U.S. Investors Buying Canadian Oil Stocks
Companies like Stealth Energy, Inc. (SLH), Canadian Oil Sands Trust (COS), and EnCana Corporation (ECA) may look compelling, but how can U.S. investors purchase stocks on foreign exchanges like the Toronto Stock Exchange (TSE) or Canadian National Exchange (CNSX)?
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Stocks are bot and sold on stock exchanges by floor traders and market makers that receive orders from brokers around the world. While not all brokers have access to Canadian exchanges, a growing number are getting organized to offer access as the markets continue to globalize.
Popular Canadian stock exchanges include the Toronto Stock Exchange (TSE – www.tmx.com) and the Canadian National Stock Exchanges (CNSX – www.cnsx.ca).
Some public companies choose to have greater investor exposure by having their shares listed on more than one exchange. Many Canadian public companies have dual stock exchange listings; one in Canada (TSE or CNSX) and another in USA (New York Stock Exchange, NASDAQ, AMEX, OTCQX or OTCBB).
For example, Canadian Oil Sands Trust, whose main listing is in Canada (symbol COS on TSE), has a USA listing on OTC (symbol COSWF). USA investors may purchase the OTC securities through any brokerage account, allowing them to gain direct exposure to the Canadian securities.
Unfortunately, not all Canadian public companies have dual listings in USA exchanges, which means that investors may have to seek out brokers with access to Canadian exchanges in order to invest in them. This is particularly true with smaller companies like Stealth Energy, Inc. (SLH).
Many large discount brokerage firms will allow trading in a number of foreign exchanges, including Interactive Brokers, OptionsXPress, and eTrade. Clients can also call up their brokers and ask which exchanges are covered in order to see if they can trade Canadian stocks.
In the end, Canadian stocks can offer investors access to a whole new pool of potentially successful companies and undervalued stocks. As a result, U.S. investors would be wise to open their eyes to these opportunities by consulting with their broker.
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