06.10.2016
By John D'Antona

RBC Leads in Canadian Equities

While trading in the Canadian equity markets is dominated by a few large banks, one bank stood above the pack: RBC Capital Markets.

That’s the conclusion of the most recent Greenwich Associates Canadian Equity Investors Study, where 15.4% of all equities trading business in the Great North was with the Royal Bank of Canada’s brokerage subsidiary. This was a nearly a four percentage points higher than its next closest competitor, BMO Capital Markets, which snagged 11.5% of the market.

The consultancy interviewed 59 institutional portfolio managers and 59 institutional traders about the brokers they use for Canadian equities. Study participants were asked to rank order the brokers they use for research/advisory services, trade execution and other services, to estimate the share of their overall commission volume allocated to each firm, and to rate the quality of service they receive from each broker.

Rounding out the top five in Canadian equity market share are: Scotiabank and TD Securities, which were statistically tied with shares of 10.0% and 10.4%, and CIBC at 9.3%.

But it was RBC that stood out in the Greenwich survey as the firm also was named the No. 1 provider of Canadian equity research/advisory services.

According to the report, buy-side trading desks allocate about 63% of their Canadian equity trade commission payments to compensate providers of research/advisory services, including analyst service, sales, corporate access, and other services. And RBC Capital Markets leads this business with 16.6% share of the institutional commission-weighted research/advisory vote.

Scotiabank is next with a 14.3% share, followed by BMO Capital Markets at 12.4%, CIBC at 10.2% and TD Securities at 8.6%.

Electronic trading isn’t as prevalent or commoditized in Canada as it is in the U.S., as it accounts for 15% to 16% of total volume compared with 50% to 60% of trading executions in the U.S. ITG led the pack in Canadian equity electronic trading, with a whopping 79% of institutions using the firm for electronic execution. Second is RBC with a market penetration score of 65%, followed by Liquidnet, Credit Suisse, CIBC, and Scotiabank, which are statistically tied with market penetration scores between 33% and 49%.

Featured image by obyelo357/Dollar Photo Club

Related articles

  1. Electronification of the municipal bond market also presents a large opportunity.

  2. Aberdeen AM Looks to Grow In China

    The success of Northbound trading showed electronic execution is way forward for the bond market.

  3. Algorithms have become more prevalent in the spot FX market.

  4. Increased electronification has created useable and accessible real-time and historic trade data.

  5. Buy-side firms can discover liquidity more efficiently and execute on Turquoise.