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GMP results show how badly Bay Street is hurting Add to ...

The first major Canadian brokerage to report results that include the rough markets that began in August has posted a loss and said it will focus on cost cuts, a grim foreshadowing of what's likely to come from most firms.

GMP Capital Inc. , one of Canada's biggest independent brokerages, is turning the focus to cost cuts after recording a loss on a huge drop in revenue.

GMP said it recorded a loss of $4.6-million, or 9 cents per share, compared with a profit of $23.1-million, or 32 cents per share, a year ago in the third quarter. Revenue plunged 55 per cent to $46.3-million from $102.8-million.

GMP provides the first look at how major securities firms fared in the third quarter, and it's not pretty. Canaccord Financial and the big bank-owned dealers have yet to reveal results, but the expectation is that everybody will report drops in business.

GMP's securities business got hurt in pretty much every area, Harris Fricker, chief executive officer of GMP said in a statement.

"Heightened equity market volatility together with declining global equity market valuations and lower investor confidence resulted in weaker investment banking revenue, unrealized losses in principal activities and reduced trading volumes," he said.

"As a result of the financial uncertainty gripping the industry we have focused our priorities on cost reduction measures aimed at ensuring our discretionary expenditures remain commensurate with lower levels of business activity," he said.

The capital markets business at GMP recorded an operating loss of $3.8-million compared with operating earnings of $36.4-million in the third quarter last year. Revenue fell 59 per cent "due to a significant decline in investment banking revenue, losses recorded in client facilitation and principal activities and lower commissions."

Bonuses took a big hit at GMP in the quarter. Variable compensation fell to $16.3-million from $38.2-million the year before.

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