Toronto Stock Exchange -1878

Origins

Before the formation of the Toronto Stock Exchange (TSE), European colonial businesses and governments sought funding for investments from Great Britain through the capital market of London, England. As a result, shares of the largest corporations at the time were held in Great Britain and they included shares of the Grand Trunk Railway, the Bank of British North America, and the Hudson’s Bay Company which continues to operate today. Financial brokers eventually emerged in the mid-19^th century alongside new companies, institutions, and industries and provided these new and existing groups with financial instruments that included government and railway bonds as well as mining and bank stocks.

TSE – The Beginning

Dating back to 1852, with a growing business sector, a group of Toronto businessmen met regularly with the idea of creating an association of brokers, however, there are no official records of these meetings. Eventually, in October 1861, a group of 24 Toronto businessmen met in Masonic Hall to pass a resolution which set the foundation for the conception of the Toronto Stock Exchange. The mandate of the TSE was set to facilitate communication and the exchange of financial instruments in an efficient manner.

At the onset, there were few companies listed and most were related to real estate and financial services such as banks. Trading was far from the sophistication we experience today and were limited to daily half-hour sessions. For perspective, a typical trading day would see only two or three trades occur. The TSE continued to grow steadily and was eventually incorporated in 1878 under Ontario legislature. Growth, measured in trading volume, continued to grow steadily but was eventually suspended due to the start of the Great War.

The exchange was suspended for three months in 1914 due to complications arising from disruption in financial communications stemming from the war in Europe. This sparked a new era for the TSE where reliance on the British market for raising capital was no longer sustainable. To support the war effort, the Canadian government went on to raise funds through issuing its own bonds sold, on the New York bond market and to its own citizens. This initiative led to mass Canadian industrialization which increased the need for capital from businesses and institutions and signified the start of the Roaring Twenties. This era benefited the TSE greatly through a dramatic increase in demand for the TSE’s services evident in more than 10 million shares traded yearly towards the end of the decade.

TSE – Rough patches

Although the TSE experienced a dramatic rise in trade volume through the 1920s, the Great Depression brought on a period of struggle for everybody including the TSE. To adapt to the difficult circumstances, the TSE merged with the Toronto Stock and Mining Exchange (TSME), the TSEs main competitor at the time. Through this merger, the TSE was able to grow to become the third largest exchange in North America by 1936.

Although the TSE experienced a few steep declines in the years to come, the TSE continued to be a success and exemplar in the industry. One way it has done this has been technological leadership in which it became the first exchange in the world to computerize trading in the 1970s. This eventually led to the evolution of the TSE from a trading floor into an electronic trading exchange in 1997.

TSE – Today

Globalization has increased competition in the exchange sector and to compete against foreign exchanges the TSE evolved again. This included the partitioning of responsibilities where the TSE became the only market for preferred stocks while the Montreal Exchange became the only market for derivatives. From there, since April 2000, the TSE has become a for-profit corporation and in 2001 the TSE acquired the Canadian Venture Exchange (CDNX) which led to the TSE being renamed as the TSX. As of 2015 there are well over 3,500 companies listed on the exchange and its subsidiaries and it continues to contribute to the private sector in creating wealth, jobs, and access to the global markets.

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