Differences Between Canadian And American Stock Exchanges

The United States has a population that is 10 times higher than Canada’s population. Although most American stock market sectors are also larger, there are some exceptions. For example, Canada’s basic materials sector is larger. A few of the most notable differences between the two countries are within their stock exchanges.

Banking

In the United States, the five biggest banks only manage about 50 percent of the total banking assets in the country. There are many smaller banks that manage sizable portions as well. The top five banks in Canada manage about 85 percent of the country’s banking assets, and this leaves fewer lending options for investors in Canada. Bank failures are possible with the large number of smaller banks in the United States. However, Canada has an oligopoly problem. Although investors are limited with Canadian banks, the World Economic Forum said that Canada still has one of the strongest banking systems in the world.

Penny Stocks

In Canada, penny stocks are a big part of the nation’s securities industry. The TSX Venture Exchange is a marketplace that is in Calgary, and it is often called the junior listings market. It earned this name because many of the companies that trade on it have stronger dreams than financial statistics. On the website, companies can click on a link to apply to have their stocks listed. In the past, the marketplace has been the source of several major fraud cases. One example was Bre-X, which went from a penny stock to a massive market cap in a matter of months. Although there was verified insider trading, the company’s gold samples were fraudulent. There are not as many of these issues today. However, the United States does not place such a high importance on penny stocks, and there are no links for companies to apply for a stock listing on the New York Stock Exchange’s website.

Speculation Differences

Most investors around the world consider the United States to be the pinnacle of economic freedom. There is a common stereotype about Canada that its investors are deferential and reserved while American investors are bold and confident. With this assumption, it would seem natural that the United States would have more investments in wind farms and innovative online startups. By contrast, the stereotype would make it seem that Canadian investors would put more money into government debentures. However, some of the most speculative and surprising stock trading takes place in Canada, and it has the highest number of such trades per capita in Western society.

Both the United States and Canada are among the richest nations in the world. While the two markets have their differences, the biggest variations are the strategies of investors. Their strategies vary based on age, income and life status. For example, a 40-year-old with a family and an annual income of $50,000 will not have as strong of a portfolio as a 60-year-old millionaire without a family. These differences hold true in both the United States and in Canada.

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