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April 30, 2003

Great White North Invades the States

By Peter Chapman

A large Canadian bank is now a bigger player in the U.S. equities business.

Last month, BMO Financial bought New York-based research boutique Gerard Klauer Mattison. This gives BMO the research, sales and trading muscle to compete in the U.S. equities underwriting market.

The $30 million deal is BMO's third major acquisition of U.S. broker dealer assets in the past year. It also continues a trend among the Big Six Canadian banks of buying into U.S. banking and brokerage.

Since February 2002, BMO, formerly known as the Bank of Montreal, has spent some $700 million to increase its presence in the U.S. GKM, which will operate as Harris Nesbitt Gerard, is not BMO's first stab at an equity platform. It began a build-up in Chicago in the mid-1990s, but shuttered that operation in 1998.

Since then it has maintained a small equities presence in the U.S. under its BMO Nesbitt Burns banner. In New York, Nesbitt Burns focuses on Canadian stocks interlisted on U.S. exchanges.

On the trading side, the deal puts BMO on the map in the U.S. BMO Nesbitt Burns is the largest trading house in Canada, according to the 2002 Brendan Wood International Survey. But it has lacked heft in the U.S. Rivals RBC Capital Markets, CIBC World Markets and TD Waterhouse Capital Markets trade more volume, according to AutEx.

Eric Tripp, head of the equity division at BMO Nesbitt Burns, expects the deal to favor the GKM desk with more order flow.