Trading powerhouse coming to Canada

By Staff | September 7, 2011 | Last updated on September 7, 2011
3 min read

The long wave of consolidation running through the financial services industry could ebb in the coming year, as one of the world’s largest clearing and settlement firms opens shop in Canada.

The arrival of BNY Mellon subsidiary, Pershing LLC, has the potential to splinter the advice channel by providing a mind-boggling suite of services to advisors who are considering taking the truly independent road.

In an exclusive interview with, Frank La Salla, managing director, and co-head of the global customers group says Pershing plans to enter the Canadian market during first quarter 2012.

The firm’s initial entry into the market will be in the introducing broker-dealer space, but La Salla leaves the door open to dealing directly with advisor groups. Until now, the firm’s primary contact with Canadian advisors was in conducting “south-bound business” by providing Canadian traders access to U.S. markets, he says.

“We’ve been focused on getting our IBDs onboard. In the next step, we’ll look at getting the independent financial advisor space,” he says. “Although we have no formal plans now, it’s certainly on our radar screens to extend the [Pershing Advisor Services] model out to provide those capabilities to the advisors.”

The service offering is impressive: Pershing clears in 60 markets around the world, giving advisors a world of investment opportunity through its platform, which includes access to mutual funds, equities, debt and options.

Pershing’s entry to the Canadian market will vastly increase the country’s clearing and settlement capacity.

“We’re going to provide real choice to broker-dealers that are self-clearing, that might consider going third party, and hopefully reduce their operational costs,” La Salla says.

Outsourcing these administrative and operational aspects of the business could also relieve pressure from these firms’ balance sheets, allowing them to commit core capital to their core competencies, he adds.

The third party clearing offering could also reverse the long trend of industry consolidation, as it would provide an alternative for advisors who want to splinter off from their firms.

“It would allow groups [of advisors] to break off, give them another choice of service provider, and allow start-up firms to flourish,” he says. “We would want to sit down, at the right time, with a group of advisors who to this point might not find a right fit with a third party provider.

“That wouldn’t be our initial intent, but it is certainly something that inevitably happens; it happens here in the U.S. all the time.”

First, the firm will focus on its bread and butter activities of clearing and execution, La Salla explains. Down the road, he expects to expand into managed accounts or possible foreign exchange.

The decision to enter the Canadian market was sparked by requests from the firm’s existing clients south of the border, which wanted access to the northern market, while maintaining their relationship with Pershing. Canada’s equity-investing culture, strength of financial infrastructure and good demographics made it an easy decision.

Pershing was admitted to IIROC in March of this year, as Pershing Securities Canada Limited. This prompted a flurry of calls expressing interest in the offering, says La Salla.

“It really was a nice, unintended consequence of what we did.”

He says the company is still hammering out some internal logistics issues and building its technological infrastructure, but that it should be “pretty much ready to go in Q1 of 2012.”

“When we go into a market, we want to do it right,” La Salla says. “We have a sense of urgency about it, but not to the detriment of our reputation or our service levels that we provide clients. When we open the door to business, we’re ready to do business.”

The company has about 1,150 financial institutions on its U.S. platform, and the move will give these institutions a lower cost avenue for investing into the Canadian market.

Pershing already conducted business in the Canadian market, primarily facilitating north-bound investments from its U.S. client firms. But until now the company has used local brokers and agent banks on the Canadian side of the border.

“We’ve never really provided a full suite of clearing and execution capabilities in Canada for our clients,” says La Salla. “We get an immediate benefit just by internalizing what we already have. The economics of this made sense for us, even before the first client comes in the door.” staff


The staff of have been covering news for financial advisors since 1998.