Canada’s Comprehensive Economic and Trade Agreement (CETA) with the European Union will bring a number of major benefits to the investment industry, Ian Russell, president and CEO of the Investment Industry Association of Canada (IIAC), says in his latest industry letter.

His rationale:

  • European business will look to Canadian dealers to identify potential acquisitions in the Canadian corporate sector and finance their purchase and expansion.
  • The investment banking operations of the mid-tier boutiques will find similar investment banking opportunities with mandates to identify and finance smaller-sized business acquisitions.

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  • Several Canadian bank-owned and independent dealers have built up their banking operations in London to penetrate local markets and compete for business flowing from CETA.
  • As markets for Canadian products and services expand in Europe, Canadian dealers will have opportunities to arrange debt and equity offerings for Canadian companies to finance related expansion in plant and equipment.
  • The large full-service investment dealers have built up wealth management businesses in Europe in recent years through acquisition and internal expansion.
  • Canadian firms have a solid reputation for good management and strong branding.
  • CETA will enable Canadian dealers to penetrate the financial markets more easily as the trade agreement mandates national treatment in respect of securities regulation (home jurisdiction regulation) and sets clear guidelines for a robust and well-defined prudential carve-out that protects “reasonable measures” from being interpreted as prudential reasons to avoid frivolous claims. In the event of dispute, CETA reportedly has the most efficient and innovative state-to-state dispute settlement mechanism of any free trade deal signed by Canada. It builds on lessons learned from past experience and is shorter than the World Trade Organization dispute resolution process.

Read the full letter here.

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