By Aulia Beg.
Canadian fixed income platform CanDeal has extended its opening hours to capture more of the the European trading day. It will now open at 4am Eastern Standard Time (EST) which is 9am Greenwich mean time, and close at 5pm EST time or 10pm GMT.
The firm says that its move reflects the increased interest of European investors in Canadian fixed income securities. The platform claims to trade 35% of all Canadian government, corporate, provincial and mortgage-backed securities bonds, and 95% of electronic bond trading in Canada, while 35% of its volumes come from outside of Canada.
“Now that we have launched European hours [investors] are able to access a greater pool of liquidity in fixed income electronically,” says Tristan Michela, executive vice president of CanDeal. “CanDeal is like a one-stop shop with 11 dealers and the majority are Canadian banks. If a global portfolio has 2-5% Canada, they can access CanDeal to reach that component quickly and efficiently.”
CanDeal runs on Tradeweb technology and users of the platform can trade across both CanDeal and Tradeweb. It is owned by Canada’s six major banks and the TMX Group. Pre-trade transparency in the Canadian market is not obligatory, with trades reported via the government bond data product called CanPXon a voluntary basis.
Since 2016, the Investment Industry Regulatory Organization of Canada is the designated post-trade information processor for Canadian bonds. Reporting of trades moved from an hourly delay to a two-day delay in 2016, while the number of reported trades was expanded.
The drivers for European interest in using the CanDeal platform from Europe are diverse, says Jayson Horner, CEO of CanDeal, noting that different types of investment firm gain different advantages.
“Indexers get involved in Canadian fixed income securities as part of their global fund portfolio,” he says. “Diversity plays a part, decisions being based on risk, nominal rates etc. Canadian market investors are well served by CanDeal’s platform and the breadth of liquidity it attracts. A currency view can also play a role, with recent performance of the Canadian Dollar perhaps weighing into the decision making process.”
Horner notes that macroeconomics play a big part in the decision-making process to invest in Canadian debt, and citing a safe geo-political environment and a strong financial ecosystem believe the trend will continue.
“Aside from these ‘safe harbour’ factors, Canada’s economy will benefit significantly from any further upturn in commodity prices; arguably the Canadian economy has endured significant downside pressures as a result of weakness in this sector and adjusted accordingly,” he says. “Recent rebounds in job creation and commodity prices bode well for long-term sustained growth.”