Canada


Canada remains a stronghold for investors, with sound systems and ample protection against the elements. CIBC Mellon’s Shane Kuros reports

Geographically standing alone at the top of North America, Canada is a nation with exciting qualities rarely found around the globe: a vast physical landscape, an abundance of natural resources, and a strong financial sector, ripe for international investors to discover and explore.

Canada is acknowledged as one of the best sovereign nations in which to do business, and our financial sector continues to earn global acclaim. In 2014, our banking system was named the soundest in the world for the seventh year in a row by the World Economic Forum, and our nation maintains one of the few triple-A credit ratings for sovereign debt.

As outlined in the Bank of Canada’s most recent financial system review, the country continues to find success amid a challenging global environment. In the review, the Bank of Canada said: “Once we have seen a sustained increase in export demand, uncertainty about the future will diminish and firms will respond.”

“Our research indicates that many of the export sectors that we expect to lead the expansion still have some excess capacity to meet higher demand. This is one reason why our productivity growth has picked up recently. The implication is clear; a sustained expansion in our exports not only will represent new demand, it will ignite the rebuilding phase of our business cycle, which will create new supply.”

Stability is one of the strongest attributes of Canada’s financial sector. The regulatory environment in which market participants operate has garnered well-justified praise for fostering strong risk management, governance and best practices across the industry. The Canadian Office of the Superintendent of Financial Institutions (OSFI) regulates federally registered banks and insurers, and trust and loan companies in Canada, with slight differences in rules and regulations for each province and territory.

While Canada’s environment is complex, regulators are constantly looking to strengthen the sector. For example, the individual governments of Canadian provinces British Columbia, Ontario, Saskatchewan, New Brunswick and Prince Edward Island are undertaking an initiative with the Canadian government to enforce capital markets rules and regulations nationally, rather than provincially and territorially.

Canada’s Department of Finance noted that “a cooperative capital markets regulatory system will strengthen Canada’s capital markets by providing better protection to investors, enhancing Canada’s financial services sector, and managing systemic risk … A common regulator will administer a single set of regulations, reducing red tape for businesses”.

Regulatory demands in the marketplace, both global and domestic, continue to evolve as well, and those who implement fluid and dynamic rules will have a much easier time adapting to them. In the Canadian marketplace, reconciling domestic activities with cross-border regulations is a key consideration. Local expertise and insights are intangibles that attract global investors, as domestic suppliers work with entrants to the Canadian market to find solutions that mitigate risk and satisfy the requirements of both local and global regulations.

Many protections exist in the Canadian market. The Canada Deposit Insurance Corporation (CDIC) protects a client’s savings against the failure of a bank or other CDIC member institution. They provide insurance up to specified limits for money deposited in a CDIC member, in the event of that member becoming bankrupt. Similar to the CDIC, the Canadian Investor Protection Fund (CIPF) provides insurance regarding securities, cash and other property held in a client’s account, should an investment dealer become insolvent. In the Canadian Derivatives Clearing Corporation, Canada also has the only central clearing counterparty for exchange-traded derivative products in North America.

Navigating challenges is a matter of mutual education. At CIBC Mellon, we’re ready to assist global investors with our renowned client service delivery and relationship building methods, along with a deep knowledge of Canadian market mechanics, to create the right balance to satisfy both Canadian and global stakeholders.

The Canadian economy continues to grow with the emergence of vital and healthy sectors, and the banking system is one of the soundest in the world. With uncertainty and instability prevailing in various locations throughout the world, Canada stands out in terms of steadiness and opportunity for global investors. Now is the perfect time to explore everything Canada has to offer.

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