TSX volume, value tumble

TORONTO — The volume and value of trading on Canada’s largest stock exchange was down sharply last month compared a year ago, according to statistics released Thursday by TMX Group (TSX:X).

TORONTO — The volume and value of trading on Canada’s largest stock exchange was down sharply last month compared a year ago, according to statistics released Thursday by TMX Group (TSX:X).

The stock exchange operator said average daily volume at the Toronto Stock Exchange was 393 million shares in January, down 20 per cent from a year earlier.

The total value of the securities was down 16 per cent from January 2011, falling to $112.66 billion for the month or $5.36 billion daily on average.

The drop was even more pronounced on the TSX Venture Exchange, which is a smaller stock market within the TMX Group of companies.

Average daily volume on the junior market fell to $221.9 million and average daily value of the equities was $119.8 million.

That’s down 47 per cent and 54 per cent respectively from January 2011.

The decline in trading volumes comes as the market is also performing worse than it did a year-earlier, which has pushed some investors to remove their money from equities and let it sit in cash.

Last January, the TSX and junior Venture exchange were in the midst of spiking higher, recovering from the 2008 crash, said Brendan Caldwell, CEO at Caldwell Investment Management.

“It’s not surprising that volumes are lower when the market is lower. There is a correlation. People don’t trade stock as much when they don’t think they’re going to make money,” Caldwell said.

But the TSX recovery from the previous downturn peaked in early March, meaning year-over-year comparisons will begin to become more favourable as time goes on, he added.

The situation was better at the Montreal Exchange, which deals with derivatives such as options rather than stocks.

“The options exchange does better when things are terrible because people are buying options to a greater degree to hedge their positions,” Caldwell said.

MX volume was up 21.5 per cent to about 5.16 million contracts for the full month of January.

TMX Select handled about 10.5 million shares a day last month, with an average daily value of $143.3 million. There was no comparable figure a year earlier.

But Caldwell expects both market performance and volumes to pick up in 2012 and said there is already evidence that is happening as more firms begin to issue new shares on the Canadian exchanges.

“The new issue business is very strong in Canada. which makes me think we’re going to have a good market here for a run and as the market begins to turn that’s when the new issues really come into their own.”

Some Bay Street wages are paid based on per trade fees, suggesting that along with lower trading volumes, investment firms and banks have not been faring well.

The financial sector has shed some jobs in recent months, but Caldwell said if the market does better in 2012, investment dealers will also see a turnaround and begin to benefit from the new share issues.

Maple Group, a consortium of 13 financial institutions looking to take control of TMX Group, extended its takeover offer earlier this week until Feb. 29.

Maple said it has made numerous submissions to regulators in an effort to get the approvals it needs to complete the deal, which values the TMX Group at roughly $3.8 billion.

As part of its bid, Maple plans to buy all of Alpha Trading, an alternative trading system owned by the major players in the Canadian securities industry including the big banks, and CDS Inc., a clearing and depository firm, and add them to TMX Group to create a bigger Canadian-based exchange.

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