Canadian Firms Enjoy Performance Gains in 1999
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Canadian brokerage firms went out of the 20th century on a high note.
Operating profits in 1999 rose 45 percent to Can1.9 billion dollars, compared with 1998's three-year low of Can1.3 billion dollars, according to a study of 188 firms by the Investment Dealers Association of Canada in Toronto. Revenue was Can8.8 billion dollars in 1999, up 14 percent from 1998's Can7.7 billion dollars.
Canadian firms benefited from higher commissions as the country's capital markets rebounded, the survey says. Volume on all four Canadian stock exchanges rose 4 percent in 1999, resulting in an 8 percent increase in commission revenue to Can4.2 billion dollars.
However, traditional retail commissions have been squeezed by the shift to online trading, the study says. Nine firms now offer online trading to Canadian clients. Online trading commissions accounted for 14 percent of total retail commissions, up from 10 percent in 1998.
Here are some other trends among Canadian firms and clients:
* Margin debt at integrated securities firms totaled Can7 billion dollars in 1999, up 37 percent from the previous year. By comparison, debt levels at NYSE and NASD firms rose 40 percent in the same period. Canada's rules on margin debt are more stringent than U.S. rules, the study says.
* Clients have shifted from mutual funds to other investments. As a result, mutual fund commissions fell 10 percent in 1999. Mutual funds now represent 39 percent of total retail commissions, compared with 44 percent a year ago.
* The Canadian securities industry employed 36,175 people in 1999, while 326,151 people worked at NYSE member firms during the same period.
