Increased competition from domestic and foreign banks has had a noticeable impact on the market share of the Big Five in Canadian fixed income trading, says a report from Greenwich Associates. As a group, these banks now represent just 50.8 per cent of the total, compared to 67.7 per cent in 2011. The 16.9 percentage point drop-off in market share could reflect evolving business strategies of the larger bond dealers. Some banks may feel that competition and the increase in electronic trading have eroded the margins in the business to the extent that they need to adjust their client priorities. Overall trading volumes in Canadian fixed income rates instruments ‒ including government, provincial, and mortgage bonds rose ‒ sharply in 2012, fuelled by a cocktail of economic, market, and regulatory factors. The growth in the market has encouraged dealers outside the large top five brokers to further invest in the debt markets, accelerating the role of electronic trading.
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