An old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014.Mark Blinch/Reuters
TRADING
The next big thing for Canadian trading: inverted markets
The rapid pace of evolution in stock trading isn't letting up. Having already adjusted to algorithmic and high-frequency orders, Canadians are now bracing themselves for the rise of inverted markets and brokers are left to mull whether they should be in or out.
Historically, the trading world made money through spreads; traders would line up buyers and sellers and then take a 5-cent fee per share. The seller may have received $20 a share while the buyer would pay $20.05 – what was in the middle went to the investment bank.
As high-frequency and electronic trading grew, stock exchanges started experimenting with a new model that paid high-frequency traders (HFTs) to post orders on their marketplaces. Known as the "maker-taker" pricing model, traders who removed liquidity, or executed an order and removed it from the marketplace, had to pay a "taker" fee; traders who posted that order got a "maker" rebate.
That's still the dominant model for Toronto Stock Exchange-listed stocks, but there is incredible growth of a new system, known as an inverted market. It works in the exact opposite fashion. People who execute orders and remove them from the marketplace are given a rebate, while people who post orders have to pay to do so. Story
BANKING
Lessons from Scotiabank's emerging-market experience
At Bank of Nova Scotia's investor day earlier this week, bank executives mentioned the four-nation Pacific Alliance a total of 68 times. The number of references to emerging markets? Just one – and it wasn't a compliment.
"Our international experience has taught us that not all emerging markets are created equally," Brian Porter, Scotiabank's chief executive officer, said in his opening remarks at the two-day event.
The reason the lender would want to clarify its strategy is no mystery: Its association with emerging markets is weighing on its share price, which lagged its big bank peers in both 2014 and 2015. The shares have fallen about 30 per cent over the past 18 months.
The choice of words says everything you need to know about the lender's pitch to investors: The bank's substantial international operations are focused on Mexico, Chile, Colombia and Peru, rather than all emerging markets. Story
WEALTH MANAGEMENT
A toast to downturns: Why it's time to celebrate for a Calgary contrarian
Ken MacNeal, a director of wealth management and portfolio manager at Richardson GMP in Alberta, has made fortunate market calls in previous downturns and each time celebrated with a champagne brunch for his clients at the Calgary Tower's rotating restaurant.
He did it again this past weekend, treating about 60 people whose 2015 portfolio returns were in the 7- to 9-per-cent range. During the year, the Toronto Stock Exchange composite index lost 11 per cent.
Mr. MacNeal's clients also enjoyed gains (and bubbly in the tower) after the tech bust at the start of the last decade and following the global market collapse in 2008. This time he did it by convincing many to bet against their own livelihoods in Canadian oil and gas, and instead to focus on U.S. equities and fixed income. Story
STREET MOVES
BMO hires new biotech analyst
Bank of Montreal's U.S. investment arm has hired a new equity analyst.
Veteran analyst Ian Somaiya started with the bank last week in its New York office as head of biotechnology research.
Mr. Somaiya came from Nomura Securities Co. Ltd. but has also worked at Piper Jaffray Cos. Inc., Thomas Weisel Partners and Morgan Stanley during his 20-plus-year career.
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Niall McGee