if your account balance falls below a certain amount. 

Since online stock trading was first introduced in Canada in 1996, the number of online brokers has increased significantly to the point where Canadians now have over a dozen online brokers to choose from that cater mainly to Canadian nationals. 

Canadian citizens also have a range of brokerage account choices that include the following:

  • Personal taxable account. This type of account is the easiest to open and automatically applies taxes to capital gains, interest and dividends. 
  • Registered Retirement Savings Plan (RRSP). Also known as a tax-advantaged account, an RRSP account allows Canadian citizens to invest for their retirement and defers all tax liabilities until after the account holder retires. As of the 2020 tax year, you can contribute up to 18% of yearly income or a maximum amount of C$27,230 to this account type. Some RRSP accounts have a minimum deposit requirement.
  • Tax-Free Savings Account (TFSA). Unlike a regular savings account, the TFSA lets the account holder invest some of their funds tax free. This account type allows specific amounts to be deposited every year and limits withdrawal amounts. You can invest in stock, bonds exchange traded funds (ETFs), guaranteed investment certificates and cash savings in a TFSA. 

If you plan on trading Candian stocks from outside of Canada, then you can trade stocks listed on the TSX through an international broker like Interactive Brokers. You can also trade some major TSX stocks via American Depository Receipts (ADRs) listed on U.S. stock exchanges.  

You’ll also need to pay taxes on any investment income you earn according to the tax laws of the country where you reside. Make sure to check with your accountant regarding any tax obligations you may incur when trading Canadian stocks. 

For your convenience, Benzinga has compiled a list of brokers that you may be able to use to trade Canadian stocks through that is shown below. 

Best For
Canadian Investors
Overall Rating
Get started securely through Questrade’s website
Best For
Canadian Investors
N/A
1 Minute Review

Questrade, a low-cost Canadian online broker born in 1999, has grown up to become the largest independent fintech in Canada. It provides self-directed and managed investing and trading in diverse asset classes such as equities, bonds, forex, commodities, options, and ETFs. Competitive pricing, ease of use and the availability of multiple trading platforms is a definite boon for those in the land of rad hockey skills, icebergs, and Lake Louise.

Best For
  • Active traders
  • Cost-conscious clients
  • ETF traders
Pros
  • Cheap commissions, especially ETF purchases
  • Active trades are entitled to rebates
  • No annual maintenance fee
  • Broad range of asset classes
  • Well-regulated
  • Practice accounts are available
Cons
  • Available only to Canadian residents
  • An inactivity fee of CA$24.95 per quarter kicks in if a trade hasn’t been placed in a quarter or the account balance falls below CA$5,000.
  • Checking account funding takes longer to process
  • Doesn’t offer banking services
Best For
Canadian investors
Overall Rating
Best For
Canadian investors
N/A
1 Minute Review

Qtrade Investor is a Canada-based investment broker offering access to Canadian stocks, exchange-traded funds (ETFs) and options alongside U.S.-based markets. Qtrade focuses on usability and functionality, especially for beginner traders looking for a more streamlined and simplified platform. Qtrade’s platform is very basic, offering none of the bells and whistles that come standard with many competitors. Newer traders, passive investors and investors who’ve never used charting software may actually prefer Qtrade’s focus on simple order placements, quick signups and easy-to-navigate layouts.

Qtrade offers investors a wide selection of equity choices, including hundreds of commission-free ETFs and mutual funds. Options trading and stock investing are also available, though prices aren’t as competitive as other offerings. Currently, Qtrade is only available to residents of Canada.

Best For
  • Canadian investors looking to access U.S. markets
  • Investors who value platform simplicity
  • Investors looking to practice their trades using a demo account before committing their capital
Pros
  • Simple, easy-to-navigate layout ideal for new investors who don’t need advanced charting software
  • Access to 100 commission-free ETFs and many additional commission-free mutual funds
  • Demo account availability; beginner-friendly educational materials available
Cons
  • Not currently available to residents of the United States
  • Cannot fund your account using an electronic wallet or credit card
Best For
Global and Active Traders
Overall Rating
get started securely through Interactive Brokers’s website
Best For
Global and Active Traders
N/A
1 Minute Review

Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

Best For
  • Access to foreign markets
  • Detailed mobile app that makes trading simple
  • Wide range of available account types and tradable assets
Pros
  • Comprehensive, quick desktop platform
  • Mobile app mirrors full capabilities of desktop version
  • Access to massive range of tradable assets
  • Low margin rates
  • Easy-to-use and enhanced screening options are better than ever
Cons
  • Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources
Best For
Investors
Overall Rating
Get started securely through CIBC Investor’s Edge’s website
Best For
Investors
N/A
1 Minute Review

CIBC Investor’s Edge offers brokerage services to Canadian residents and is one of the best Canadian brokerages. The CIBC is the result of the merger of the Canadian Bank of Commerce (est. 1867) and the Imperial Bank of Canada (est. 1875) in 1961. The Investor’s Edge brokerage arm offers Canadian residents access to Canadian and U.S. stock and options markets, guaranteed investment certificates (GICs), exchange-traded funds (ETFs), bonds and mutual funds at low commission rates. The broker provides a platform with web-based, desktop and mobile trading options and gives clients access to 3rd-party research resources that can really help a self-directed investor or trader.

Best For
  • Self-directed and active traders
  • Self-directed and active traders Traders looking for reduced commissions
  • Students
  • Investors who require linked bank accounts
Pros
  • Low commission schedule
  • No fees on registered education savings plans (RESPs)
  • Able to integrate brokerage and bank accounts
  • Student-friendly commissions
Cons
  • Only for Canadian residents
  • Annual maintenance fee
  • No forex trading
  • No forex trading No demo account

Select Trades

In addition to the oil and gas and mining stocks sector, 1 TSX market sector that has come into its own in the past few years has been the cannabis industry. Other important industry sectors TSX stocks fall into include: technology, finance and clean energy technology. 

The selected stocks listed below include a cannabis industry stock, an environmental technology stock and a financial information stock.  

Canopy Growth (TSX:WEED). This company is well poised for the cannabis market’s edible goods that will open in Canada in October 2021. This is in addition to cannabis infused beverages that are slated to be sold legally in December 2021.  

Canopy Growth’s stock price has risen substantially to continue its term rally that began in March 2020 when the stock dipped to C$13.99, and it currently trades at C$43.58 per share. 

Cannabis stocks did experience some selling pressure recently in part due to regulatory delays and an oversupply of cannabis products. These factors contributed to a significant corrective decline in Canopy Growth’s stock price in December 2020 to C$30 per share from the $37.50 high seen the previous month. 

Questor Technology (TSXV:QST). This company services, sells and rents equipment to eliminate and reduce waste gas from industrial sources. As more and more countries begin imposing environmental restrictions, QST’s services will be more in demand.

The small capitalization stock currently trades at just C$2.85 per share, which is half of its February 2020 price of $5.85 per share. The company has, however, increased yearly earnings by an average of 87% per year and revenue by 11%. While the stock has been volatile over the last few months, the company is a leader in its field and has clearly outperformed its sector. 

Thomson Reuters (TSX, NYSE: TRI). Both Reuters and Thomson have a long history as news information providers. Reuters was an international news agency founded in London in 1851, while the Thomson Corporation was a major holding company for Canadian newspapers and media founded in 1934.  

Thomson Reuters was the result of the 2008 purchase of Reuters Group by the Thomson Corporation. The company currently operates through several different segments including: Reuters News, Legal Professionals, Tax Professionals, Global Print and Corporates. 

The merged company has a market capitalization of $50.154 billion, and its stock currently trades at C$99.24 that lies closer to the higher end of its yearly range of $75.91 to $115.66. Information technology stocks like Thomson Reuters currently seem worthy of consideration for investing for the long-term or short-term speculation.  

Canadian Stock Research Platforms

Researching Canadian stocks is best done through your chosen broker’s website, which in many cases offers its own research and technical analysis tools. Brokers that offer no research facilities often link to 3rd party research platforms like Morningstar, for example. 

The 2 Canadian brokers listed below provide good research platforms for Canadian stocks, as well as some useful educational resources.

Stocktrades.ca

Stockstrades.ca is Canada’s completely free stock trading platform. You can find stock screeners, model portfolios and stock research.

Or subscribe to the paid Stocktrades Premium to see its picks for the best prospects, protect your portfolio from market crashes and get access to its 9 custom portfolios of Canadian stocks.

Wealthsimple Trade

Wealthsimple Trade offers considerable resources you can use for researching Canadian equities. Wealthsimple also provides its clients with an online magazine, a personal finance page and a portfolio review service. You can open Canadian specific accounts like RRSPs and TSFAs at this broker.  

Time to Get Started?

Now that you’ve learned about opening an account and have some information on certain stocks and research platforms, you can start trading on the TSX. To pick additional attractive stocks to trade, you can use fundamental analysis resources provided by the brokers mentioned above that offer research platforms suitable for Canadian stocks. Technical analysis can then help you time your entry into the Canadian stock market. 

Frequently Asked Questions

Q: What type of market is Toronto Stock Exchange?

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Q: What type of market is Toronto Stock Exchange?
asked
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A: The Toronto Stock Exchange (TSX) is the central marketplace for Canadian listed equities. The exchange also operates the TSX Venture Exchange (TSXV) for new issues and the TSX Alpha exchange (TSXA), an automated exchange platform for retail and institutional traders.

answered

Q: Can a U.S. citizen buy stock on the Toronto Exchange?

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Q: Can a U.S. citizen buy stock on the Toronto Exchange?
asked
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A: If you’re a U.S. citizen, you can trade American Depository Receipts listed on U.S. exchanges on Canadian stocks that are also traded on the TSX through a reputable U.S. based stock broker. And some U.S. stock brokers like E*TRADE can accommodate traders seeking to buy select stocks on the TSX directly.

answered

Turn to Webull

0 Commissions and no deposit minimums. Everyone gets smart tools for smart investing. Webull supports full extended hours trading, which includes full pre-market (4:00 AM - 9:30 AM ET) and after hours (4:00 PM - 8:00 PM ET) sessions. Webull Financial LLC is registered with and regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is also a member of the SIPC, which protects (up to $500,000, which includes a $250,000 limit for cash) against the loss of cash and securities held by a customer at a financially-troubled SIPC-member brokerage firm.