Briefly:

(April 21, 2006) The C.D. Howe Institute is projecting the Bank of Canada will increase its key overnight lending rate 25 basis points to 4% at its next meeting on Tuesday, April 25.

While there was clear consensus for a rate hike amongst the 11 economists and academics who sit on the institute’s monetary policy council, they were split over what the Bank of Canada should do at its meeting in May.

Five members are calling on the central bank to freeze the rate to 4%, four would like to see the rate increase to 4.25%, and one would like to see the rate upped to 4.5% while another would like to see the rate scaled back to 3.75%.

Earlier this week, U.S. markets were shocked by how unambiguous the U.S. Federal Reserve was under its new chair Ben Bernanke, who suggested there might be one more rate increase and then the central bank would wait to see what happens.

Canadian investors don’t have the luxury of peering into the closed doors discussions at the Bank of Canada. And there’s no guarantee the central bank will follow the U.S. lead.

• • •

TSX not just about Canada anymore

(April 21, 2006) The TSX Group is looking to expand into other North American markets by leveraging its strength in the energy sector, Richard Nesbitt, CEO of the exchange, told an audience at an energy conference in Toronto on Thursday.

The TSX plans to use its Natural Gas Exchange, a leading North American exchange for the trading and clearing of natural gas and electricity contracts, in its push south. “Through NGX, TSX Group now has full-time people in Texas and California who are signing up customers, developing new products and gradually building liquidity,” he said at GasFair, Canada’s largest energy conference.

The TSX is in a unique position to do this since it lists more oil and gas companies than any other exchange in the world with 434 oil and gas companies and income trusts at the 2005.

“Our countries have an opportunity to free our markets up from some of the trade restrictions. Canada has prospered under the first 15 years of free trade. Trade with the U.S. has tripled in that time to $580 billion a year and oil and gas are an important part of that trade. While there is free trade of the energy between our two countries, U.S. investors still cannot trade shares in the companies that are listed on our markets,” he said.

The TSX expansion push comes at a time when the exchange is facing increasing competition from the London Stock Exchange’s AIM, which has admitted more than 2,200 firms and raised nearly $50 billion since it opened in 1995. AIM has made several attempts in to lure Canadian small-cap growth companies with its lower compliance costs, generous tax breaks and a regulatory regime that is far less restrictive than North America.

• • •

Canadian pension plans jump 4% in Q1

(April 21, 2006) Canadian pension plans posted their 12th straight quarter of positive earnings, according to RBC Dexia Investor Services.

In the first quarter ending in March, pension funds climbed 4% due to surging commodity prices and hearty growth on the global equity markets. “The average Canadian pension plan has realized a robust 15.8% annualized return over three years,” said Don McDougall, director advisory services, RBC Dexia Investor Services. In the latest 12 months, performance averaged 14.9%.

Pension funds performed well despite having reduced exposure to resources, which resulted in the funds performing about 0.6% below the S&P/TSX Composite Index in the quarter.

The funds outpaced global equity markets by 0.8%, RBC Dexia added, noting that the repeal of the Foreign Property Rule last June has paved the way for more global diversification. That’s been good for pensions, although the strong loonie has tempered foreign returns for many unhedged Canadian plans, explained McDougall.

Speculation about further interest rate hikes triggered a modest sell-off of Canadian fixed income products, resulting in a 0.4% loss on the quarter, in line with the Scotia Capital Universe Bond Index.

• • •

Sun Life, CFIB team up on Quebec group insurance

(April 20, 2006) Sun Life Financial and the Canadian Federation of Independent Business are joining forces to launch two new group insurance products designed for self-employed workers and small business owners in Quebec.

CFIB, Sun Advantage Plus (for small business owners) and CFIB, Sun Advantage Solo (for self-employed workers) offer better coverage, lower premiums and enhanced accessibility, the two companies said in a release.

“For a long time now, entrepreneurs have wanted simple, comprehensive and reasonably-priced group insurance products,” says Richard Fahey, Quebec vice president of the CFIB. “We are very happy to meet their needs and enable small business owners and their employees to have appropriate insurance coverage.”

In addition to the partnership with Sun Life Financial, CFIB will work with Nexim Canada, which acted as master broker in the development of the new products. Nexim will be responsible for the certification of member brokers in all regions of Quebec who are licensed as representatives in group insurance.

The two products will be available May 1, 2006.

• • •

Pro-Financial launches metals-based commodity note

(April 20, 2006) Pro-Financial Asset Management has announced the launch of a pure base metal commodity note, the Pro-Performance Commodity Linked Note.

Principal protected and backed by Société Générale, the 5.5 year term notes provider investors with exposure to gold, copper, aluminum and zinc.

“The Pro-Performance commodity notes provide investors timely exposure to the soaring base metals sector, while protecting their downside risk,” says Pro-Financial senior vice president Ravi Ramaswamy. “The notes provide investors desired exposure to the base metals themselves, rather than the commodity investment companies. Commodity investment companies typically hedge their exposure to commodity prices and as such, the equity value of the companies may not fully reflect the changes in commodity prices.”

• • •

CSR issues gaining traction, survey suggests

(April 20, 2006) Nearly 70% of Canadians say they are aware of corporate social responsibility issues, however most are in the dark when it comes to specifics, a new survey suggests.

The Ipsos-Reid poll found that 53% of Canadians pay some attention to issues related to corporate social responsibility, while 15% claimed to pay a “great deal” of attention.

Only one-third of those surveyed could identify companies which have “made an explicit commitment to CSR”. A similarly low number (31%) were aware of any companies with “formal policies in place that require companies to take on socially responsible activities and initiatives.

Among firms, three-quarters of business leaders claim to have “made an explicit commitment to CSR” and 72% said they have developed formalized policies for such activities.

• • •

Pooled pension funds enjoy healthy first quarter

(April 20, 2006) Mercer’s Pension Health Index advanced in the first quarter of the year, thanks to positive returns among the world’s major equity markets.

“The first quarter was great news for pension funds,” says Peter Muldowney, business leader for Mercer Investment Consulting in Canada. “Not only did equity markets post strong returns, but long bonds, which provide an estimate for pension liabilities, declined during the quarter.”

The Mercer index, an indicator of the impact of capital markets on the financial position of Canadian pension plans, showed a solvency rate of 85% at the end of March 2006, compared to 80% at the end of 2005.

• • •

What goes up, must come down, TD warns

(April 19, 2006) The recent run-up in commodities, particularly oil and gold, is not sustainable, according to TD Economics. Crude oil continues to set records, climbing above $72 US a barrel on Wednesday, while some gold bugs believe bullion could soar to $700 an ounce by year’s end.

Although the fundamentals underpinning those numbers — including continuing political tensions in oil-producing nations such as Iran and Nigeria — are positive, investors should be cautious, says TD senior economist Derek Burleton.

“Put simply, spurred by speculative activity, prices have risen too far, too fast,” he says in a report. “We are now even more steadfast in our view that commodity prices are headed for a significant pullback of least 20% later this year.”

The main culprit will a mid-cycle economic slowdown in the U.S., although Burleton admits that could take at least a few months to materialize. “While ongoing rapid growth in developing markets such as India and China will continue to place a floor under which commodity prices can drop, a major slackening in the world’s largest economy is likely to win out.”

• • •

Foreign investment falls in February

(April 19, 2006) Foreign investment in Canadian securities dropped to $2.1 billion in February, down from $3 billion in sales the previous month. Most foreign investors bought equities, as sales reached $4.7 billion in February, but sold off their bond holdings for a third month in a row. Overall, total equity acquisitions by non-residents in the first two months of 2006 have already surpassed the total for all of 2005, Statistics Canada said in its monthly report on international securities transactions.

Canadian investors meanwhile, continued to acquire foreign securities for the 13th month in a row, buying $2.7 billion worth of foreign securities. Equities again lead the way, with Canadians investing $1.8 billion in U.S. equities while selling off $600 million worth of overseas shares. Canadian bond purchases slowed considerably in February after making record investments in January. Investors sold off $451 million in U.S. bonds and invested $1.2 billion in overseas bonds.

• • •

Gluskin Sheff plans to go public

(April 19, 2006) High net worth money management firm Gluskin Sheff has filed a preliminary prospectus, announcing its intention to take the company public. The subordinate voting shares being offered are identical to the multiple voting shares being retained by company managers except each subordinate share is entitled to one vote while multiple voting shares are entitled to 15 votes.

The company currently has $3.75 billion in assets under management and roughly 700 clients. Investor Economics rated Gluskin Sheff the fifth largest Canadian non-bank private client wealth management firm, as of December 2005. Approximately $2.9 billion or 83% of the firm’s assets under management are managed on behalf of high-net-worth private clients, including entrepreneurs, professionals, family trusts, private charitable foundations and estates. The balance of approximately $600 million, or 17% of AUM, consists of funds managed on behalf of institutions.

• • •

OpenSky introduces two new series of principal protected notes

(April 19, 2006) OpenSky Capital has launched two new series of notes, the Annual Income Range Notes and the Annual Pay Range Notes, both guaranteed by Société Générale.

Each year, on the anniversary date of the issuance of the notes, investors will receive a payout equal to either the average price return of an equally weighted basket of common shares of 15 major global companies, where each share’s cumulative price return could reach up to 9%, multiplied by the principal amount ($100), or 2% multiplied by the principal amount ($100), whichever is greater. The notes are structure such that the annual payout will never be less than 2%.

Payouts for the Annual Income Range Notes will be treated as interest income and for the Annual Pay Range Notes as return of principal, for tax purposes.

The notes pay an upfront selling commission of 4% and are available until June 2, 2006. Minimum investment is $1,000 and the notes mature in 2014.

• • •

Stock regulator suspends, fines B.C. advisor

(April 19, 2006) A Market Regulation Services (RS) hearing panel has approved a settlement agreement in the case of Research Capital investment advisor Alfred Simon Gregorian.

At the hearing, Gregorian agreed to a five-year suspension and was ordered to pay a total of $55,260 for his use of manipulative and deceptive methods of trading by three of his clients in the securities of International Wex Technologies.

Gregorian entered more than 800 orders for the shares, mostly small volume buy orders, resulting in trades of no economic benefit to the clients and numerous upticks and high closes designed to prop up and create an artificial share price for the company, RS said.

• • •

Bank CFO wins top honour

(April 18, 2006) The Chief Financial and Administrative Officer of BMO Financial Group has been named “CFO of the Year” for 2006. Karen Maidment will be honoured at a gala dinner in Toronto’s Fairmont Royal York, on May 4.

Maidmont was chosen by a committee drawn from some of Canada’s most prominent business leaders. The committee praised her for her impact on the overall strategic direction of BMO.

The award is presented by Financial Executives International Canada (FEI Canada) and PricewaterhouseCoopers LLP, in association with The Caldwell Partners International.

Past recipients include Claude Mongeau of CN in 2005, Peter Rubenovitch of Manulife Financial in 2004 and RBC Financial’s Peter W. Currie in 2003.

• • •

Critical illness specialist joins Desjardins

(April 18, 2006) Desjardins Financial Security has announced the appointment of insurance veteran Sean Long as individual health products specialist.

“We are pleased to have Mr. Long join the Desjardins Financial Security team,” says Alain Bédard, vice president of product development and marketing, individual insurance at Desjardins Financial Security. “Mr. Long’s experience is a wonderful addition to help us in continuing to grow and develop our strong presence across Canada.”

Long has spent 34 years in the insurance industry, including 25 years in sales and has since focused on living benefits, promoting critical illness insurance throughout the Americas.

• • •

Most Canadians claim honesty on taxes

(April 18, 2006) Most Canadians will follow the “straight and narrow” this tax season, but some will exercise a little creativity, according to a survey by tax-filing software maker Intuit.

The poll found 87% claimed they would diligently follow the rules, but the real number may actually be higher — if they plan to cheat on their taxes, it is questionable whether they would admit it.

“Canadians are honest and forthright when preparing and filing their taxes,” says Tom Forbes, director of consumer tax software at Intuit Canada. “While there can be some confusion about what is and is not deductible, most have a sense of what’s right, and today’s software provides step-by-step guidance to ensure users receive every legitimate deduction.”

The survey also found that 54% of respondents planned to use their anticipated tax refund to improve their financial situation, either investing the amount or paying down debt. Nearly 20% said they would spend it on consumer goods or services, ranging from home renovations to travel.

• • •

TD flexes its American muscle

(April 17, 2006) TD Bank Financial Group has launched a $25 million US advertising campaign to promote its beefed-up U.S. presence.

The campaign, which is the first of its kind for TD in the U.S., comes on the heels of $480.6 million US cash deal it struck last Thursday to acquire Interchange Bank. The deal, pending shareholder approval, will give TD’s Banknorth a stronger presence in the “wealthy and dynamic market of northern New Jersey.”

“This is an excellent complement to our recent acquisition of Hudson United,” said William J. Ryan, TD Banknorth Chairman, President and Chief Executive Officer in a release announcing the deal.

On a pro forma basis, the acquisition of Interchange will position TD Banknorth as New Jersey’s ninth largest bank based on total deposits. The deal, when combined with TD Ameritrade and TD Securities, makes TD Financial Group one of the 10 largest banks in North America by market capitalization.

The new ad campaign will leverage the bank’s acquisitions and strengthen presence in the U.S. as a way to increase consumer awareness. The campaign will target eight mid-Atlantic and New England states. Three-quarter page print ads will run for 17 weeks in 50 daily newspapers, including The Wall Street Journal and The New York Times, while 30-second television spots will run for 11-weeks in key markets.

• • •

Hedge funds weather March in fine form

(April 17, 2006) RBC’s Hedge 250 Index had a preliminary net return of 1.71% in March, bringing the year-to-date return of the index to 5.07%.

March’s numbers for the index were an improvement over February when the index inched up a mere 0.44%. Since its inception on July 1, 2005 to February, the index has had a net return of 9.44%. Over the same period other investable indices have averaged 6.04%.

The performance of RBC’s index is in line with figures released by Credit Suisse, which reports a 1.82% gain for its hedge fund index in March versus a 0.34% gain in February.

• • •

Canada Life subsidiary fined $40,000 for accounting error

(April 17, 2006) In a settlement agreement with the IDA, GRS Securities, a subsidiary of Canada Life Assurance, will pay a fine of $40,000 and $7,000 in costs after it failed to maintain its risk-adjusted capital (RAC) above zero.

Between April and August in 2004, GRS, which administers group savings plans, switched its group investment plan from TD Canada Trust to Investors Group Trust. After the switch the trust should have been reported as a “non-allowable asset” but GRS recorded it as an allowable asset. As a result, instead of having an RAC of $6.399 million the actual RAC was in the red to the tune of $31.9 million. At its peak the RAC overstatement was $38.3 million.

GRS, which cooperated with the investigation, addressed the capital deficiency in September 2004 through subordinated debt from Canada Life. No client accounts were at risk, the IDA added.

• • •