Revitalizing Canada’s Economy Starts With Fixing the TSX
For decades, the Toronto Stock Exchange (TSX) stood as a proud symbol of Canadian economic might. It was the gateway to funding for the nation’s industrial titans, from towering banks and sprawling energy firms to world-leading miners. It channeled the savings of millions into the engines of national growth. Yet, a quiet but profound concern is now spreading among investors, entrepreneurs, and policymakers: the TSX is not just underperforming; it is failing to fulfill its core mandate of financing Canada’s future.
While global markets surge, driven by innovation in technology and green energy, Canada’s premier exchange feels increasingly sidelined. This isn’t merely a problem for portfolio managers seeking returns. It is a fundamental threat to Canadian prosperity, signaling a dearth of new, high-growth companies and a worrying reliance on legacy industries. To reignite broad-based economic dynamism, Canada must first confront the challenges plaguing its public capital markets.
The Symptom: A Market Lagging Behind the Future
The evidence of the TSX’s struggle is visible in the numbers and the narrative. The exchange remains heavily concentrated in financials, energy, and materials—sectors that, while historically vital, are not the primary drivers of 21st-century growth.
A Concentration Crisis
This creates a vicious cycle: promising companies see a better path to capital and recognition south of the border, so they list there or get acquired early, further draining the TSX of its growth potential.
The Root Causes: Why the TSX is Falling Short
Diagnosing the problem requires looking beyond simple performance charts. Structural and regulatory issues have made the public markets a less attractive destination for both companies and investors.
For Companies, Going Public Has Lost Its Luster
For Investors, Options Feel Limited
The Path Forward: A Blueprint for a Relevant TSX
Revitalizing the TSX is not about propping up old industries; it’s about aggressively building the bridge between Canadian capital and Canadian innovation. It requires a concerted effort from regulators, listed companies, and the investment community.
1. Modernize Regulation to Encourage Listings
Streamlining the IPO process and ongoing reporting for emerging companies is critical. Exploring models like a “venture segment” with tailored rules could make public capital a more viable, attractive growth step. The goal is to make listing a competitive advantage, not a bureaucratic penalty.
2. Incentivize Long-Term Domestic Investment
Policies should encourage patient Canadian capital to back Canadian growth. This could involve:
3. Cultivate the Ecosystem from Start to Scale
A vibrant public market needs a robust pipeline. This means:
4. Embrace the Energy Transition as a Growth Catalyst
Canada doesn’t need to abandon its resource expertise; it needs to evolve it. The TSX can become the global financing hub for the next wave of energy—critical minerals, hydrogen, carbon capture, and clean tech. This leverages existing knowledge while decisively pivoting toward the future.
A Strong TSX is the Foundation of a Strong Canada
Fixing the TSX is not a narrow financial exercise. It is an economic imperative. A dynamic, innovative, and globally competitive stock exchange performs essential functions: it provides companies with the fuel to expand and invent, offers citizens a stake in national prosperity through their investments, and signals to the world that Canada is open for the business of the future.
The choice is clear. We can accept a gradual decline into economic irrelevance, anchored to the commodities of the past. Or, we can undertake the necessary reforms to rebuild our public market into a true engine of growth. By making the TSX a magnet for the world’s most ambitious companies and the capital that seeks them, we don’t just boost portfolio returns—we invest in the very future of the Canadian economy. The path to national prosperity, indeed, starts here.
