Briefly:

(October 14, 2005) Canadian Trading and Quotation System (CNQ) plans to launch its own alternative market early next year, for trading in securities listed on the TSX.

The new market, which will be separate from CNQ’s own listed market of small-cap companies, will provide a low cost alternative to trading on the TSX, CNQ said in a release, and will be the first alternative market in Canada to offer a visible auction market accessible by any Canadian investment dealer.

“We will be offering not only lower cost but also greater speed of execution, something that is increasingly demanded by the trading community”, said CNQ president Robert Cook. “The recent upswing in algorithmic trading is a sector of the market that is under served in today’s market. Our trading platform will be designed to accommodate the demands of that sector of the market, as well as the large volumes that go through the TSX.”

Cook added that CNQ’s alternative market will operate in the same manner as Electronic Communications Networks (ECNs) in the U.S. that have traded Nasdaq and NYSE stocks for several years.

The Ontario Securities Commission has published CNQ’s market application for industry comment. A launch date will be set following OSC approval.

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Former Crocus executive joins Bieber Securities

(October 14, 2005) Allan Jacks, former vice-president of sales at the now-defunct Crocus Investment Fund, has joined Winnipeg investment dealer Bieber Securities as manager of business development.

Jacks will be responsible for advisor recruitment, opening new branches, and helping advisors develop their businesses.

Jacks has nearly 30 years experience in the financial services industry. He is also active in the community and involved in a number of charitable events, including “Winn$tock,” Winnipeg’s annual financial services battle of the bands.

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Ontario regulator dismisses insider trading charges

(October 14, 2005) The Ontario Securities Commission has dismissed allegations of insider trading against the chair of ATI Technologies.

OSC staff alleged that K.Y. Ho and his wife Betty avoided $7 million in losses by trading stock based on information that was not public.

However, an OSC panel ruled that when Ho donated more than 250,000 shares of the chipmaker to three Toronto charities in April 2000, he had no way of knowing that ATI would subsequently fall short of its forecasted revenue and earnings for the third quarter of that year.

“We would not be doing our job of enforcing the capital markets if we only brought cases that were clear winners,” said Michael Watson, director of enforcement at the OSC. “The other respondents involved in this case settled with us and admitted wrongdoing.”

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Norbourg files for bankruptcy protection

(October 14, 2005) Vincent Lacroix, who heads the Norbourg group of companies, including the Evolution fund family, has placed the firms’ assets under bankruptcy protection with trustee RSM Richter.

In a statement released Thursday, Lacroix said he believes that this measure “was necessary given the present circumstances and was the appropriate means of protecting the interests of the investors and other creditors of the Norbourg Group.”

Last month, Quebec regulators asked the province’s finance minister to shut down the Norbourg group, after an audit revealed a $130 million discrepancy in the company’s financial statements.

In its report, Ernst & Young said that according to Norbourg’s financial statements as at July 31, 2005, assets under management amounted to $205 million, but only $75 million remains.

The number of unitholders in the Norbourg group totalled 9,200, Ernst & Young said, mostly Quebec residents. Regulators say they will attempt to recover investors’ money and have set up a special phone line (1 877 525-0337) for investors seeking information.

Montreal’s Integrated Market Enforcement Team (IMET) has undertaken a criminal investigation to determine whether or not legal proceedings should be launched against Norbourg. Lacroix says he will cooperate fully with the trustee and has denied any wrongdoing.

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C.D. Howe recommends interest rate hike

(October 13, 2005) The C.D. Howe Institute’s Monetary Policy Council has recommended that the Bank of Canada raise its key overnight lending rate 25 basis points to 3% when it makes its next announcement on October 18.

“Canadian domestic demand is robust and may get further stimulus from lax fiscal policy,” the council said. “With the U.S. economy also showing strong momentum and adverse impacts from the higher Canadian dollar on the trade balance at least temporarily muted, the group felt that Canadian output and employment will continue to grow at least as fast as Canada’s productive capacity.”

The council’s 11 economists and academics also agreed that the central bank should raise rates a further 25 basis points in December.

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Canadian investors remain upbeat, survey suggests

(October 13, 2005) The recent spike in energy costs and other economic pressures hasn’t had much of an impact on Canadian investor sentiment, according to Manulife Financial’s latest survey.

In fact, Canadian investor sentiment is not only up, it is at its highest level in more than four years. Surprised? It’s understandable. The rosy report seems incongruous with the mood on the S&P/TSX Composite Index, which has plunged 800 points since the start of the month.

“If we did the same survey today, certainly there may be some changes,” concedes Manulife’s Tom Nunn. “The markets may vary, but the average person’s view of the investor sentiment is not necessary affected by those daily changes.”

Still, he’s quick to point out the survey is not just a measure of the markets — it looks at how people feel about investing in their own homes and real estate as well.

According to Manulife, Canadians are most comfortable investing in real estate and related transactions, like renovations or paying down their mortgage. The greatest change in investor sentiment was towards savings accounts and balanced funds.

And while attitudes towards savings accounts are up, they are tied with stocks as the least favourite destination for investments.

Maritz Research conducted the survey of 1,002 Canadians for Manulife in mid-September. What Bruce Gordon, Manulife’s senior executive vice-president and general manager of Canada, found most interesting, was just how strong consumer sentiment was, despite Katrina and the economic fallout that followed.

“In contrast to recent consumer confidence surveys, Canadians seem to show some strong resilience toward investing, even amid rising energy prices and energy-related impacts on equity markets in the past month,” he says.

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Natural gas adds to Canada’s trade surplus

(October 13, 2005) The U.S.’s loss is Canada’s gain. In August, Canadian exports abroad increased for the sixth time this year, thanks largely to soaring natural gas prices caused by Hurricane Katrina, Statistics Canada reports.

The spike in the price of oil and the subsequent increases in gas prices through September has somewhat overshadowed the fact that several natural gas processing plants along the Louisiana coastline were also damaged by Katrina. As a result, Canada’s natural gas exports hit $3.3 billion in August, up from $2.9 billion the month before, which is just $1.1 billion off the record high for natural gas exports, set in January 2001. Natural gas is one of Canada’s most valuable exports.

The increase was the direct result of rising prices, which offset a 4.6% decline in volumes. In total, Canadian exports increased 1.5% to nearly $38 billion from July resulting in a trade surplus with the world of close to $5.6 billion, which is up from a revised $4.9 billion in July. Economists, however, had expected the surplus to grow to $6.1 billion, and markets responded accordingly.

Canada’s trade surplus with the U.S. rose to nearly $8.9 billion mostly due to oil and natural gas exports, while the trade deficit with countries other than our neighbours to the south narrowed to $3.3 billion. The U.S.’s trade deficit grew to $59 billion in August, up from revised $57.9 billion a month earlier.

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Connor, Clark & Lunn to shut down trust

(October 13, 2005) The board of directors at Connor, Clark & Lunn Capital Markets has approved a proposal to wind up the Tigers trust by liquidating its assets and terminating the trust around December 15.

The firm has called a special unitholders meeting for November 30 to approve the trust’s termination.

“At the trust’s current net asset value, it is becoming uneconomical to unitholders to continue to operate the trust and pursue its investment strategy,” the company said in a statement.

If the move is approved, proceeds of the sale will be distributed to current unitholders. The trust, whose portfolio consisted mainly of companies listed on the S&P 500, was trading at $16.10, with a market cap of $11.8 million dollars.

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Franklin Templeton shakes up line-up

(October 12, 2005) Franklin Templeton Investments has announced it is changing the name of the Bissett American Equity Fund to Franklin Templeton U.S. Rising Dividends Fund. The mandate of the fund will also change, focusing now on U.S. equities “that both consistently and substantially increase their dividends over time.” The portfolio will be managed by Franklin Advisory Services LLC, of Fort Lee, New Jersey.

“This fund looks for companies that have increased dividends in at least eight of the last ten years with no decreases and have doubled their dividend over the previous ten years,” said Don Reed, President and CEO of Franklin Templeton Investments Corp. The fund plans to make annual distributions to investors.

The firm is also changing the name of Franklin Templeton Tax Class Corp. to Franklin Templeton Corporate Class Ltd. to more accurately reflect the nature of the structure.

The company also announced late yesterday that it would merge Franklin U.S. Large Cap Growth Fund, Franklin U.S. Large Cap Growth Tax Class and Franklin Flex Cap Growth Fund into Franklin Flex Cap Growth Tax Class, effective the close of business on October 21, 2005.

Franklin World Telecom Fund, Franklin World Telecom Tax Class and Franklin Technology Fund will merge into Franklin Technology Tax Class; and Franklin World Growth Fund will merge into Franklin World Growth Tax Class.

Unitholders also approved changes to the investment mandate for the three surviving funds to reflect the mergers. Two of the funds will remain under the management of Franklin Advisers of San Mateo, California, while New York-based Fiduciary International will remain sub-advisor for Franklin World Growth Tax Class fund.

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RBC Insurance appoints Prairie Region director

(October 12, 2005) RBC Insurance has announced the appointment of Shane Corcoran as regional director, Prairie Region for the life and health division of RBC Insurance, covering Northern Alberta, Saskatchewan and Manitoba.

“We are certain our distributors will continue to benefit from Shane’s extensive experience and understanding of the industry,” said Neil Paton, vice president, third party distribution, RBC Insurance. “Shane’s depth of knowledge of life and health insurance and RBC Insurance specifically makes him an ideal fit for this role.”

Corcoran has 18 years of sales experience at RBC Insurance and most recently was a senior account executive responsible for individual disability insurance.

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Covington proposes merger of its LSIFs

(October 12, 2005) Covington Group of Funds has proposed the merger of six of its labour-sponsored investment funds into one Covington Venture Fund. The board has already approved the merger, which now awaits unit-holder and regulatory approval.

If approved, the proposal would bring together Triax Growth Fund, New Millennium Venture Fund (both Venture series and Balanced series shares), E2 Venture Fund, New Generation Biotech Balanced Fund, Venture Partners Balanced Fund and Capital First Venture Fund.

“As a result of operating the Covington Venture Fund as one fund rather than as six independent funds, there is anticipated to be a reduction in the ongoing expenses including operating costs, management fees and professional fees, as a result of the economies of scale that should result from the merger,” the company said in a release.

The proposal will face a vote at the annual and special meetings of the funds, to be held on November 18, 2005.

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S&P to proceed with income trust plan

(October 11, 2005) Despite unanswered questions from the federal government over the fate of income trusts, Standard & Poor’s has announced it will forge ahead with plans to phase trusts into the S&P/TSX Composite Index.

The decision to maintain the plan was made after Standard & Poors received more than 30 responses to its call for comment, in the wake of Ottawa’s decision to consult on the future of trusts.

The first set of trusts will be added to the index after the market closes on December 16, 2005, with a second group to be added after the close on March 17, 2006. An equity-only index will still be launched beginning in December 2005 and income trusts will not be added to the blue-chip S&P/TSX 60 Index.

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AIC hires Naccarato from PH&N

(October 11, 2005) Fund firm AIC has appointed U.S. equities specialist Pat Naccarato as portfolio manager, working on the AIC Value Fund, AIC American Balanced Fund and anticipated closed-end fund offerings.

“The addition of Pat to our team reinforces our ongoing commitment to our investors to provide the best quality talent in our research group,” said Jonathan Wellum, Chief Investment Officer.

Naccarato, with more than 18 years experience, joins AIC from Phillips Hager & North, where he managed U.S. equity investments.

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Fidelity delisting two LPs

(October 11, 2005) Fidelity Investments will voluntarily delist two of its limited partnerships from the Toronto Stock Exchange, effective December 31, 2005.

Fidelity Limited Partnership 1994 (FLP.UN) and Fidelity Limited Partnership 1995 (FYP.UN) have termination dates at the end of 2006 and 2007, respectively, and as they approach termination, their assets will drop below TSX listing requirements. The company says the delisting should not affect unitholders, as they will continue to distribute quarterly income.

Fidelity also reminded unitholders of its Limited Partnership 1993, which will be terminated December 31, 2005.

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Investment prospecting: Study highlights eastern Europe, Asia

(October 11, 2005) Russia, Romania and Bulgaria have been added to PricewaterhouseCoopers’ annual study of countries’ offering the best investment opportunities for retail and consumer firms.

China, India, Turkey and Vietnam also make the list of the 20 countries with the highest growth potential.

The study says that while achieving a presence in these markets can be challenging, companies that develop new products and new formats tuned to the quickly evolving tastes of customers will be successful.

“Adopting a policy of expansion into one or several of the high growth markets is a strategic must for retail and consumer companies,” says Jacques-Etienne de T’Serclaes of PricewaterhouseCoopers. “To succeed in transitional economies, companies must consider the specific challenges they face in expanding before realizing the opportunities that lie ahead.”

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U.S. institutional investors increase equity stake

(October 11, 2005) Calls for tighter corporate governance regimes could get louder in the futures, as institutional investors increased their ownership stake of the U.S. equity market, according to a study by the U.S. Conference Board.

According to the most recent data, U.S. institutional investors controlled $19.6 trillion in global assets in 2003, matching a peak reached in 1999.

“Despite a brief hiatus, the economic power and clout of U.S. institutional investors continues,” says Dr. Carolyn Kay Brancato, director of The Conference Board’s global corporate governance research centre.

“These investors tend to be the most activist in demanding corporate governance reforms and will continue to have a profound impact on every company not only in the U.S. but also in global markets, since U.S. investors have tended to be out in front of global shareholder activism.”

Among the various institutional investors, pension funds are the largest single equity holders, at 40.7% of the total, while investment companies account for 22%. Insurance companies hold 23.3% of institutional equity holdings, while bank and trust companies own 11.7%, and foundations hold 2.4%. As recently as 1980, investment firms made up only 2.6% of assets, while pensions were 32.6%. Banks and trust companies have declined substantially from 38.8% of total assets.

This continued growth is significant because, among the categories of institutional investors, the public pension funds are the most activist and the most coordinated with other global institutional investors, says Brancato. “Ten years ago, these funds weren’t likely to join in lawsuits, but now, having been severely burned by the Enron and WorldCom situations, these funds are asserting themselves as never before.”

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