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Consolidation blazed through U.S. broker-dealers after the financial crisis, with about 400 firms taken over or closing shop. But in Canada, just two have exited in the past four years, the Investment Industry Association of Canada says.

Markets in both countries faced many of the same recession and recovery challenges, including regulatory changes and decreased investor confidence. But a few core differences have left the two landscapes looking different. Earnings results in the U.S. and Canadian securities industries, for instance, have not followed the same patterns. U.S. brokerage profits soared 124 per cent in the 2011 to 2012 year after steep losses in the previous two years. But in Canada, profits rose by just 2 per cent in the latest period.

Account sizes, transaction clearing practices and regulatory changes account for much of this split, IIAC president Ian Russell writes in his latest report. The IIAC is a trade organization that represents Canadian securities firms.

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Canada's broker-dealer businesses have dodged the consolidation that their counterparts have experienced, but they're not out of the woods. Competition for top talent is fierce and "the improving market conditions in the past year may have come too late for many firms," Mr. Russell wrote. "Unless market conditions continue to improve, and corporate issuers and institutional and retail investors engage more actively in the markets boosting earnings performance, more acquisitions and firm closures are on the horizon."

You can read the letter here.

(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)

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