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1878 – The Toronto Stock Exchange (TSE, currently TSX)

European Brokers:

During the first few centuries of Canada’s European settlement, colonial businesses and governments borrowed primarily from the London capital market to undertake major investment projects. Public shares of large corporations such as the Hudson’s Bay Company, the Grand Trunk Railway, and the Bank of British North America were largely held in Great Britain. In the mid-19th century, however, financial brokers began to emerge in Canada, as the supply of financial instruments, such as government and railway bonds and bank and mining stocks, grew.

Montréal Stock Exchange:

In 1863, a board of brokers that later called itself the Montréal Stock Exchange (MSE) was formed in Montréal to informally trade some of these bonds and stocks. In 1874, when the MSE received a charter from the Quebec government, Canada’s first stock exchange officially began to operate.

TSE—Early Years:

The formation of the TSE dates back to 1852, when several Toronto businessmen periodically met with the intention of forming an association of brokers; however, there is no official record of their activities. In October 1861, two dozen Toronto businessmen passed a resolution in the Masonic Hall to create the Toronto Stock Exchange. Their main objective was to establish communications between members to facilitate the exchange of stocks, shares, bonds, mortgages, and other loans.

In 1861, fewer than two dozen companies, most related to banks and real estate, were listed. Trading was limited to daily half-hour sessions, and usually no more than two or three transactions occurred per day. In 1878, the Toronto Stock Exchange (TSE) was officially incorporated through an act of the Ontario legislature. The trading volume grew slowly, with periodic ups and downs, until the outbreak of the First World War.

In 1914, the TSE ceased for three months because of the financial dislocations brought on by the war in Europe, and 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. Throughout the Roaring Twenties, the TSE responded to this demand, and by late in the decade, the number of shares traded grew to over 10 million a year.

The Great Depression:

During the Great Depression of the 1930s, the value of stocks fell substantially. To cope with the economic crisis, the TSE merged with the Toronto Stock and Mining Exchange (TSME). Created in 1868, the TSME was the principal competitor of the TSE. By 1936, the TSE had become North America’s third largest exchange. Since then, the trading volume and value have continued to grow, with few sharp declines such as the one that occurred during the stock market panic of October 1987.

The TSE has played a leading role in adopting modern technologies and ideas. In the 1970s, the TSE was the first exchange in the world to develop a computerized system to trade some of its stocks. In 1997, the TSE closed its trading floor in favour of electronic trading. In 1999, in order to compete with foreign exchanges, Canada’s major exchanges reached an agreement to realign their responsibilities. The TSE has become the sole market for the preferred stocks or senior equities— stocks that have priority over other stocks in the event of bankruptcy of the company. The Montréal Exchange (ME) has become the sole market for derivatives.

Since April 2000, the TSE itself began to operate as a for-profit corporation—the TSE issued its own stocks and declared its first quarterly dividend in January 2003. In May 2001, the TSE acquired ownership of the Canadian Venture Exchange (CDNX) and the TSE was renamed the TSX. In 2003, more than 1,400 companies were listed on the TSX and approximately $700 billion of share transactions took place.

Accounting for over 75% of the dollar value of all shares traded in Canada, the TSX is important to all Canadians, including those who have a direct stake in it. The TSX facilitates the formation and allocation of capital, stimulates the private sector’s ability to create wealth and jobs, and provides a gateway to Canada for global investors.

Links

TSX Group History at a Glance
Source: Toronto Stock Exchange
http://www.tse.com/en/pdf/TSXHistory.pdf

Canada’s Securities Industry
Source: Finance Canada
http://www.fin.gc.ca/toce/2002/cansec_e.html

The TSE and its Future
Source: Toronto Stock Exchange
http://www.empireclubfoundation.com/details.asp?SpeechID=569&FT=yes

Historical Highlights of Montréal Stock Exchange
Source: Montréal Exchange
http://www.m-x.ca/mx_hist_en.php

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