Chinese currencyIngvar Bjork/Getty Images/iStockphoto
Word is Canadian banks are looking at trying to create a centre for trading China's yuan in Toronto, hoping to steal a march on the U.S.
The idea is a nice niche play for a financial centre that has probably not capitalized on all the headlines about Canadian strength as much as expected.
Coming out of the financial crisis, the feeling was that Canada was ascendant as an international financial centre. At the margin, it's been true. The country's big banks and brokerages are stronger, having used the opportunity to acquire people and businesses, but in an incrementalist rather than transformative fashion for the most part. From a risk point of view, it was the smart play.
And as attractive as Canada is, our strength has not brought an influx of foreign firms looking to establish large operations here. There's been no flight to Canada to speak of. So Toronto's financial sphere does not look vastly different than before the crisis and the attendant hype about this country.
In fact, while respondents to the latest 2013 Global Financial Centre Index survey put Toronto among the cities most likely to become more significant, the actual survey showed the city fell in the financial centre rankings as growth in other centres was faster.
The findings put Toronto in 12th spot, between Chicago and San Francisco. That's down two spots from 2012. Vancouver, Montreal and Calgary rank 15, 16 and 17, respectively.
Building the city's foreign exchange capabilities is a way to keep Toronto grinding higher.
Canada's banks do not rank in the top 10 globally in foreign exchange market share. Royal Bank of Canada was the only one to crack the top 20 in the benchmark Euromoney survey, coming in at No. 18. It's hard to make that happen when your home currency is only the seventh-most traded currency globally (that was a 2010 number, from the last completed Bank for International Settlements triennial survey) and your home country is the world's 11th most active foreign currency market by average daily volume.
Getting in early on the yuan market is unlikely to be a game changer, but it is the kind of small win that keeps Toronto on the right path.
(Boyd Erman is a Globe and Mail Capital Markets Reporter & Streetwise Columnist.)
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