Visibility

A Canadian company listed on the Toronto Stock Exchange will attract more analyst coverage than a Canadian company listed only on a U.S. exchange.

An independent source showed that analysts cover only 53% of Canadian companies listed solely on a U.S. exchange. An average of three Canadian or U.S. analysts each cover these companies. For companies that are listed on both the Toronto Stock Exchange and a U.S. exchange, 86% receive coverage by an average of 9 analysts each.

Index eligibility

A Toronto Stock Exchange listing means a Canadian company is eligible to be included in the S&P/TSX Composite Index, as well as several newly introduced S&P/TSX sector indices. Being included in an index raises a company's visibility and profile, and can improve investor awareness.

Index-based investing strategies are popular among institutional investors. According to Benefits Canada, almost one-third of Canadian pension fund assets invested in Canadian stocks are managed using index-based investing strategies.

Institutional investment

Listing on the Toronto Stock Exchange gets a company noticed by the Canadian investment community. Portfolio and pension managers funnel 70% of their money into Canadian assets. Canadian investors, both retail and institutional, look to the Toronto Stock Exchange for their primary investment choices.

Lower costs

It costs less to go public in Canada than the U.S.

A recent Conference Board of Canada study compared the costs of going public in Canada and the U.S. This study confirmed that direct costs (fees and commissions paid to underwriters, accountants and lawyers, as well as listing charges from exchanges) were lower for companies going public on the Toronto Stock Exchange than on either NASDAQ or the NYSE. Direct costs for every dollar raised were 5.5% for the Toronto Stock Exchange, compared with 8.7% for NASDAQ and 6.6% for the NYSE.

The same study also measured the indirect costs of underpricing shares issued in initial public offerings. Issuers receive lower returns from initial public offerings when money is "left on the table." Initial public offerings on the Toronto Stock Exchange were underpriced by an average of only 5.8%, compared with 49.6% on NASDAQ and 10.9% on the NYSE.

Market support

Canadian investors and analysts are more likely to stick with Canadian companies for the longer term. Canadian investors also tend to have lower turnover in their portfolios.

A well-regulated and fully automated marketplace

The ability of investors to buy or sell a reasonable amount of stock, without incurring major price changes, is an important feature of a quality market. This instils trust in the market and encourages more trading.

Because most of our trading rules are built into our automated systems, the Toronto Stock Exchange ensures consistent treatment of all orders. This consistency enhances investor confidence in the fairness of our market.

All companies listed on the Toronto Stock Exchange are assigned a Registered Trader. The Registered Trader facilitates orderly trading in your stock to avoid dramatic short-term price changes. The Registered Trader also guarantees to fill a minimum buy or sell order at the best prices at the time, which enhances your stock's liquidity.

In the members briefing of The Conference Board of Canada, Theresa Shutt and Hugh Williams discuss the costs of going public thru the IPO in the Canada on TSX and „south of the border“ on the NYSE and NASDAQ. They compared both the Direct and Pricing costs on a sample of IPOs going public in Canada and USA. Download here.