12.06.2011
By Terry Flanagan

Investment Opportunities in Canada

With the sustained volatility seen in the global markets, participants note that there are opportunities available north of the border.

“U.S. investors who are concerned about trading volatility and volumes should think about coming to Canada,” CIBC head of prime brokerage Thomas Kalafatis told Markets Media. “It is very easy to trade in the Canadian market. We have the expertise and technology, and one of the best developed market structures in the world. Increases in trading volumes, new participants, liquidity from abroad and competition for order flow also support opportunities that may be hard to find elsewhere. These are very good reasons for U.S. investors to look north and participate in Canadian markets.”

Although the volatility seen in the global markets has also had an effect on Canada, it has been less drastic. Part of that has to do with the fact that the Canadian economy is largely backed by natural resources such as oil, gold and other mining activities. Canada’s financial sector also wasn’t inflated to the point where widespread bailouts were required to save them once things came crashing down. For the most part, Canadian indices have been among the best if not the best performing in the world. The Canadian dollar has also been very strong.

The U.S. and Canadian markets have traditionally been very interconnected. They’re the only two markets in the world where there are fully fungible interlisted securities, based on the arrangement between the DTCC and CDS, around the trading of Canadian listed and interlisteds, and that has a huge effect on where the liquidity in Canada comes from. A substantial portion of the liquidity and the quotes in Canada come from the U.S. For example, on Thanksgiving, when the U.S. markets were closed, the Canadian market volumes were as much as 60% than they would be on a normal day.

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