Canadian institutional investors are prioritizing efficient access to liquidity and high-quality brokerage services in the domestic equity market, according to a new report from Crisil Coalition Greenwich.
It found the average estimated total Canadian cash equity spend grew five per cent up from $450 million in 2023 to $475 million in 2024, noting Canadian trading volumes tend to be lighter, leading to liquidity challenges in the smaller-cap equity market.
Read: Value of Canadian equities marketplace drops 10% in 2023: report
The report also found ease of use, reliability and quality of technical support (70 per cent) and proven execution quality (61 per cent) were the leading factors for asset owners picking electronic trading platforms. Almost 40 per cent of asset owners said they’re looking for liquidity from small- and mid-cap equities.
In a press release, Jesse Forster, senior analyst market structure and technology at Crisil Coalition Greenwich and author of the report, said a combination of high concentration of assets held by a few large asset managers coupled with lower trading volumes are making liquidity access crucial to investors.
“Despite a decline in trading last year, traders expect it to resume its upward trend, reaching 29 per cent of notional value in three years, driven by the adoption of new electronic channels and the growing importance of small- and mid-cap liquidity.”
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