Trading the Toronto Stock Exchange- It's Not as Hard as you Think
Many times over the years, I have been asked, "How do you trade on the Toronto Stock Exchange?" Many people have misconceptions about trading in foreign markets; they think, for the most part that you need some special qualifications or paperwork to buy and sell stocks on these exchanges.
The Toronto Stock Exchange is the largest stock exchange in Canada, listing more than 1,300 companies that are traded electronically. The exchange is part of TSX Inc., which includes the TSX Venture Exchange. The exchange offers a group of S&P/TSX Canadian sector indices for energy, information technology, financial services, consumer discretionary, consumer staples, industrials, telecommunications services, utilities, health care, materials, gold, diversified metals and mining, and real estate. Trading hours are 9:30 A.M. To 4 P.M., Monday through Friday. Settlement is the third day following the trade.
Many of the things that apply to the U.S. Stock Exchanges apply to the Toronto Exchanges as well. Another interesting thing about the TSX, is the fact that it is run entirely online and electronically. "Floor trading" ended in 1997 and the transition to electronic trading has been going on for over 12 years now... Also the TSX is broken up into "regular" listed stocks like the U.S. based AMEX, NYSE and NASDAQ Markets and the TSX Venture Exchange which is for smaller, more speculative companies like the U.S. Pink Sheets and Over the Counter Bulletin Board (OTCBB). So how to you buy and sell stocks on the TSX and TSX Venture Exchange?
It's Really Easy
If you are interested in buying or selling stocks on the TSX, contact your local broker to see if they have access to trade TSX stocks online. If you are not a registered member of a participating TSX trading organization, you cannot access TSX stock trading directly online. Many of the online brokers in the U.S. have access to the TSX however. With some brokerages you will have to phone your broker to have the orders placed. But there are a number of online brokers that with the right paperwork in place, you can place orders directly online.
Another aspect of trading the TSX/Venture Exchanges is currency conversion; this is usually done the same way that a transaction with a credit card is done through a foreign country. It is automatic and is part of the transaction.
In short, if you are currently trading/investing in stocks in U.S. based markets, all it takes is a phone call to your broker to ask if you can trade or invest in TSX listed companies. If not, then I would recommend contacting one of the many online brokers and open an account with one of them. The only difference is that you have to sign one more piece of paperwork; other than that, you can but up and trading on the TSX in no more time than it would take to start with an account for U.S. stocks.
Contributed by Tom Allinder on 12/21/09.
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