Highlights

• Stock exchanges provide a meeting place for buyers and sellers to trade their securities.
• The Toronto Stock Exchange Venture (TSXV), and the Toronto Stock Exchange (TSX) are the leading stock exchanges in Canada.
• Transactions on the TSX takes place in CAD or C$ (Canadian dollars).

A stock exchange works like a market where it provides a place for both buyers and sellers to connect and exchange goods. Stock exchanges provide a meeting place for buyers and sellers to trade in the market. In this article, we will learn about stock exchanges.

What is a stock exchange?

Stock exchanges provide a meeting place for buyers and sellers to trade their securities. It is an organized market where stockbrokers, traders, and investors buy and sell existing securities. One can buy or sell a stock if it is listed on the exchange.

The Toronto Stock Exchange Venture (TSXV), and the Toronto Stock Exchange (TSX) are the leading stock exchanges in Canada.

Stock exchanges provide a platform for corporations and governments to connect with investors. It helps companies in raising money so that they can expand their business.

Also read: 2 Canadian semiconductor stocks to explore in 2022

Primary and secondary market

When companies, governments, and public sector institutions issue their securities (stocks, bonds, debt, or equity instruments) to investors for the first time, it is on the primary market. An example is an Initial Public Offer (IPO). In the secondary market, investors buy and sell already-owned shares. 

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Stock exchanges in Canada

The Canadian stock market works through two major stock exchanges, including Toronto Stock Exchange (TSX) and the Toronto Stock Exchange Venture (TSXV).

Also read: What are the different types of stocks in Canada?

Toronto Stock Exchange (TSX)

The TSX is said to be the largest stock exchange in Canada and is situated in Toronto, Ontario. It is said to consist of over 1,500 companies, including mining, REITs, energy, and technology companies. The TSX was founded officially in 1878 under the 'TSE' symbol. Then, it closed its trading floor in 1997 and became a fully electronic exchange. 

In 2002, it rebranded itself and changed its symbol to TSX from TSE. In 2007, the TSX acquired the Montreal Exchange and incorporated the TMX Group. The transactions on the TSX takes place in CAD or C$ (Canadian dollars). Some of its trading instruments include commodities, shares in companies, futures, exchange-traded products, and investment trusts.

Process of listing on TSX

A company that wants to go public or raise capital can choose various methods to be listed on the TSX, including:

• Initial Public Offering
• Reverse Takeover
• Qualifying transaction or acquisition
• Direct listing

Also read: Which are the Top Crypto Trading Platforms in Canada?

Toronto Stock Exchange Venture (TSXV)

The Toronto Stock Exchange Venture or TSX Venture Exchange is in Calgary, Alberta, and was initially established as the Canadian Venture Exchange (CDNX). The TSXV was formed through the merging of the Vancouver and Alberta stock exchanges. Currently, it operates in Toronto, Montreal, and Vancouver and was acquired by the TMX Group.

It is said to consist mostly of small-cap Canadian stocks of more than 1,600 companies and approximately 400 companies are a component of the S&P/TSX Venture Composite Index. The TSXV focuses on providing access to capital to venture companies at different stages of development. It connects US-based investors to Canadian markets where they can freely buy and sell shares.

TSX Venture 50

TSX Venture 50 provides ranking to the top 50 companies on the TSXV platform. Some examples of companies that were selected as the top 50 performers in 2021 from different industries are the following:

• Clean Technology & Life Sciences - Greenlane Renewables Inc. (TSX:GRN)
• Diversified Industries - Vicinity Motor Corp. (TSXV:VMC)
• Energy - Reconnaissance Energy Africa Ltd. (TSXV:RECO)
• Mining - American Lithium Corp. (TSXV:LI)
• Technology - Fobi AI Inc. (FOBI: TSXV)

Also read: What is a stock market & how does share trading work?

Bottom line

Without stock exchanges, an investor would have to connect directly to a company or an individual for trading. Therefore, stock exchanges make trading easier by providing a meeting place where traders can buy and sell their shares.