UK investors with a sense of adventure have always favoured the US markets. But investors chasing particular investment ideas may find their research leads them across the Canadian border to the Toronto Stock Exchange (TSX) or its sibling the TSX Venture Exchange (TSXV).
Unfortunately, not all stocks listed on these exchanges are available to UK-resident investors. The picture varies from broker to broker. IG Group, Hargreaves Lansdown and HSBC’s InvestDirect Plus allow UK-resident investors to trade on the New York Stock Exchange and Nasdaq, where some Canadian stocks will also be listed. As IG Group says on its website: “This gives you access to a wide range of blue-chip stocks, but it doesn’t include most stocks with a sole listing on the TSX.”
Currently, there are 701 Canadian stocks that are dual-listed on US exchanges, including investor favourites like Barrick Gold (CT:ABX) and Canopy Growth (CT:WEED). But if a stock is not dual listed, how do you get access to it?
Getting access to Canadian stocks from Britain and Europe
AJ Bell says it offers access to 24 international markets, but the choice of stocks is restricted to those available on the CREST Depository Interest (CDI) system. The CDI is a UK security with an underlying interest in an overseas security that can be bought, sold and settled in sterling, in the same way as a UK share. The problem is that CDIs tend only to be available for the larger US, Canadian and European stocks.
At AJ Bell, orders for Pacific Rim markets (Australia, Hong Kong, Japan, New Zealand and Singapore) have to be phoned in, with a minimum purchase order size of £10,000.
But it is always worth calling your broker to discuss options.
Jeff Foster, director, equity markets at TMX Group, which owns the TSX and TSXV exchanges, says: “If you don’t see TSX/TSXV listed securities on your broker’s online platform, you can try calling your provider, as service representatives usually have access to a wider selection of listings than are made available online. This tip is usually a big help for foreign investors.”
Opening a trading account is normally quick and requires the usual details of address, debit card details and national insurance number, but dealing in international stocks will a require a few extra forms.
AJ Bell’s Charlie Musson says: “To deal in Canadian stocks in a dealing account or ISA, we’d need to receive an NR-301 form before trading – this can be a scanned copy.”
Traders that want to buy US shares must complete a W8-BEN form, which registers beneficial owner information for the US Internal Revenue Service, unless the investment is for a SIPP, which is already recognised by the IRS for tax purposes.
Investing in small cap stocks in general carries higher risk, which means brokers may require further client information.
Myron Jobson of Interactive Investor, says: “While we do offer US, Canadian and Australian markets, customers will need to complete exchange agreements to access the price information on these exchanges, and may have to complete an appropriateness assessment to allow us to gauge whether the client has the necessary experience and knowledge in order to understand the risks involved, before they can purchase certain stocks.”
In short, if you are looking to access Canadian stocks, including TSXV shares, open a request with your existing broker first. If that gets you nowhere, it is worth shopping around with the other UK brokers. We have found with some of the brokers we use that some will come our way fairly readily. Fees will vary considerably, but it helps to do some research.