Name the main venues and explain listing, market makers and trading halts.
An exchange lists securities, runs a central order book where buy and sell orders are matched under published rules, publishes prices and monitors trading. Exchanges earn revenue from listing fees, trading fees and selling market data.
| Country | Venue | Notes |
|---|---|---|
| Canada | Toronto Stock Exchange (TSX) | Senior companies |
| Canada | TSX Venture Exchange (TSXV) | Early-stage companies, many in mining and technology |
| Canada | Canadian Securities Exchange (CSE) | Lower-cost listing for small issuers |
| Canada | Cboe Canada | Listings and trading in securities listed elsewhere |
| US | New York Stock Exchange (NYSE) | Largest by listed market value; has a trading floor with designated market makers |
| US | Nasdaq | Fully electronic; home to most large technology companies |
| US | Other exchanges (Cboe, IEX and others) | Compete to trade the same stocks |
A share listed on one exchange trades on many venues at once: other exchanges, alternative trading systems (ATSs) and dark pools, which do not display orders before execution. Rules require brokers to seek the best available price across them. In the US the best displayed prices form the national best bid and offer (NBBO). Canada has an order protection rule with the same aim.
To list, a company must meet minimum standards for size, public float, number of shareholders, financial results and governance, and must keep meeting ongoing requirements. A company that fails them can be delisted. Many Canadian companies are interlisted on a US exchange to reach more investors.
A market maker continuously posts a bid (the price it will buy at) and an ask (the price it will sell at) and earns the difference. Exchanges appoint designated market makers with obligations to keep markets orderly. Today most market making is done by high-frequency trading firms using algorithms. Liquidity means being able to trade quickly, in size, without moving the price; it is measured by the bid-ask spread, the depth of orders in the book and trading volume.
The regular session in both countries runs 9:30 a.m. to 4:00 p.m. Eastern time. The opening and closing auctions set official open and close prices and handle a large share of daily volume. Pre-market and after-hours sessions are thinner, with wider spreads.
An index tracks a basket of securities under published rules. The S&P/TSX Composite and S&P/TSX 60 represent Canada; the S&P 500, Dow Jones Industrial Average, Nasdaq-100 and Russell 2000 represent US segments. Most are weighted by market capitalization; the Dow is weighted by share price.
Before the open and at the close, orders are collected without trading and then matched at the single price that executes the most shares. The closing price set this way is used to value mutual funds and ETFs, to settle index products and to measure performance, so closing auctions attract a large share of the day's volume. On index rebalancing days, the close can account for a much larger share than usual as index funds trade to match the new weights.
Prices move in minimum increments called ticks. On the TSX the tick is one cent for shares priced at $0.50 or more and half a cent below that; in the US it is generally one cent for stocks priced at $1 or more. A board lot, the standard trading unit, is 100 shares on the TSX for stocks priced at $1 or more, and larger for cheaper stocks. Orders smaller than a board lot are odd lots.
A company trades on the TSX at C$136.00 and on the NYSE. USD/CAD is 1.36, so the equivalent US price is 136.00 / 1.36 = US$100.00. If the NYSE price rose to US$100.20 while the TSX price stayed put, the US shares would be worth C$136.27. Traders would buy in Toronto and sell in New York until the gap, less currency and trading costs, disappeared. For an investor, the practical question is which listing has the narrower spread and whether buying in US dollars means paying for a currency conversion (Module 3).
Exchanges run different tiers with different standards. The TSX Venture Exchange has two tiers; Nasdaq has the Global Select Market, the Global Market and the Capital Market; NYSE American serves smaller companies. A company moving up a tier (for example from the TSXV to the TSX, called graduation) gains a wider investor base, because many funds may hold only senior-exchange shares.
Canadian rules require small orders executed in the dark to give the client meaningful price improvement over the displayed quote, so that displayed orders, which create public prices, are not undercut for trivial gains. The US has no equivalent minimum, and a larger share of US trading happens off-exchange.
Exchanges also list ETFs, closed-end funds, preferred shares, warrants, structured products and, on derivatives exchanges, options and futures (RS 303).
Choose one company interlisted in Canada and the US. Record its ticker on each exchange, the day's volume on each, and the bid, ask and spread on each at the same moment. Convert the US price to Canadian dollars and compare.
Educational content only; not investment, tax or legal advice. Companies, tickers and figures are illustrative examples, not recommendations. Rules, rates and limits change, so check current details with the regulator, exchange or tax authority before relying on them. Worked examples are not forecasts. Written by Elizabeta Dimoska. RiskStock is not a registered dealer or adviser.