Canadian-listed companies have one more letter to work with, if they want to use their stock symbol to get a message across to potential shareholders.
TMX Group Inc., which runs the Toronto Stock Exchange and the TSX Venture Exchange, now allows four-letter stock symbols, after decades of restricting tickers to three letters.
The exchanges made the change on Nov. 1, and already several companies have taken advantage of the opportunity to make their ticker symbol more closely reflect the company name. Investing firm Onex Corp. is now listed as ONEX instead of OCX, for example, and e-commerce company Shopify Inc. now has the ticker SHOP instead of SH.
The shift at TMX was made to allow companies to more closely link their stock symbol to their marketing efforts, said Nick Thadaney, president of global equity capital markets at TMX Group. "If you are choosing the optimal symbol for your company, ideally you'd want to match really closely with your brand and your story."
While many companies such as BCE Inc. (BCE) or Canadian National Railway Co. (CNR) have easily fit their acronym into their symbol under the three-letter restriction, "now if you add another letter it gives them a little more flexibility," Mr. Thadaney said.
The move also brings the Canadian markets in line with U. S. exchanges such as the Nasdaq and the New York Stock Exchange, which generally allow four letters. (Over-the-counter Nasdaq listings can have five letters.) Companies such as Shopify, which used SHOP for its NYSE listing will now be able to have a consistent ticker.
The Canadian tickers were limited to three letters because of a long-standing convention, and then processes and computer systems were built around that, Mr. Thadaney said. But in recent years, companies have been asking for more choice, so the TMX systems were adjusted, he said.
About 180 companies – now listed or planning to do so – have reserved four-letter trading symbols, Mr. Thadaney said. The two exchanges have more than 3,100 listed companies.
Any combination of letters is fine as long as it is not already taken, he said, although "we would be careful to censor out any of the four letter words that aren't appropriate."
Some companies are indelibly linked to their stock symbols. Bank of Montreal, for instance, uses its ticker, BMO, as the preface for most of its subsidiaries, such as its brokerage BMO Nesbitt Burns.
Other companies across North America have made clever use of their symbols. Beer company Anheuser-Busch InBev used BUD, auctioneer Sotheby's is listed as BID, motorcycle maker Harley-Davidson Inc. used HOG , and animal health care company VCA Inc. is listed as WOOF.
Some studies have suggested that stocks with catchy ticker symbols actually perform better as investments than companies that don't, at least in the early period after an initial public offering.
A small number of companies still have coveted one-letter ticker symbols, which were first used by telegraph operators who wanted to save time and space. One letter tickers on the NYSE include Ford Motor Co. (F) and Citigroup Inc. (C). On the TSX there are several one-letter companies, including Goldcorp Inc. (G), Hydro One (H), Loblaw Cos (L), Telus (T) and the TMX Group itself, which uses the symbol X.