Date: April 17, 2023
The Toronto Stock Exchange (TSX) is facing increasing competition from US exchanges, as a growing number of Canadian firms choose to list their shares in the United States instead of their home country. The TSX, one of North America’s oldest and largest stock exchanges, has long served as a central meeting place for companies seeking investment and investors looking to provide it.
Recently, the TSX has experienced a surge in Initial Public Offerings (IPOs), with 152 IPOs in the first 11 months of last year, a 15.2% increase from 2020. However, the aftermarket performance of 18 tech IPOs on Canadian exchanges has dipped nearly 7%, and of the 20 top Toronto-listed technology, cleantech, and life-sciences IPOs, 11 were trading below their IPO prices by December 23. This lackluster performance may be driving companies to look elsewhere for capital.
The TSX, owned by TMX Group Limited, has provided access to equity capital for more than 160 years. It currently ranks as the 10th largest exchange in the world and the third-largest in North America by market capitalization. Despite its long history and prominence, the TSX is now grappling with retaining Canadian companies that may be lured by the perceived advantages of listing on US exchanges, such as greater liquidity and broader analyst coverage.
One potential advantage of listing on the TSX is that it is home to more mining companies than any other market in the world. Companies in this sector may benefit from tailored listing requirements and specialized indices, but this advantage does not extend to all industries.
As the TSX struggles to retain Canadian firms, it will need to find ways to compete more effectively with US exchanges to maintain its position as a leading global exchange. This may involve offering additional benefits to listed companies or adapting its strategies to better suit a changing market landscape.
For more information on the Toronto Stock Exchange, visit tsx.com.