PrefBlog

I have often railed against the high cost of university education nowadays, blaming it largely on the huge increase in the number of university administrators, which results in mission creep (see March 6, 2014). I can’t find my post where I talked about the increase in administrative costs, but just so you know I’m not blowing smoke … Where all that money is going:

Shockingly, 20 cents is now spent on central administration for every dollar spent on instruction and non-sponsored research; back in 1987-88, 12 cents went to administration. At the average top 25 university, central administration (including external relations) now consumes $18 million that previously would have flowed to instruction. (For a G13 school, it’s $20 million; for the top 5, $39 million.)

… and Administrator Hiring Drove 28% Boom in Higher-Ed Work Force, Report Says:

The report, “Labor Intensive or Labor Expensive: Changing Staffing and Compensation Patterns in Higher Education,” says that new administrative positions—particularly in student services—drove a 28-percent expansion of the higher-ed work force from 2000 to 2012. The report was released by the Delta Cost Project, a nonprofit, nonpartisan social-science organization whose researchers analyze college finances.

What’s more, the report says, the number of full-time faculty and staff members per professional or managerial administrator has declined 40 percent, to around 2.5 to 1.

… and Administrators Ate My Tuition:

Between 1975 and 2005, total spending by American higher educational institutions, stated in constant dollars, tripled, to more than $325 billion per year. Over the same period, the faculty-to-student ratio has remained fairly constant, at approximately fifteen or sixteen students per instructor. One thing that has changed, dramatically, is the administrator-per-student ratio. In 1975, colleges employed one administrator for every eighty-four students and one professional staffer—admissions officers, information technology specialists, and the like—for every fifty students. By 2005, the administrator-to-student ratio had dropped to one administrator for every sixty-eight students while the ratio of professional staffers had dropped to one for every twenty-one students.

To be fair to the universities, mission creep isn’t entirely their own idea – it’s pushed by politicians:

A group of lawmakers is pressuring U.S. News & World Report to update its influential college ranking system to indicate which universities have come under fire for failing to adequately handle sexual assault cases on campus. The rankings are currently based on a range of academic indicators, like SAT scores and graduation rates.

I also understand – although I confess I can’t find the reference – that some of these policy changes come from a desire to appeal to parents of prospective students, who for some reason think they should have a say in the choice of school.

Anyway, the story that caught my attention was on Bloomberg, College Debt Leaves Generation X Grads Less Wealthy Than Parents:

While 82 percent of Generation X Americans with at least a bachelor’s degree earn more than their parents did, just 30 percent have greater wealth. A smaller share of workers without college education — 70 percent — have surpassed their parents’ incomes yet almost half had higher wealth, according to a Pew Charitable Trusts report released today.

Lackluster saving among the cohort, those born between 1965 and 1980, has come as student-loan balances persist into middle age. Generation X’s financial straits could come with economic aftershocks, making it difficult for parents to afford college for the next generation and forcing workers to hold onto jobs longer or lower their living standards as they age.
…
People between the ages of 30 and 39 held about $321 billion in total student debt at the end of 2012, up from about $124 billion at the start of 2005, according to data from the Federal Reserve Bank of New York. Those between 40 and 49 owed $168 billion, up from $53 billion.

This is all based on a study from the PEW Charitable Trusts titled A New Financial Reality:

•• Most Gen Xers have higher family incomes than their parents did at the same age, but only one-third have greater family wealth. Three-quarters of Gen Xers have higher family incomes than their parents did, earning a median of $43,000 annually, after adjusting for family size. However, just 36 percent of Gen Xers have exceeded their parents’ family wealth, and the typical Gen Xer has $5,000 less wealth than their parents did at the same age.

•• Gen Xers’ lower wealth is due in part to their debt totals, which are nearly six times higher than their
parents’ were at the same age. Nearly all Gen Xers report holding student loan, medical, credit card, or other debt, with a median of more than $7,000. In contrast, their parents held just over $1,000 in debt at the same point in their lives.

•• Generation X has experienced exceptional stickiness at the top and bottom of the income ladder. Among Gen Xers raised at the bottom of the income ladder, half remain stuck there and nearly three-quarters never reach the middle. There is similar stickiness at the top: Nearly 7 in 10 Gen Xers who are on the top income rung in their 30s were raised by parents who were also above the middle in their 30s.

•• The persistent stickiness at both ends of the income ladder for Gen Xers is linked to sharp demographic differences. Among Gen Xers stuck at the bottom of the income ladder, median wealth, excluding home equity, is less than $800, more than half are single, and only 2 percent have a college education. In contrast, of Gen Xers who were born in and remain at the top, 83 percent are part of a couple, 71 percent have a college education, and all have more than $69,000 in non-home-equity wealth.

•• Gen Xers whose family wealth exceeds that of their parents also far surpass their peers in wealth holdings. Gen Xers who are upwardly wealth-mobile—that is, they have more wealth than their parents did at the same age—have nearly nine times the non-home-equity wealth of their peers who have less wealth than their parents and more than three times that of the typical Gen Xer.

•• Among Gen Xers who have exceeded their parents’ income, those with college degrees are less likely to surpass their parents’ wealth, mostly due to student loan debt. Nearly 4 in 10 Gen Xers who have college degrees and have more income than their parents did hold student loan debt, with a median amount owed of $25,000.

OSFI has released its Public Disclosure Requirements related to Basel III Leverage Ratio:

4. Disclosure requirements for D-SIBs

The disclosure requirements set out in the BCBS LR Framework, require D-SIBs to publicly disclose:

• I. Summary comparison table – D-SIBs are required to report the reconciliation of their balance sheet assets from their financial statements with the leverage ratio exposure measure, using the attached Reporting Table 1 in the Annex I.
• ii. Common disclosure template – D-SIBs are required to provide a breakdown of the main leverage ratio regulatory elements, using the attached Reporting Table 2 in the Annex I.

  OSFI requires D-SIBs to report the LR using both the transitional measure of Tier 1 capital and the all-in measure of Tier 1 capital. Lines 1 to 22 of this template are based on the Basel transitional LR. Lines 23 to 26 should be used to report the all-in LR.

• iii. Reconciliation with public financial statements – D-SIBs are required to disclose the source of material differences between their total balance sheet assets (net of on-balance sheet derivative and securities financing transaction (SFT) assets) as reported in their financial statements and their on-balance sheet exposures in line 1 of the common disclosure template.
• iv. Other – D-SIBs are required to explain the key drivers of material changes in their Basel III leverage ratio observed from the end of the previous reporting period to the end of the current reporting period (whether the changes stem from changes in the numerator and/or from changes in the denominator).

The SEC has triumphantly declared a milestone in its assault on ethics:

The Securities and Exchange Commission today announced an expected award of more than $30 million to a whistleblower who provided key original information that led to a successful SEC enforcement action.

The award will be the largest made by the SEC’s whistleblower program to date and the fourth award to a whistleblower living in a foreign country, demonstrating the program’s international reach.

“This whistleblower came to us with information about an ongoing fraud that would have been very difficult to detect,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement.”

That’s right, folks! You, too, can obtain multi-generational wealth by sneaking up to your bedroom at midnight, drawing the blinds, taking your ‘phone under the bed and denouncing your colleagues to the authorities! Sadly, the SEC did not state whether or not each whistleblower receives a shiny new “Junior Secret Policeman” badge.

Many investors long for a return to the days when they could get a two or three percent real return from T-Bills. ‘Don’t hold your breath’, says Rhys R. Mendes in a Bank of Canada discussion paper titled The Neutral Rate of Interest in Canada:

A measure of the neutral policy interest rate can be used to gauge the stance of monetary policy. We define the neutral rate as the real policy rate consistent with output at its potential level and inflation equal to target after the effects of all cyclical shocks have dissipated. This is a medium- to longer-run concept of the neutral rate. Under this definition, the neutral rate in Canada is determined by the longer-run forces that influence savings and investment in both the Canadian and global economies. Structural forces have likely reduced the neutral rate by more than a percentage point since the mid-2000s. The Bank’s estimates of the real neutral policy rate currently stand in the 1 to 2 per cent range, or 3 to 4 per cent in nominal terms. The current gap between the policy rate and the neutral rate reflects policy stimulus in response to significant excess supply and in the face of continuing headwinds. As long as these headwinds persist, a policy rate below neutral will be required to maintain inflation sustainably at target.
…
We define the neutral rate as the real policy rate consistent with output at its potential level and inflation equal to the 2 per cent target after the effects of all cyclical shocks have dissipated. This is a medium- to long-run concept which varies over time with lower-frequency factors such as demographic change and shifts in trend productivity growth. The deviation of the actual policy rate from neutral – the interest rate gap – is a measure of the stance of monetary policy.

The Bank’s estimates of this concept of the neutral policy rate currently stand in the range of 1 to 2 per cent in real terms, or 3 to 4 per cent in nominal terms. This range reflects the range of estimates from the various approaches discussed in this paper. Thus, with the nominal policy rate currently at 1 per cent, monetary policy is stimulative in Canada.
…
The Bank’s estimates of the neutral rate have declined by more than 1 percentage point since the mid-2000s as a result of structural changes in the Canadian and global economies. This decline largely reflects a lower global neutral rate and reduced potential output growth in Canada.
…
The global savings rate began to increase in the early 2000s. This rise was interrupted by the crisis, but the International Monetary Fund (IMF) expects it to continue in the future (Figure 6). The IMF projects the global savings rate to average 26 per cent over the 2014–19 period, more than 3 percentage points above its 1999–2006 average.
…
The preceding analysis of savings and investment assumed that there is a single risk-free interest rate in the economy. In reality, households and firms do not generally have access to credit at the risk-free rate. When borrowing to finance investment or consumption, private economic agents pay a rate of interest equal to the risk-free rate plus a risk premium or credit spread. Since credit spreads influence private sector behaviour, they affect the level of the neutral rate….Figure 8 shows effective spreads for households and firms in Canada. The 2013 average level of effective spreads was about 20 bps higher for households and 45 bps higher for firms, relative to the 1999–2006 average. Were this increase in spreads to persist, it would imply a lower neutral rate.

Did everybody get that last bit? Since credit spreads have increased, households and firms will have to pay more to borrow, which means they will borrow less, which reduces growth, which means the policy rate will have to decrease in order to maintain the growth rate, which means households and firms will get paid less for their savings. Hurray for financial repression! Mr. Mendes says we can give thanks to our glorious leaders for keeping us safe!

Relative to the pre-crisis benchmark, changes in spreads are not uniform across economies. In particular, spreads have not increased universally. However, increased costs of financial intermediation, partly as a result of needed financial regulatory reform, may cause spreads to settle at higher levels than in the pre-crisis period. A joint analysis by the Financial Stability Board and the Basel Committee on Banking Supervision attempted to quantify this effect. It found that a 3-percentage-point increase in banks’ common equity Tier 1 capital ratio would raise lending spreads by around 45 to 50 basis points (BCBS and FSB 2010). The Bank’s estimates for Canada are of a similar magnitude (Bank of Canada 2010). This could be reinforced by changes in investors’ perceptions and pricing of risk in light of the experience of the crisis. As Caballero and Farhi (2014) show, an increase in the relative demand for safe assets can increase the spread between risky and risk-free assets and lead to a lower neutral rate.

Blackrock, the people who bring to you more ETFs than you can shake a stick at, has released a “Viewpoint” with the thesis Corporate Bond Market Structure: The Time For Reform Is Now:

We believe the secondary trading environment for corporate bonds today is broken, and the extent of the breakage is masked by the current environment of low interest rates and low volatility, coupled with the positive impact of QE on credit markets. The current environment also breeds complacency—for issuers and investors alike. When any of these factors change, the extent to which today’s fixed income markets are not “fit for purpose” will be exposed. Market regulators are right to call for change now, while the benign state still exists. In this paper we make four recommendations for reform. As we explain, these are not just regulatory changes, but much broader reforms—to fix corporate fixed income markets will require changes in behavior by all market participants—issuers, intermediaries and investors. And yes, by regulators, too.

Their problem is one I have harped on until you guys are all bored to death of the topic:

For the last several years, both retail and institutional investors have been concerned about deteriorating liquidity in the corporate bond market.

… and they propose four steps:

Market Changes to Improve Liquidity

There is no “silver bullet” that will cure the corporate bond liquidity challenge. However, there are four drivers which, together, have the potential to substantially improve liquidity in the corporate bond market.

• More “all to all” trading venues – not just “dealer-to-customer” or “dealer-to-dealer”;
• Adoption of multiple electronic trading (e-trading) protocols – not just request for quote (RFQ) or central limit order book (CLOB);
• Standardization of selected features of newly-issued corporate bonds; and
• Behavioral changes by market participants recognizing the fundamentally changed landscape.

The first idea is, essentially, exchange trading for bonds:

Increased development and acceptance of “all-to-all” trading venues, where multiple parties, from both the buy-side and the sell-side, could come together and communicate would provide opportunities to uncover latent liquidity. Greater use of “all-to-all” venues, including exchanges, clearinghouses, electronic communication networks (ECNs), and similar platforms would enhance liquidity by enabling greater market connectivity and centralization of liquidity than the current bi-lateral framework. Such venues already exist, but see limited trading activity. For example, the New York Stock Exchange (NYSE) operates NYSE Bonds which trades in a similar manner to the NYSE stock exchange; however, NYSE Bonds has limited volume of largely small-sized trades.

I can’t agree with this one. As I often bore you by reiterating (most recently on June 23, 2014) public exchanges lead to thin, brittle markets. Exchanges are OK for tiny little markets like equities, but the bond market deals with real money.

Their introduction to the explanation of their ‘multiple protocol’ idea amused me:

Currently, trading in the corporate bond market is primarily conducted via the request for quote (RFQ) method, where a trader from the buy-side will communicate an interest in buying or selling a particular bond to a dealer and ask the dealer for a price. The buy-side trader may ask several dealers for a price quote and will then select a dealer with whom to conduct the transaction.

Ha-ha! As I most recently noted on September 16, 2014, your average portfolio manager is far too lazy to get multiple quotes. The general rule, enthusiastically endorsed by our wise regulators, is for bozo-boy to call ‘his’ salesman at ‘his’ firm, exchange wise remarks about whatever was in the headlines of the Wall Street Journal that morning, and then take whatever price he’s given for whatever the salesman is selling. Then he calls his mummy and tells her what a big shot he is; having received a confidence-raising pat on the head, he then calls his clients and tells them what a hard-nosed skin-flint he is. That’s reality.

Anyway, they contrast the RFQ system, above, with the CLOB system:

In comparison, a central limit order book (CLOB), one of the primary protocols used in the equity markets, allows buy and sell orders for a particular stock that is listed on an exchange to be matched up, and facilitates efficient execution for these securities. Central limit order book protocols work best when the instruments being traded are highly liquid and standardized.

They want to form other protocols:

RFQ systems	All-to-all RFQ systems are all-to-all trading venues, where multiple parties from both the buy-side and the sell-side are connected and quotes can be requested from several different parties electronically. RFQ can be made anonymously or disclosed. Multiple requests could be made simultaneously via lists to multiple participants on the venue. This enables aggregating some of the fragmented liquidity and supports broader market participation.
Open trading protocols	Open trading systems that pool together sell-side inventory and orders with buy-side orders enhance liquidity by broadening the universe of potential matches. MarketAxess is an ECN that has been a thought leader in defining new protocols, and offers both open trading and list-based all-to-all RFQ protocols.
Session-based protocols	Session-based protocols aggregate liquidity in a given security at defined times of day by announcing a time when certain securities will be traded. Parties interested in buying and selling that particular security will do so at that time, which in turn addresses timing mismatches, where there is no buyer when a market participant wants to sell a security or vice versa.
Crossing systems	Enables anonymous matching of desired buy and sell orders using electronic systems, usually executed at a mid-market price.

Well, these things might be OK, or at least interesting, when raising or spending cash. But I can’t see any applicability for spread trading, which makes all this useless. Session-based protocols aren’t much good – corporate bonds trade by appointment, and a rational trader won’t even know he wants to trade something until after he’s shown a good price. So let’s just say on this that I retain an open mind, but I’m going to need a lot more explanation and justification!

My first thought when reading their recommendation for ‘standardization’ was that it was going to be a reprise on the idiotic covenant standardization idea mocked on March 10, 2014; fortunately, Blackrock isn’t that dumb. What they want is:

Standardization would reduce the number of individual bonds, via steps such as issuing similar amounts and maturities at regular intervals and re-opening benchmark issues to meet on-going financing needs. Standardized terms would improve the ability to quote and trade bonds, and would create a liquid curve for individual issuers.

They offer up a number of purported advantages of such a change, but don’t really address the question of how the poor old issuer is supposed to refund the monster issues when they come due. Governments can have a set schedule of issuance, there is always a good deep bid for governments … but for credit? I’m not so sure.

Their desired behavioral changes are a real grab-bag:

For investors, this behavioral change means a willingness to give up new issue gains and liquidity arbitrage strategies for lower transaction costs, access to deeper markets, and for institutional investors in particular, the ability to buy and sell in greater size. Investors must become price makers as well as price takers. Issuers must begin to assess the benefits of standardization (potentially lower issuance costs) against the cost (some compromises in flexibility) not only in today’s benign environment but also when interest rates rise and volatility increases. Bankers should provide leadership in product innovation and structure debt offerings to improve liquidity, as the status quo is not sustainable. Larger, more frequent issuers, particularly wholesale-funded banks that are also the leading debt underwriters, are natural parties to lead the market evolution. Trading venues need to develop new ways to trade beyond the standard protocols. And regulators, given concerns about transparency and market liquidity need to consider the benefits of standardization and how best, within their mandate, to promote it.

I continue to feel that the best path – and the one that makes most sense in terms of markets – is for large bond-holders to start making markets. Blackrock could take the lead here. How about a corporate bond fund that covenants not to approximate the index as closely as possible, but one that will invest in a universe defined by such-and-such an index, maintaining metrics such as duration, convexity, average coupon, issuer exposure, etc., to within a certain tolerance of the index (a multiple-dimension cell system would be ideal)? As I understand it, that is the objective, more or less, of the HPR: Horizons AlphaPro Preferred Share ETF:

“We’re very happy to be working with Natcan once again. Their fixed income team has done a great job in managing the recently launched Horizons AlphaPro Corporate Bond ETF, Canada’s largest actively managed ETF. We expect more of the same with the Preferred Share ETF based on our belief that an active strategy can overcome many of the limitations found in trying to replicate a preferred share index,” said Ken McCord, President of AlphaPro.

… but of course, that would involve Blackrock hiring actual traders and actual salesmen to run their fund … and those guys make a little bit more than the spreadsheet wretches they have on staff now … ‘You first!’ exhort the bold visionaries at Blackrock! Maybe Guggenheim, or one of the other players who have been buying US annuity books will step up. It would be a natural fit.

And … almost finally … there are questions swirling about the King Timmy merger:

The Treasury Department announced steps that will make it harder for U.S. companies to move their addresses outside the country to reduce taxes, clamping down on the practice known as inversions.
…
Among the eight pending inversions is Burger King Worldwide Inc. (BKW)’s planned merger with Tim Hortons Inc. (THI), which would put the combined company’s headquarters in Canada.
…
Under current law, U.S. companies that invert through a merger are still treated as domestic for tax purposes if the former U.S. company’s shareholders own more than 80 percent of the combined company. The administration wants to reduce that 80 percent to 50 percent; that requires legislation.

In the absence of legislation, the Treasury Department looked for ways to make it harder for companies to get around the 80 percent limit.

The rules announced today seek to limit so-called spin-versions, in which U.S. companies spin off units into a foreign company.

It also would restrict the use of a technique known as skinnying down, in which companies make special dividends to reduce their size before a merger to meet the current law’s requirements. U.S. companies would be less able to seek out so-called old and cold foreign companies with cash and other passive assets as merger partners to meet the rules.
…
Scott Bonikowsky, a spokesman for Tim Hortons, didn’t immediately respond to messages seeking comment. Burger King, based in Miami, declined to comment.

Power Corporation, proud issuer of POW.PR.A, POW.PR.B, POW.PR.C, POW.PR.D, POW.PR.F and POW.PR.G, has confirmed at Pfd-2(high) by DBRS:

DBRS has today confirmed the Senior Debt and preferred shares ratings of Power Corporation of Canada (POW or the Company) at A (high) and Pfd-2 (high), respectively. The trends on the ratings remain Stable. The credit strength of POW is directly tied to its roughly two-thirds equity interest in Power Financial Corporation (PWF), which represents a substantial majority of the Company’s earnings and cash flow, as well as the Company’s estimated net asset value. The Senior Debt rating of the Company is A (high), or one notch below the AA (low) rating on the Senior Debentures of PWF, reflecting the structural subordination of the holding company’s obligations.

Power Financial Corporation, proud issuer of PWF.PR.A, PWF.PR.E, PWF.PR.F, PWF.PR.G, PWF.PR.H, PWF.PR.I, PWF.PR.K, PWF.PR.L, PWF.PR.O, PWF.PR.P, PWF.PR.R, PWF.PR.S and PWF.PR.T, has been confirmed at Pfd-1(low) by DBRS:

DBRS has today confirmed both the Issuer Rating and Senior Debentures rating of Power Financial Corporation (PWF or the Company) at AA (low) and the Cumulative and Non-Cumulative First Preferred Shares at Pfd-1 (low). All trends remain Stable. The financial strength of PWF, and DBRS’s rating assessment, is largely derived from its controlling interests in two of Canada’s leading financial service providers: Great-West Lifeco Inc. (GWO; senior debt rated AA (low)), one of the three largest life insurance concerns in Canada, and IGM Financial Inc. (IGM; senior debt rated A (high)), one of the largest mutual fund complexes in Canada.
…
The Company’s financial leverage has been maintained at a reasonable level for the past ten years. The Company’s capitalization remains conservative and the fixed charge coverage ratios are similarly strong relative to both earnings and cash flow. Liquidity is not a source of concern, with about $800 million in cash and short-term securities at the holding company at June 30, 2014, in addition to stores of liquidity at both GWO and IGM.

It was a modestly positive day for the Canadian preferred share market, with PerpetualDiscounts up 4bp, FixedResets winning 8bp and DeemedRetractibles gaining 3bp. Volatility was average. Volume was below 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	-0.4848 %	2,637.8
FixedFloater	4.20 %	3.46 %	24,966	18.43	1	-0.7463 %	4,129.2
Floater	2.92 %	3.05 %	57,212	19.59	4	-0.4848 %	2,727.7
OpRet	4.05 %	1.57 %	98,820	0.08	1	0.0395 %	2,727.1
SplitShare	4.30 %	3.80 %	106,598	3.90	5	0.1177 %	3,150.7
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.0395 %	2,493.7
Perpetual-Premium	5.48 %	3.51 %	81,667	0.08	20	0.0996 %	2,438.3
Perpetual-Discount	5.27 %	5.18 %	101,413	15.16	16	0.0439 %	2,589.7
FixedReset	4.24 %	3.76 %	184,423	6.48	74	0.0752 %	2,558.4
Deemed-Retractible	5.00 %	1.99 %	114,145	0.42	42	0.0314 %	2,564.3
FloatingReset	2.58 %	-2.37 %	76,046	0.08	6	-0.0913 %	2,537.5

Performance Highlights
Issue	Index	Change	Notes
MFC.PR.F	FixedReset	-1.24 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.37 Bid-YTW : 4.61 %
BAM.PF.D	Perpetual-Discount	-1.01 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-22 Maturity Price : 21.33 Evaluated at bid price : 21.63 Bid-YTW : 5.68 %
IAG.PR.G	FixedReset	1.00 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.21 Bid-YTW : 2.46 %
POW.PR.G	Perpetual-Premium	1.03 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-15 Maturity Price : 25.00 Evaluated at bid price : 26.02 Bid-YTW : 4.83 %

Volume Highlights
Issue	Index	Shares Traded	Notes
PWF.PR.H	Perpetual-Premium	255,200	Nesbitt crossed blocks of 150,000 and 100,000, both at 25.43. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-22 Maturity Price : 25.00 Evaluated at bid price : 25.47 Bid-YTW : -6.76 %
FTS.PR.M	FixedReset	231,290	Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-22 Maturity Price : 23.19 Evaluated at bid price : 25.11 Bid-YTW : 4.01 %
SLF.PR.H	FixedReset	121,700	Nesbitt crossed 117,800 at 25.20. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.23 Bid-YTW : 3.40 %
TD.PF.B	FixedReset	116,727	Scotia crossed 98,700 at 25.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.13 Bid-YTW : 3.61 %
CU.PR.C	FixedReset	66,004	RBC crossed blocks of 50,000 and 14,200, both at 25.52. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.44 Bid-YTW : 3.42 %
MFC.PR.M	FixedReset	58,180	TD crossed 21,500 at 25.31. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-12-19 Maturity Price : 25.00 Evaluated at bid price : 25.31 Bid-YTW : 3.74 %
There were 26 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
BAM.PR.K	Floater	Quote: 17.05 – 17.32 Spot Rate : 0.2700 Average : 0.1728 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-22 Maturity Price : 17.05 Evaluated at bid price : 17.05 Bid-YTW : 3.07 %
MFC.PR.B	Deemed-Retractible	Quote: 23.20 – 23.50 Spot Rate : 0.3000 Average : 0.2176 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.20 Bid-YTW : 5.61 %
PVS.PR.C	SplitShare	Quote: 25.89 – 26.90 Spot Rate : 1.0100 Average : 0.9287 YTW SCENARIO Maturity Type : Call Maturity Date : 2015-12-10 Maturity Price : 25.50 Evaluated at bid price : 25.89 Bid-YTW : 3.65 %
MFC.PR.C	Deemed-Retractible	Quote: 22.70 – 22.92 Spot Rate : 0.2200 Average : 0.1430 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.70 Bid-YTW : 5.73 %
GWO.PR.I	Deemed-Retractible	Quote: 22.54 – 22.80 Spot Rate : 0.2600 Average : 0.1831 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.54 Bid-YTW : 5.80 %
BAM.PF.D	Perpetual-Discount	Quote: 21.63 – 21.85 Spot Rate : 0.2200 Average : 0.1577 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-22 Maturity Price : 21.33 Evaluated at bid price : 21.63 Bid-YTW : 5.68 %

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