It’s a tough old world in Canada’s shrinking independent brokerage business.
The sector lost another one of its leading names when Vancouver investment dealer Jordan Capital recently agreed to be swallowed by Toronto-based Mackie Research Capital.
By joining forces, the combined company will be better equipped to compete with the brokerage arms of the big six Canadian banks, said Jordan President Shayne Nyquvest during an interview in Vancouver.
Mackie Research is already one of Canada’s leading independent investment firms, with over 350 employees, working in Toronto, Calgary, Montreal, Regina, Vancouver and St. Albert, Alberta, as well as in independent wealth management locations in Campbell River, B.C., and Mississauga, Ontario.
By acquiring Jordan Capital, Mackie is picking up a private client investment and venture investment banking firm with over 55 employees. As Jordan has established a Colombian-based investment banking platform focused on the materials and energy sector, the deal expands Mackie’s presence in the materials and energy sector.
Speaking to Stockhouse, Nyquvest said he fears that more independent brokerages will soon disappear unless regulators do something to level the playing field in a way that will permit the independents to compete with the bank-owned firms.
Nyquvest, through lawyer Rory Godhino and Vancouver-based consultant Don Mosher have been lobbying hard in Victoria in a bid to persuade regulators in B.C. to change the Accredited Investor rule that impacts the ability of citizens to participate in private placement financings.
Under the current regulation, an accredited investor must have $1 million in net financial assets (not including real estate) and/or have earned over $200,000 in income for the past two years.
“My own opinion is that the Accredited Investor definition is completely out of date and illogical,’’ said Mosher. “Equal access to financial opportunities should be available to all citizens in a democracy, not the privileged few (2%) of the population,’’ he said.
Critics of the current regulations are quick to point out that if you happen to have inherited money or won the lottery, however, you are qualified to invest regardless of your investment knowledge or experience. “Does this make any sense?” Mosher said.
Nyquvest said he believes B.C. Finance Minister Mike de Jong is too preoccupied with issues related to the planned liquefied natural gas (LNG) industry to think much about reform in the investment sector.
However, he warned that the cost of regulatory compliance in the brokerage sector is now so high that more independents are bound to get swallowed up. “Any firm with less than $100 million in capital is done. That’s why you are seeing mergers,’’ he said.
One industry source agreed, saying that the cost of complying with regulations has become so "horrendously expensive" that even the bank-owned investment firms are complaining.
At the age of 57, Nyquvest is a brokerage industry veteran who previously worked at
Canaccord Genuity Corp., (
TSX: T.CF,
Stock Forum) and came out of retirement to help run Jordan Capital.
He and a team of Jordan Capital’s founding partners will lead Mackie and Jordan’s combined management team in British Columbia.
Under an agreement, both Mackie and Jordan will continue to conduct business under their respective names until June 22, 2015. At that time, they will merge and continue under the name Mackie Research Capital Corp.
In Vancouver, Jordan’s pending disappearance leaves only a handful of B.C.-based independent brokerage firms including Global Securities Corp., PI Financial Corp., Haywood Securities Ltd., Salman Partners Inc., Global Securities Corp., Wolverton Securities Ltd., Canaccord Genuity Corp., and Tempest Capital Corp.