Transcript Canada Equity Market - BU Main Page

Canada Equity Market
Overview
• Introduction (~5 minutes)
• History
• Today
• Participants (~4 minutes)
• Rules and Regulations (~7 minutes)
• Structure (~8 minutes)
• Differences between Canada and USA (~4 minutes)
• Conclusion/Questions (~2 mins)
History
• Started 1832
• Traded in coffee house in Montreal
• 1874 – Montreal stock exchange
• 1878 – Toronto stock exchange
• 1980’s – Canadian Banks and trust companies can
now have ownership
History Continued
• 1999 – CDNX created
• Natural resources
• CDNX was bought by the Toronto stock exchange.
• TSX was bought by TMX Group Inc.
• CDNX  Toronto Venture Exchange.
Today
• 3 main marketplaces:
• S&P/TSX
• Toronto Venture Exchange
• Montreal Exchange
• Other market places:
•
•
•
•
•
•
CSE
Alpha exchange
Bloomberg Tradebook
Chi-X Canada
CX2 Canada ATS
…(6 more)
• Assets traded:
• Cash and financial derivatives as well as fixed income,
energy, natural gas, technology, natural resources
• Derivatives
• Fixed income securities
• Energy
• Natural gas
• Market cap of over 889 billion USD.
Participants
Participants
• As of 2014, there are 187 firms – 17 are foreign owned.
• 6 largest participants (owners followed by the firm):
• BMO
• BMO Nesbitt Burns
• Canadian Imperial Bank of Commerce
• CIBC World Markets
• National Bank of Canada
• National Bank Financial
• Royal Bank of Canada
• RBC Dominion Securities ltd
• The Bank of Nova Scotia
• scotia capital
• TD Bank Financial Group
• TD Securities
Participants
73%
6 largest firms
15%
Retail firms
12%
Institutional firms
Regulation
• Federal and provincial regulation
• Federal CSA:
• Investment Industry Regulatory Organization of Canada
(IIROC)
• Mutual Funds Dealers Association (MFDA)
• Provincial (3 largest)
• Ontario Securities Commission
• British Columbia Securities Commission
• Autorité des marchés financiers
Regulation
Provincial
IIROC
Provincial
CSA
MFDA
Provincial
*Total of 13 regulators including Revenue Canada
Regulation
• Canadian Securities Association
•
•
•
•
Create uniform rules and regulations
Manages approval process
In charge of developing IT (nationally)
Enforces rules
• Passport System (except Ontario)
• Easy
• Fast
• Cheap
Regulation
• IIROC
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•
•
•
Self-regulatory
CSA
Standards
Protect investors
• Help prevent fraud
• Canadian Investor Protection Fund
Regulation
• MFDA
• Self-regulatory
• Not licensed under Quebec regulator
• Cooperative agreement
• CSA
• IIROC
• Investor Protection
• Regulates mutual fund distribution
Regulation Problems
• Difficult coordination
• Slow
• Increased risk
• International Issues
• Small resistance in collaboration
• Inefficient
• Costly
Current Trend
• 80% of share traded on TMX Group
• 3% trades in dark pools
• Banking , mining and energy
• Heavy dependency on commodities
Structure
Toronto Stock Exchange
• Exempt issuers
• Non-exempt issuers
TSX Venture Exchange
• Tier 1
• Tier 2
• NEX
Canadian National Security Exchange
Stock Exchange---Four Primary
Methods
• IPO
• REVERSE TAKE-OVER
• QUALIFYING TRANSACTION
• DRICTLY LISTING
The Difference between Canada
and US Stock Market
Sector weights for Canadian and US
markets
Utilities
Information Technology
Health Care
Consumer Staples
Telecommunication…
Consumer Discretionary
Industrials
Materials
Energy
Financials
0
5
10
S&P Total Market Index (US)
15
20
25
S&P/TSX Composite (Canada)
30
35
40
The Difference between Canada
and US Stock Market
Smaller market size
Smaller market capitalizations
Concentrated sectors
Less dark poor trading
References
• (n.d.). Retrieved March 17, 2015, from http://iiac.ca/wp-content/uploads/HFTs-and-the-StructuralDifferences-Between-Canadian-and-U-S-Equity-Markets1.pdf
• Canadian Investor Protection Fund - Home. (n.d.). Retrieved March 17, 2015, from http://www.cipf.ca
• Commissoin des valeurs mobilières du Manitoba. (n.d.). Retrieved March 17, 2015, from
http://www.msc.gov.mb.ca
• Department of Finance Canada * Ministère des Finances Canada. (n.d.). Retrieved March 17, 2015,
from http://www.fin.gc.ca
• Home. (n.d.). Retrieved March 17, 2015, from http://www.bankofcanada.ca/
• Investment Industry Regulatory Organization of Canada (IIROC). (n.d.). Retrieved March 17, 2015, from
http://www.iiroc.ca
• Investment Industry Regulatory Organization of Canada (IIROC). (n.d.). Retrieved March 17, 2015, from
http://www.iiroc.ca
• OSC-IIROC Market Structure Conference. (n.d.). Retrieved March 17, 2015, from
http://www.osc.gov.on.ca/en/NewsEvents_osc-iiroc-msc_index.htm
• Task Force to Modernize Securities Legislation in Canada. (n.d.). Retrieved March 17, 2015, from
http://www.tfmsl.ca/