What Is the TMX Group?

The TMX Group is a large Toronto-based financial services company that operates the Toronto Stock Exchange (TSX), TSX Venture Exchange, Montreal Exchange, and TSX Alpha Exchange. The group operates exchanges for derivatives, equity, and fixed income trades through trading, clearing, depository, and settlement services.

Key Takeaways

  • TMX Group operates the Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange (derivatives), TSX Alpha Exchange, and Shorcan (fixed income).
  • TMX Group offers other services including TMX Datalinx, TMX Insights, TMX Money, TSX Trust, Canadian Derivatives Clearing Corporation, Canadian Depository for Securities, and Trayport.

Understanding the TMX Group

TMX Group has its origins in the Toronto Stock Exchange (TSX), founded in 1861 and initially listing only 18 stocks. Traditionally, trading in Canadian equities has taken place on a provincial level.

By the end of the 1990s, TSX had become the national exchange for senior equities. Its counterpart in Quebec, the Montreal Exchange (MX), handled trading in derivatives. Other provincial exchanges in Vancouver, Calgary, and Winnipeg merged to form the Canadian Venture Exchange (CDNX), which handled junior equities.

TSX registered as a for-profit enterprise in 1999, making it eligible to be a publicly traded stock. The Toronto Exchange soon found itself in the odd position being an exchange executing trades in shares of the business, as well as being the regulatory authority for the trading of those shares. In the United States, authority powers would have fallen into the realm of the federal level. 

In response to this juxtaposition, TSX handed regulation off to Market Regulation Services Inc. and the Investment Dealers Association. In the early 2000s, TSX assumed ownership of the Canadian Venture Exchange (CDNX) and renamed it the TSX Venture Exchange.

TSX officially changed its name to the TMX Group in June 2008. In early 2011, TMX hatched plans to merge with the London Stock Exchange (LSE). A rival bid appeared in the summer of 2011, as a group of Canadian investors known as the Maple Group challenged the TMX/LSE deal. The Maple Group—made up of major Canadian banks—took over the TSX in July 2012 blocking the LSE deal.

Maple Group Ownership Changes the TMX

In recent years, TMX has diversified its holdings and offered services outside of the traditional functions of a stock exchange. 

  • Shorcan is a fixed-income subsidiary that provides a specialized fixed-income trading platform.
  • TMX Datalinx compiles historical and real-time data from a wide range of exchanges and markets this information to investors. 
  • TMX Insights offers a package of analytics and content and database management services to financial institutions.
  • TSX Trust offers corporate trust services.
  • Canadian Derivatives Clearing Corporation (CDCC) is a clearing company owned by the Montreal Exchange.
  • TMX Money is a financial information hub.

In October 2017, TMX acquired Trayport, a London-based energy-trading platform, from the Intercontinental Exchange (ICE) after British regulators forced ICE to divest itself of the company. The acquisition allowed TMX to access global utility, energy, and derivatives markets and satisfied the British government’s interests in a diversified marketplace for trading software.

Examples of TMX Group-Listed Stocks

The Canadian stock markets sport global companies including major banks, energy, mining, and technology companies, among others. Some of these major names listed on the TSX include Royal Bank of Canada (TSX: RY) with a market capitalization of nearly C$153 billion as of February 17, 2021. Toronto-Dominion Bank (TSX: TD) has a market cap of C$137 billion.

Enbridge Inc. (TSX: ENB) has a market cap of nearly C$89 billion, Canadian National Railway Company (TSX: CNR) at over C$98 billion, and Shopify Inc. (TSX: SHOP) at over C$200 billion. Market caps are subject to daily change.