October 9 Benefits and Pensions Monitor Daily News Alerts

Co-operation Needed Among Provinces

More co-operation is needed between the four provinces to fix Atlantic Canada for the next generation, says Graham Steele, a former NDP finance minister for Nova Scotia. He, along with Tom Marshall, former PC minister of finance for Newfoundland and Labrador, and Wes Sheridan, former Liberal finance minister for Prince Edward Island, took part in the discussion ‘A View From The Money Seat: 3 Former Finance Ministers’ at 2018 CPBI Atlantic Regional Conference. He said he was not talking about an Atlantic provinces union, “it will never happen.” However, he questioned why there are four pension regimes and four liquor commission. The region just doesn’t have the resources for separate entities. Sheridan agreed that co-operation is key and “we can do that right up to point of creating a union.” Procurement is one area where it could be done. “We all use the same things, yet we procure separately,” he said. At the top of this list is drug procurement, he said. Ontario is the largest procurer of drugs in Canada and it pays 68 per cent of what the Atlantic provinces pay simply due to ignorance and size. The region is losing out on an opportunity to save millions of dollars a year. He cited the Atlantic lottery as an example of co-operation which has worked for 40 years. Marshall, however, thought maybe regional government is the way to do. “When we got together, we got along,” he said. One of problems, for example, is the population of Newfoundland is declining. The province needs immigrants. “PEI doing a great job there, why not let them do it,” he asked. But there is no interest in that in Newfoundland which, like the other three provinces, wants to “hang on to everything” because each is protecting its own turf, he said.

Survey Identifies Need For Pension Plans In For Non-profit And Charitable Sectors

A majority of employees in the non-profit or charitable organization sector have no retirement benefits at all. If they exist, the most commonly offered plan is based upon employer matching of employee retirement contributions, says a survey for the Common Good initiative to create a national, portable retirement income plan for Canada’s non-profit and charitable sector. These employers currently inhabit a challenging environment to offer retirement benefits. Financial barriers are huge issues for retirement benefits in the non-profit sector as 84 per cent say the lack of consistency/stability in their organization's funding impedes their ability to offer retirement benefits to employees. The most common reason cited for employers not offering benefits is that they are too expensive (73 per cent). Larger employers are more likely to offer retirement benefits of some kind. Only 18 per cent of employers with small numbers of employees (less than 10 employees) have retirement benefits; this number increases to 52 per cent among medium employers (10 to 99 employees), and reaches a high of 75 per cent for large employers (100 or more employers). Among employers that do offer benefits, they are generally satisfied with their current plan, except for its applicability to all types of employees. Three-in-four (75 per cent) of the plans that are offered are totally (48 per cent) or partially (27 per cent) optional. Echoing earlier concerns, the main barrier to full plan participation is plans’ inability to be offered to part-time/contract workers. The survey also shows that at first blush, interest in Common Good is extremely high. Over nine-in-10 employers (92 per cent) and employees (94 per cent) are interested in the potential plan after first learning about it.

Canada Lags In UNPRI Signatories

Canada has the lowest percentage of UNPRI signatories outside of Asia ex-Japan at 51.9 per cent, trailing the U.S. (55.5 per cent), the UK (77.8 per cent), and continental Europe (88.5 per cent), says Russell Investments ‘2018 ESG Survey.’ Similarly, the U.S. (59.4 per cent) and Canada (63 per cent) have the lowest number of firms with a Responsible Investment Policy outside of Asia ex-Japan. Australia and New Zealand (90 per cent), continental Europe (88.5 per cent), and the UK (86.7 per cent), have the highest. It also shows only 36 per cent of firms globally have dedicated ESG professionals who spend at least 90 per cent of their time on ESG-specific matters. However, AUM (assets under management) is a major factor as 92 per cent of firms with AUM greater than $500 billion have dedicated ESG professionals while 91 per cent of firms with AUM less than $10 billion do not.

Research Incorporates Climate Change Into Analysis

Yale University professor William D. Nordhaus and New York University professor Paul M. Romer have been awarded the 2018 Nobel Memorial Prize in Economic Sciences "for integrating climate change into long-run macroeconomic analysis," the Royal Swedish Academy of Sciences announced in a news release. They designed models that address the creation of long-term sustained and sustainable economic growth. Romer's research revealed how economic factors dictate companies' willingness to produce new ideas and innovations. It laid the foundation of the "endogenous growth theory," which explains how ideas are different from other products and need specific conditions to thrive. Nordhaus' work examines how society and nature interact. He was the first person to build a quantitative model to reveal the relationship between the economy and the climate. His model is used to simulate how these spheres co-evolve and impact one another.

Blockchain Gathers Interest

Blockchain is gathering interest in financial communities who believe that this technology will create significant new revenues so it is worth the monetary investment, says Lucien Foster, head of fintech strategy and partnerships at the Bank of New York Mellon. Simply put, at its core, blockchain is a database, he told the ‘Blockchain and Cryptocurrency’ at the ‘2018 CPBI Atlantic Regional Conference.’ It is a data store holding a log or ledger of transactions or events. Distributed across public or private network, there are multiple copies on multiple computers so there is no single point of failure. New information, or blocks, are added to the chain, each with a unique fingerprint or tracking code so. All the parties involved have to agree on the order of the ledger so need for a third party to monitor is not necessary. Still in the early stages, some of its value for financial services include efficiency gains through operational simplification and automation, reduced clearing and settlement time, and liquidity and capital improvement. It also provides risk management as it reduces counterparty risk and fraud, improves resiliency, provides compliance with new regulations, and offers regulatory real-time monitoring between partners.

Brokers Work Hard To Keep Up

Nearly half of institutional equity investors globally are expected to ask their brokers for customized algorithms next year ? a percentage that shows just how fast equity execution technology is evolving, and how hard brokers must work to keep pace, says Greenwich Associates. In 'The Evolution of Sell-side Execution Technology,' it says until recently, there was a perception that trading algorithms were commoditized products. There was some truth to this belief, since algos were using similar logic, and because many brokers were “white labeling” the same algos from bigger brokers. To combat this complaint, brokers have increasingly focused on providing bespoke algorithms to their clients and more than 94 per cent of electronic trading executives say customization is an important part of their service model. “Today, armed with new insight and analysis, buyside traders have a much clearer view about the types and timing of strategies they want to use, the order types that work best, and the venues they want to access,” says Richard Johnson, vice-president of Greenwich Associates market structure and technology and author of the report. “All of this places an increasing demand on the broker to accommodate their clients’ order-handling requirements.”

Trade Concessions Needed To Reach Agreement

Canada didn’t have much of a choice but to compromise and make concessions to get a new trade agreement with the U.S., says John Baird, former minister of foreign affairs and senior advisor at Eurasia Group. Speaking at the ‘2018 CPBI Atlantic Regional Conference’ on North American Integration ? Where Are We Going, he said, however, it is a huge win for Canada as it eliminates uncertainty to future economic growth. Even without the election of Donald Trump as president, there was growing sentiment in the U.S. against global trade. During the election, both Bernie Saunders and Hillary Clinton who were running for president came out in favour of some sort of change in direction, responding to a frustration with trade architecture which built up over three decades. Canadians, on the other hand, are more comfortable with globalization and had the free trade debate 10 years ago. Canada was warned that this would happen from day 1 and two years ago its government knew it had to make concessions, it was just a question of the size of these, he said. However, trade is an area Trump passionately cares about and he has been asking about the issues for “many, many years.” Now, the U.S. is questioning the value of groups like World Trade Organization, going so far as to threaten to pull out.

IIAC Responds To CDIC Trust Disclosure

The IIAC (Investment Industry Association of Canada) has responded to the Canada Deposit Insurance Corporation’s (CDIC’s) consultation on proposed amendments to its joint and trust account disclosure by-law. CDIC’s proposal will have a material impact on IIAC members acting as nominee for their clients when placing deposits at CDIC’s member institutions. While the IIAC supports the policy rationale for CDIC’s proposed amendments, namely to ensure CDIC obtains the information it requires to reimburse insured depositors as quickly as possible in the event of a member institution failing, it will entail significant systems and procedural changes for IIAC member firms. The extent of these changes should be taken into consideration by CDIC when it decides on an effective implementation date. Further, there are areas of the proposed bylaw that require additional clarity to ensure IIAC members understand what is required to develop the necessary systems and procedures to ensure compliance.

Parametric Registers As Portfolio Manager

Parametric Portfolio Associates LLC, a subsidiary of Eaton Vance Corp., has been registered as a portfolio manager with the securities regulatory authorities in certain provinces of Canada for specific products and strategies as well as a commodity trading manager in Ontario. The registrations became effective this summer. It is a systematic asset manager focused on delivering elevated, transparent, repeatable investment outcomes by bringing clarity and accessibility to investment science. Its solutions apply ingenuity and scientific rigour to manage risks and control costs across three main categories: better beta, non-traditional alpha, and efficient portfolio implementation. As of June 30, 2018, it managed $231.3 billion in assets on behalf of institutions, high-net-worth individuals, and fund investors in the U.S. and internationally.

Connor, Clark & Lunn Acquires Hydropower Facilities

Connor, Clark & Lunn Infrastructure has entered into an agreement with Greengen Holdings Ltd. and Sts'ailes Energy Development Limited Partnership to acquire a majority interest in Bremner Trio Hydro Corp., which owns two construction-stage, run-of-river hydropower facilities aggregating approximately 50 megawatts (MW) located near Harrison Lake in British Columbia. The portfolio consists of the 27 MW Trio Creek and 23 MW Bremner Creek hydroelectric projects, with a combined expected energy output of approximately 150 gigawatt hours per year. With key construction and procurement milestones achieved, the Trio Creek project is underway and the Bremner Creek project is expected to commence construction in early 2019.

Tutty Is Volunteer Of Year

Dave Tutty is the CPBI Atlantic region volunteer of the year. He has spent 13 years on regional council and has held every executive role. For last six years, he has served as sponsorship chair for the annual regional conference. He currently represents the Atlantic region on the CPBI national board.

Persicone Manages Pension Policy

Enrico Persicone is manager, pension policy, at OMERS. Most recently, he was senior manager of the BMO Canada pension program. He joined the organization in 2014 as a senior pension advisor.

Dinner Looks At Future-proofing

‘Future-proofing the Investment Management Industry’ is the focus of the CFA Society Toronto’s ‘2018 Annual Investment Dinner.’ This year’s featured speakers ? Mark Wiseman, senior managing director and global head of active equities at BlackRock, and Shelley O’Connor, managing director and co-head of wealth at Morgan Stanley ? will speak about the future of wealth management and active management in the current rising interest rates environment and describe the ways in which the industry can be future-proofed. It takes place November 1 in Toronto, ON. For more information, visit CFA Dinner

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