The crisis that wiped out a quarter of Canada’s independent brokers seems to have halted. Four new firms signed up with the Investment Industry Regulatory Organization of Canada in the first five months of 2017 and only two deregistered. That compares with net dropouts over the last four years as plunging commodity prices and higher compliance costs favored big banks.
Boutique dealers were also battered by Canadian investors’ post-crisis aversion to risk capital, which prompted them to avoid the kind of companies that typically work with smaller brokerages. Such firms funnel research and capital into small and mid-cap companies, which account for more than a quarter of volume traded in Canada’s equity markets.
“Life for independents has gotten better over the last six months,” Dan Daviau, chief executive officer of Toronto-based independent broker Canaccord Genuity Group Inc., said by phone. “Investors are all of a sudden saying, ‘Hey, I don’t mind taking a little more risk, I don’t mind investing in an early-stage tech company or a mining company that’s just discovering stuff.’” Continue Reading →