The possibility of Saskatchewan entering the national securities regulation framework has led to calls for Nova Scotia to join the happy throng:
Nova Scotia treats its regulator as a bit of a cash cow. It takes in $15.8 million in yearly revenue and spends $2.7 million on programs. Finance Minister Diana Whalen has cited loss of this revenue, and of provincial control, as reasons for Nova Scotia not joining the voluntary initiative by Ottawa, Ontario and B.C. to set up a co-operative regulator after the courts said Ottawa could not do it alone.
These are parochial reasons to deny Nova Scotians better investor protection and to stymie creation of stronger national safeguards against system-wide risks.
We will surely have more real influence if we are early participants in this initiative. It can be designed to provide a share of fee income and appropriate regulation for local initiatives like Nova Scotia’s Community Economic Development Investment Funds. Nova Scotia should get on board and play a role in ensuring first-rate national regulation is also sensitive to local and regional needs.
But:
Andrew Preeper, a spokesman for the province’s Finance Department, said “the possibility of taking part in a co-operative regulator is being discussed and considered, but no decision has been made.” He said that Nova Scotia Finance and Treasury Board Minister Diana Whalen wants to have more talks with industry stakeholders.
Meanwhile, in Europe:
European Central Bank president Mario Draghi surprised the markets by saying the bank’s governing council is “comfortable” in launching measures next month to fight falling inflation and the rising euro, a strong signal that the ECB thinks the euro zone recovery is in jeopardy if no action is taken.
While the ECB, as expected, left the benchmark interest rate intact at a record low of 0.25 per cent, Mr. Draghi repeatedly highlighted the dangers of falling inflation and the rising euro. In his press conference, he said: “The strengthening of the exchange rate in the context of low inflation is cause for serious concern in the view of the governing council.”
But Mr. Draghi did not say which easing measures the ECB is prepared to take to tackle disinflation and the rising euro. Options include forms of quantitative easing tailored to the European markets, negative interest rates (charging banks to park funds at the ECB) or a cut that would take rates to zero. The ECB could also intervene in the foreign exchange markets to put downward pressure on the euro.
Many will be interested in the recent Economist article titled Maple, resting on laurels, but unfortunately it’s slap-dash bilge. They say, for instance:
the World Economic Forum anointed Canada’s banking system the soundest in the world
Bullshit. They obviously have not read my post What the WEF Report Really Says about Canadian Banks. They also repeat the claim…:
The latest calculations from The Economist suggest that house prices in Canada are overvalued by 76% and 31% when measured against long-term average rents and incomes respectively.
… without addressing the methodological problems discussed in How to Dissect a Housing Bubble. It’s very disappointing so see such crap spouting out of the Economist.
You want to see some layoffs? Barclays Bank can show you some layoffs:
Britain’s Barclays reined in its ambitions to be a Wall Street powerhouse on Thursday and signalled a return to its retail roots with a plan to hive off much of its investment bank and axe one in four jobs at the division.
Chief Executive Antony Jenkins, in his second strategic review in as many years, will cut 19,000 jobs in the next three years, 7,000 of them at the investment bank, and park 400 billion pounds of assets in a new “bad bank”.
Some bond ETFs are benefitting from price reductions:
The cost of owning an ETF tracking the S&P/TSX composite index has fallen from 0.27 per cent to 0.05 per cent this year, and U.S. and international fund fees have fallen significantly as well. But, with only a couple of exceptions, bond ETFs have for the most part been exempt from this price competition.
One of those exceptions is the iShares High Quality Canadian Bond Index ETF (CAB), which holds a portfolio that is 60 per cent weighted to government bonds and 40 per cent weighted to corporate bonds. All bonds in the portfolio have a credit rating of A or higher, which is where the “high quality” name for this ETF comes from. The fee for CAB has fallen to 0.12 per cent from 0.3 per cent, which makes it a low-cost leader for ETF investors. Other broad Canadian bond ETFs have fees in the 0.23 to 0.33 per cent range.
Another bond fund to benefit from fee cuts is the BMO Short Corporate Bond Index ETF (ZCS), which falls to 0.12 per cent from 0.30 per cent. The previous floor for this type of ETF had been about 0.15 per cent.
And … in one of PrefBlog’s least surprising links … Canadian banks are extending their hegemony over the financial system:
DBRS has today confirmed the Issuer Rating, Medium-Term Notes and Debentures ratings of Canadian Tire Corporation, Limited (CTC or the Company) at BBB (high), and its Commercial Paper rating at R-2 (high), all with Stable trends. This rating action follows CTC’s announcement earlier today of a far-reaching strategic partnership with Scotiabank, under which Scotiabank will acquire 20% of the equity interest in Canadian Tire’s financial services business for $500 million in cash (the Transaction).
Julie Dickson gave a self-congratulatory valedictory. She did not mention OSFI’s botching of the Life Insurance Regulatory Framework, that she has kicked down the road to her successor.
The Canadian preferred share market reignited today, with PerpetualDiscounts winning 32bp, FixedResets gaining 3bp and DeemedRetractibles up 17bp. Volatility was muted. Volume was above average.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.4229 % | 2,452.9 |
| FixedFloater | 4.49 % | 3.72 % | 31,695 | 17.97 | 1 | 1.8786 % | 3,822.6 |
| Floater | 2.97 % | 3.09 % | 53,050 | 19.48 | 4 | -0.4229 % | 2,648.4 |
| OpRet | 4.35 % | -1.65 % | 33,681 | 0.15 | 2 | -0.3468 % | 2,699.9 |
| SplitShare | 4.78 % | 4.07 % | 66,639 | 4.18 | 5 | 0.0000 % | 3,102.6 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3468 % | 2,468.8 |
| Perpetual-Premium | 5.51 % | -8.62 % | 97,080 | 0.09 | 15 | 0.1122 % | 2,403.0 |
| Perpetual-Discount | 5.28 % | 5.30 % | 122,690 | 14.93 | 21 | 0.3195 % | 2,550.4 |
| FixedReset | 4.50 % | 3.31 % | 209,792 | 4.14 | 75 | 0.0297 % | 2,572.8 |
| Deemed-Retractible | 4.96 % | -7.23 % | 137,905 | 0.13 | 42 | 0.1684 % | 2,532.8 |
| FloatingReset | 2.67 % | 2.36 % | 186,427 | 4.06 | 6 | -0.0066 % | 2,495.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.A | Floater | -1.86 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-05-08 Maturity Price : 19.51 Evaluated at bid price : 19.51 Bid-YTW : 2.68 % |
| IAG.PR.A | Deemed-Retractible | 1.09 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.20 Bid-YTW : 5.59 % |
| BAM.PR.G | FixedFloater | 1.88 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-05-08 Maturity Price : 21.67 Evaluated at bid price : 21.15 Bid-YTW : 3.72 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PWF.PR.P | FixedReset | 105,900 | TD crossed three blocks: 45,000 shares, 35,000 and 10,000, all at 24.50. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-05-08 Maturity Price : 23.44 Evaluated at bid price : 24.47 Bid-YTW : 3.35 % |
| TD.PR.R | Deemed-Retractible | 104,604 | RBC crossed blocks of 71,600 and 25,000, both at 26.69. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-07 Maturity Price : 25.75 Evaluated at bid price : 26.65 Bid-YTW : -32.07 % |
| ENB.PR.B | FixedReset | 69,747 | Scotia crossed 60,000 at 25.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.32 Bid-YTW : 3.83 % |
| BMO.PR.Q | FixedReset | 53,815 | TD crossed 12,800 and 25,000, both at 25.05. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.06 Bid-YTW : 3.08 % |
| RY.PR.X | FixedReset | 49,291 | RBC crossed 17,300 and 20,800, both at 25.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : 1.25 % |
| IFC.PR.A | FixedReset | 47,385 | RBC crossed 39,600 at 24.85. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.81 Bid-YTW : 3.82 % |
| There were 40 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.A | Floater | Quote: 19.51 – 19.99 Spot Rate : 0.4800 Average : 0.3372 YTW SCENARIO |
| CIU.PR.C | FixedReset | Quote: 21.46 – 21.96 Spot Rate : 0.5000 Average : 0.3977 YTW SCENARIO |
| SLF.PR.B | Deemed-Retractible | Quote: 23.96 – 24.19 Spot Rate : 0.2300 Average : 0.1474 YTW SCENARIO |
| CGI.PR.D | SplitShare | Quote: 25.01 – 25.25 Spot Rate : 0.2400 Average : 0.1623 YTW SCENARIO |
| BNA.PR.E | SplitShare | Quote: 25.87 – 26.16 Spot Rate : 0.2900 Average : 0.2211 YTW SCENARIO |
| MFC.PR.B | Deemed-Retractible | Quote: 23.30 – 23.47 Spot Rate : 0.1700 Average : 0.1126 YTW SCENARIO |