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( (April 21, 2008) Canadians bought foreign, while foreigners bought Canada in February, according to Statistics Canada’s latest report on international transactions in securities. Canadians sharply increased their holdings of foreign securities by $6.1 billion in February. While non-residents acquired $3.8 billion worth of Canadian securities over the month, their largest monthly purchase since April 2007.

A large portion of Canadian investment money went into foreign bonds, StatsCan reports. February marked a $2.6 billion acquisition of foreign bonds, following two straight quarters of sell-offs in the context of the global credit market meltdown. Over the month, Canadian investors bought $2.4 billion worth of U.S. government bonds, which StatsCan says was fuelled by strong demand for medium-term bonds of five to 10 years as the yields on those instruments improved.

Canadian investors also seemed keen to wade back into the U.S. equity market after prices there reached an 18-month low. Canadian purchased $3.8 billion of foreign stock on the month — more than replacing January’s reduction of $2.3 billion — the majority of that money ($2.9 billion) went to buy U.S. shares.

Non-residents opted to invest heavily in Canadian securities. Following heavy purchases of $6.3 billion in January, non-residents added a further $3.7 billion worth of Canadian bonds to their portfolios in February. StatsCan notes that regionally, British and Asian investors accounted for the demand, while U.S. investors reduced their holdings by a sizeable amount.

Instead, U.S. investors seem interested in acquiring Canadian stocks. Non-residents bought $1.3 billion of Canadian shares in February, as Canadian stock prices rebounded. The majority ($1.2 billion) was in outstanding Canadian equities, with gold, mining and energy sectors, StatsCan reports.

According to StatsCan, since December 2007 investments by U.S. investors accounted for nearly all the monthly purchases of outstanding Canadian shares, as the U.S. stock markets posted consecutive losses.

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Expert regulatory panel seeks input

(April 21, 2008) The push for a single securities regulator in Canada took a step forward when the appointed expert panel officially launched its consultation process today.

The panel, appointed in February by Federal Minister of Finance Jim Flaherty, is seeking input to develop a model common securities act for Canada.

“The minister has given us a clear mandate — to help create a Canadian advantage in global capital markets,” said Thomas Hockin, a progressive conservative parliament member appointed as the panel’s chair. “Our goal is to seek input on the best way forward to improve securities regulation in Canada. To do that, we will seek the views of stakeholders on these issues.”

The consultation document provides background information on the topic, discusses the terms of reference and poses a series of questions the panel would like answers to. Interested parties will have several ways to participate, including direct contribution of their views through the panel’s website. The panel members, Ian Bruce, Denis Desautels, Hal Kvisle, Dawn Russell, Terry Salman and Heather Zordel, also plan a limited number of face-to-face meetings across the country. The deadline for submissions is July 15, 2008.

Hockin said the consultation process will build upon the “positive steps” taken in recent years by the full range of partners, including provinces, territories and regulators, contributions by private sector groups, and international best practice.

The University of Toronto’s Capital Markets Institute (CMI) was appointed as the research resource to the panel. The CMI will assist in the design and direction of the panel’s research program. Paul Halpern, TSX chair in capital markets, Rotman School of Management, University of Toronto and Poonam Puri, associate professor of law, Osgoode Hall Law School, York University, will jointly carry out the function of research director.

Law firm Stikeman Elliot is now engaged to provide legal advice and assistance to the panel and is specifically tasked with developing the draft model common securities act.

The panel is expected to deliver a final report and draft model securities act by the end of 2008.

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BMO acquires Illinois-based muni-bond dealer

(April 21, 2008) BMO Capital Markets revealed that it has acquired Chicago-based regional bond dealer Griffin, Kubik Stephens & Thompson.

The buyout makes BMO the six-largest bank sixth-largest bank qualified municipal bond dealer in the United States and the largest in Illinois.

“This acquisition allows us to grow our U.S. fixed income business by broadening our scope and more than doubling the size of our municipal bond business,” says Tom Milroy, BMO Capital Markets’ CEO.

Charlie Piermarini, Executive Managing Director and Head of Debt Products & Securitization for BMO Capital Markets adds that the acquisition will help BMO Capital Markets delve deeper into the healthcare, education and financial sectors.

Right now, GKST has offices in Chicago, Monticello, Illinois and Milwaukee, Wisconsin and serves clients in 47 states and Puerto Rico. There’s no word on whether or not that will change once BMO takes over in June.

(04/21/08)