Toronto's Bay Street financial district in February, 2012.Tim Fraser for The Globe and Mail
Thanks to our relatively stable economy, the Canadian marketplace is about to make room for the largest provider of global clearing services.
Pershing LLC, which made its name in the trade execution and clearance business, has announced its membership to the Toronto Stock Exchange under the name Pershing Securities Canada Ltd. This will allow it to offer registered Canadian broker-dealers and advisers its full range of clearing and trade execution services – the same ones U.S. clients currently have access to.
While Pershing has been doing business in Canada for a long time – roughly 35 years – most of that has been through third parties already operating in the Canadian market. Now the company wants to eliminate those middlemen and bring all the business through their own shop.
Frank LaSalla, CEO of Pershing Securities Canada and managing director at Pershing, says the company's business has primarily been directed southbound until now, supporting Canadian companies by acting as the intermediary to help facilitate U.S. business dealings. But times have changed. The continued climb of commodity prices persuaded Pershing it was time to move north, and Canada's relatively stable economy hasn't hurt either.
"I would say post-financial crisis there has been a move by end investors and advisers to look at commodity-based economies for investment opportunities. Places like Australia come to mind, places like South Africa have sort of come back, and Canada has come back on everyone's radar screen," says LaSalla, whose role at Pershing involves managing the firm's non-U.S. dollar global securities business in places like the U.K., Australia and Singapore.
The plans for developing Pershing Securities Canada began more than two years go and the intention is to become a stronger domestic player in the market. "Right now, I would say we are in stage one with the launch of our office and membership to the TSX." For now, the team will continue to operate out of the U.S. headquarters, but LaSalla thinks there's a good chance a Toronto office is in the cards in the near future. "Look, we've got 600 people in the U.K., we've got 50 people in Australia and five or six people in Singapore, so we're ready to deploy people into the market as need be," he said.
While LaSalla sees a solid backbone of "good growth if you believe in the commodities story," he believes the biggest challenge to being here is the country's size. "If there were a negative, I think it would simply be the size of the market. It's a good market, and has scalability and an equity-oriented culture, but it is small."
LaSalla said broker-dealers who clear through Perishing in the U.S. told the company they needed more exposure and access to Canada. But there are other reasons a move to Canada works for Pershing.
Pershing LLC. is a subsidiary of BNY Mellon, and to a certain extent LaSalla says his firm's Canadian ambition is really part of a broader mandate to help the bank expand into markets with good growth prospects. BNY is in year 16 of a partnership with Canadian Imperial Bank of Commerce though CIBC Mellon. Pershing has more than 1,500 clients in institutional and retail financial organizations and around $1.01-trillion in global client assets as of the end of June. By comparison, BNY Mellon had $27.1-trillion in AUM as of the end of June.