At the invitation of the Hong Kong Trade Development Council (HKTDC), I led the Canadian delegation of 80 professionals to the 2016 Asian Financial Forum (AFF) in Hong Kong in January. The Forum attracted more than 2,600 participants from 39 countries and regions.
Not surprising, much of the conversation centred on China. The country’s challenges have been debated for years, but in recent months have been thrust into the international spotlight. There are increasing worries that Chinese authorities, in their attempt to implement difficult reforms while preserving demand and financial stability, may set off a chain reaction that hurts other economies and global financial markets. Moreover, the lack of transparency—opaque policy making and confusing announcements—have exacerbated uncertainty in the minds of global investors. China’s unexpected devaluation of the renminbi, which sent shockwaves through financial markets, is a case in point. Finally, the country’s sheer scale in commodities trading means that China will continue to shape commodity prices for years to come.
So what does this mean for Canada? Read my February 2016 Letter from the President to find out.
The singular event that has drawn considerable attention to the investment industry during the past year has been the steady withdrawal of boutique dealers from IIROC registration through mergers and amalgamations, the shuttering of operations or a shift to lighter registration, notably Exempt Dealer status.
The plight of the small dealer boutique firm has coincided with the collapse of the public venture market, the TSX Venture Exchange (TSXV).
In my latest Letter from the President, I discuss the issues facing small dealer boutique firms, the factors contributing to the decline in the TSXV, and the steps …
Watch the interview by clicking here.
Established in 2013, The IIAC Investment Industry Hall of Fame serves to honour excellence, integrity and leadership in Canada’s investment industry. The IIAC is proud to announce the names of the 2015 inductees:
Peter M. Brown – Founder and former Chairman & CEO, Canaccord Financial Inc.
Frederick M. Ketchen – Former Director of Equity Trading, ScotiaMcLeod
Donald A. Leslie – Former President & CEO, Canadian Investor Protection Fund
Charles M. Winograd – Former Chairman & CEO, RBC Capital Markets; current Chairman, TMX Group
Jalynn H. Bennett – Former Director, Bank of Canada; former Commissioner, Ontario Securities Commission
Sir Rodolphe Forget – Former Chairman, Montreal Stock Exchange; former Partner, L. J. Forget et Compagnie
Jean-Louis Lévesque – Founder, Lévesque, Beaubien Inc.
Charles Edward (Ted) Medland – Former President & CEO and Chairman, Wood Gundy Ltd.
This year’s inductees have roots that span the country and have played a pivotal role in the development and growth of the investment industry and capital markets in Canada. They are highly accomplished trailblazers in an industry that has evolved significantly over the years.
The 2015 inductees will be formally recognized and celebrated at a Gala Dinner on the evening of Thursday, October 29, 2015 at the SoCo Ballroom, Delta Toronto hotel, in downtown Toronto.
On June 4-5, 2015, I participated in the International Capital Market Association (ICMA) Annual General Meeting and Conference in Amsterdam—perhaps the foremost venue to understand the leading edge trends in global and European credit markets and the direction of regulatory reform.
The bond market liquidity drought dominated the conversations. Finding buyers in the market when investors look to sell has gotten more difficult, resulting in greater day-to-day volatility and wider bid-ask spreads. Even the U.S. Treasury bond market—one of the most liquid markets in the world—is not immune to turbulence.
There are a number of factors behind this liquidity crunch, including changes to regulation aimed at addressing weaknesses exposed by the financial crisis. I explore these factors in my newsletter.
Market participants fear a full-blown liquidity crisis if a real shock hits, perhaps a Greek default or the U.S. Federal reserve signals an earlier-than-expected rate hike. Investors may rush out of bonds, only to discover they cannot find buyers—the type of scenario that could quickly become a fire sale.
Is there any way to mitigate this risk? I believe so. Regulator should step back and undertake a full regulatory review of the cumulative effect of post-crisis capital, liquidity and trading rules. They should also proceed with utmost care in rolling out new credit market regulatory reforms to avoid further damage to market liquidity.
Read more in my industry letter by clicking here.
The IIAC submitted comments to the Ontario Securities Commission (OSC) on the proposed changes to the way in which unsolicited or hostile corporate take-over bids are carried out in Canada. The proposed changes to the rules aim to level the playing field between bidders and target boards and to provide additional protection to the existing shareholders of the target company. The IIAC supports the OSC’s objectives, but we have a concern about the extent of time bids must remain open.
In Canada, a company’s board of directors cannot reject a hostile bid without first giving shareholders their say. The proposed rules will substantially extend the period during which a take-over bid must remain open—from the current minimum of 35 days to 120 days. While in some cases the current minimum deposit period is arguably too short to allow target boards to properly evaluate unsolicited bids, to negotiate with a hostile bidder or to seek out competing bids, we believe a longer 120 day bid period may act as a deterrent to bidders in that there are additional costs involved with cash considerations being set aside for a longer period of time. There is also the risk that competing transactions may be identified and accepted by the target company’s board of directors. We believe that a 90-day bid period is sufficient for these boards to properly evaluate bids, and it would not provide a disincentive for potential transactions that may maximize shareholder value.
Read more in our submission by clicking here.
Greg Woynarski, Managing Director and Global Head of Origination, Scotiabank Global Banking and Markets, Scotia Capital Inc., was elected the 2015-2016 Chair of the Board of Directors of the Investment Industry Association of Canada (IIAC) at its AGM in Toronto on June 10, 2015.
John Chambers, Chief Executive Officer, FirstEnergy Capital Corp., was elected First Vice Chair.
“The IIAC provides leadership for the Canadian securities industry with a commitment to a vibrant, prosperous investment industry driven by strong and efficient capital markets,” said Greg Woynarski. He added: “Over the years, we have had a great impact on positively transforming the regulatory landscape and on shaping public policy to the benefit of Canada’s investment dealer firms.”
Also at the AGM, I outlined our organization’s top priorities for the year ahead. They include: commenting on new draft regulations for the Cooperative Capital Markets Regulatory System (CCMRS); engaging key stakeholders in roundtable discussions to diagnose what ails the TSX Venture Exchange and identify solutions; assisting regulators to finalize the rules framework for financial advisors; working with regulators to improve the transparency regime of traded debt securities; and helping firms develop best practices and tools to defend against cyber threats.
I very much look forward to working with the entire Board to advance the IIAC’s agenda.
The IIAC has submitted comments to the Investment Industry Regulatory Organization of Canada (IIROC) on the proposed guidance requiring Canadian exchanges and alternative trading systems to establish specific price thresholds that, when breached, would trigger a halt in trading in the event a particular stock experiences rapid and unexplained price movement over a short period of time.
The IIAC generally supports the principles of the guidance, but voiced significant concern with the requirement that dealers tailor their individual order flow so as to avoid exceeding the marketplace threshold for a particular security.
In our view, adding dealer thresholds creates redundancy. The proposed approach is unnecessarily complex, would result in inconsistent practices among dealers in setting triggers for thresholds, could prejudice certain investors whose orders may have to be held back, and could potentially be a very costly proposition as new and more elaborate technology will be required to implement an effective dealer threshold. Rather, we believe the responsibility for administering thresholds should fall solely on each marketplace.
Read our submission.